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

We have incurred recurring operating losses and negative cash flows from operating activities since inception and expect to continue incurring operating losses and negative cash flows in the future. In connection with the preparation of our Annual Report, our management concluded that there is substantial doubt as to whether we can continue as a going concern for the twelve months following the issuance of the Annual Report, and our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated financial statements as of and for the year ended December 31, 2024,2025, that raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon raising capital to maintain current operations and continue research and development efforts. We plan to raise additional capital to fund our operations through public or private equity offerings, debt financings, and/or potential collaborations and license arrangements or other sources. There is no assurance, however, that any additional financing or any revenue-generating collaboration will be available when needed or that we will be able to obtain financing or enter into a collaboration on terms acceptable to us.

These factors raise substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. If existing or potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations. We have prepared our condensed consolidated financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. If we are unable to continue as a going concern, we will be forced to delay, reduce or discontinue our research and development programs or consider other various strategic alternatives and you could lose all or part of your investment in us.

We have incurred significant net losses since our inception, have not generated any revenue from product sales to date and have financed our operations principally through public and private financings. For the years ended December 31, 20242025 and 2023,2024, we incurred net losses of $11.2$18.6 million and $16.5$11.2 million, respectively. As of December 31, 20242025 and 2023,2024, we had an accumulated deficit of $35.5$54.2 million and $24.4$35.5 million, respectively. Our losses have resulted principally from expenses incurred in research and development of our product candidates and from management and administrative costs and related expenses that we have incurred while building our business infrastructure. We expect that it will be several years, if ever, before we have a commercialized product and generate revenue from product sales. Even if we succeed in receiving marketing approval for, and commercializing, one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses as we discover, develop and market additional potential product candidates.

We are party to a standby equity purchase agreement, or the SEPA, dated December 20, 2024, with YA II PN, LTD.LTD., or Yorkville. Pursuant to the SEPA, subject toYorkville the satisfaction of certain conditions, YA II PN, LTD., or Yorkville, agreed to advanceadvanced us the principal amount of $15 million to be evidenced by convertible promissory notes in three tranches andand, subject to the satisfaction of certain conditions, we may elect to issue and sell to Yorkville up to $10 million worth of shares of our common stock for a period ending December 20, 2026. The first two tranches of the advance were disbursed on December 20, 2024 and December 30, 2024, respectively, and we issued a convertible promissory note to Yorkville in the principal amount of $5.0 million in each of the first two tranches. On January 7, 2025, we satisfied the commitment fee owing to Yorkville under the SEPA by issuing 118,991 shares of our common stock. The conversion of the convertible promissory notes by Yorkville and our election to issue and sell to Yorkville shares of our common stock pursuant to the SEPA has resulted, and will result, in dilution to our existing stockholders.

Additionally, our only clinical trial conducted to date utilizedutilized, and our contemplated twelve-week Phase 1/2 clinical trial in Australia for treatment of diabetic foot ulcers will utilize, an “open-label” trial design, and some of our planned clinical trials may be designed similarly. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving either the investigational product candidate or an existing approved pharmaceutical 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. 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. The results from an open-label trial may not be predictive of future clinical trial results with any of our product candidates for which we include an open-label clinical trial when studied in a controlled environment with a placebo or active control.

Even if we are successful in obtaining marketing approval, commercial success of approved products may also depend in large part on the availability of coverage and adequate reimbursement from third-party payors, including government payors such as the Medicare and Medicaid programs and managed care organizations in the United States or country-specific governmental organizations in foreign countries, which may be affected by existing and future healthcare reform measures designed to reduce the cost of healthcare. Third-party payors could require us to conduct additional studies, including post-marketing studies related to the cost effectiveness of an approved product, to qualify for reimbursement, which could be costly and divert our resources. If government and other healthcare payors were to not provide coverage and adequate reimbursement for our products once approved, market acceptance and commercial success may be reduced. Even if we are able to obtain coverage and adequate reimbursement for our products once approved, there may be features or characteristics of our products, such as dose preparation requirements, which prevent our products from achieving market acceptance by the healthcare or patient communities. For additional information, see the section of this report titled, “Business—Regulatory Environment—Coverage and Reimbursement.”

In addition, if any of our product candidates receive marketing approval, we will be subject to significant regulatory obligations regarding the submission of safety and other post-marketing information andinformation, reports and registration, and will need to continue to comply (or ensure that any third-party providers comply) with cGMPs and good clinical practices, or GCPs, for any clinical trials that we conduct post-approval. In addition, there is always the risk that we, a regulatory authority or a third party might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance with these requirements is costly, and any failure to comply or other issues with our product candidates post-approval could adversely affect our business, financial condition, and results of operations.

Where possible, we may pursue accelerated development strategies in areas of high unmet need. We may seek an accelerated approval pathway for one or more of our therapeutic candidates from the FDA, EMA, or other comparable regulatory authorities. Under the accelerated approval provisions in the Federal Food, Drug, and Cosmetic Act, and the FDA’s implementing regulations, the FDA may grant accelerated approval to a therapeutic candidate designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over available therapies upon a determination that the therapeutic candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit. The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit. Under the Food and Drug Omnibus Reform Act, or FDORA, the FDA is permitted to require, as appropriate, that a post-approval confirmatory study or studies be underway prior to approval or within a specified time period after the date of approval for a product granted accelerated approval. FDORA also gives the FDA increased authority to withdraw approval of a drug or biologic granted accelerated approval on an expedited basis if the sponsor fails to conduct such studies in a timely manner, send status updates on such studies to the FDA every 180 days to be publicly posted by the agency, or if such post-approval studies fail to verify the drug’s predicted clinical benefit. The FDA is empowered to take action, such as issuing fines, against companies that fail to conduct with due diligence any post-approval confirmatory study or submit timely reports to the agency on their progress.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, each as amended, or collectively, the ACA, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty.

Our business is subject to risks associated with conducting business internationally. For example, our CRO and clinical trial sites for our contemplated twelve-week Phase 1/2 clinical trial in Australia for treatment of diabetic foot ulcers in the second half of 2025 are located outside of the United States.States Furthermore,and ifwe formed an Australian subsidiary to act as a sponsor for the clinical trial. If we succeed in obtaining approval of any product candidates, we anticipate marketing them in the European Union and other jurisdictions in addition to the United States. If approved, we may hire sales representatives and conduct physician and patient association outreach activities outside of the United States. Doing business internationally involves a number of risks, including but not limited to:

Any of these factors could harm our contemplated clinical trial in Australia, as well as our current and any future international operations and, consequently, our business, financial condition, prospects, and results of operations.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, layoffs,substantial changes in leadership and shifting policy priorities as a result of changes in the presidential administration and its appointees tasked to oversee the agency, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, including executive and congressional priorities, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agenciesagencies, including as a result of reductions in force, significant organizational changes, substantial leadership departures, and policy changes, may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. In addition, the current U.S. administration has proposed substantial reductions in force at various government agencies that, if applied in a material way, could significantly reduce the FDA’s and other agencies’ capacities to perform their functions in a manner consistent with past practices. If a prolonged government shutdown occurs or if the FDA or SEC experiences significant decreases in funding or personnel, it could significantly impact the ability of the FDA to issues licenses needed for conduct of our clinical trials and the abilities of both agencies to timely review and process our regulatory submissions, which could have a material adverse effect on our business and our timelines. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

As a public company, we have incurred, and will continue to incur,incur significant legal, accounting and other expenses. In addition, the federal securities laws, including the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and rules and regulations subsequently implemented by the SEC and the Nasdaq Stock Market LLC, or Nasdaq, have imposed various requirements on public companies, including requirements to file annual, quarterly, and event driven reports with respect to their business and financial condition, and to establish and maintain effective disclosure and financial controls and corporate governance practices. These rules and regulations have increased, and will continue to increase, our legal and financial compliance costs, made certain activities more time-consuming and costly, and required our management and other personnel to devote a substantial amount of time to compliance initiatives. Recent legislation permits emerging growth companies to implement many of these requirements over a longer period and up to five years after completion of a company’s initial public offering. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

Despite our best efforts, we may not be able to produce reliable consolidated financial statements or file such consolidated financial statements as part of a periodic report in a timely manner with the SEC or comply with Nasdaq listing requirements. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate consolidated financial statements on a timely basis is a costly and time-consuming effort that needs to be reevaluated frequently. We also expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles. We have begun the process of documenting, reviewing, and improving our internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act, which requires an annual management assessment of the effectiveness of our internal control over financial reporting. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We are required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually. However, for as long as we are an emerging growth company or a non-accelerated filer, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years following the completion of our Direct Listing. An independent assessment of the effectiveness of our internal controls over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls over financial reporting could lead to restatements of our consolidated financial statements and require us to incur the expense of remediation.

During the preparation of our consolidated financial statements for the fiscal years ended December 31, 2025, 2024, 2023 and 2022, our management identified a material weakness in our internal control over financial reporting due to a lack of segregation of duties. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Specifically, our management identified a deficiency in our internal controls within the financial reporting function that resulted from an ineffective design and implementation of controls over proper segregation of duties for the period of time covered by our consolidated financial statements prior to our then Chief Financial Officer joining us in June 20222025 when all financial functions were handled by a single individual, and afterward, through December 31, 2024,2025, due to a limited number of individuals. Based upon management’s evaluation, and due to the material weakness identified, our principal executive officer and principal financial and accounting officer have concluded that our disclosure controls and procedures were not effective.

With the addition of our Interim Chief Financial Officer and the changes made to our accounting and financial reporting processes and internal controls during the last half of fiscal year 2022 and through December 31, 2024, we have strengthened our internal controls andWe will continue to add staff, evaluate segregation of duties, and implement initiatives to improve our internal controls over financial reporting as we grow. However, the implementation of these initiatives may not fully address the material weakness in our internal control over financial reporting and we cannot assure you that we will not identify other material weaknesses or deficiencies, which could negatively impact our results of operations in future periods. Further, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

The manufacture of biologic cell therapy product candidates, and products, if approved, is complex and requires significant expertise and capital investment, including developing advanced manufacturing techniques and process controls. Manufacturers of biologic products often encounter difficulties in production and sourcing, particularly in scaling up or out, validating the production process, and assuring high reliability of the manufacturing processes (including the absence of contamination), in light of variations and supply constraints of critical components. These problems include logistics and shipping, difficulties with production costs and yields, quality control, including consistency, stability, purity, and efficacy of the product, product testing, operator error, and availability of qualified personnel, as well as compliance with strictly enforced federal, state, and foreign regulations. For example, initial timelines for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia were extended as we worked with our CDMO to resolve process issues with the manufacturing training run and increased the number of test manufacturing runs needed to confirm no sterility issues. Furthermore, if contaminants are discovered in our supply of our product candidates or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We cannot assure you that any stability, purity, and efficacy failures, deficiencies, or other issues relating to manufacturing our product candidates will not occur in the future.

We have contracted with CDMOsa CDMO for the production of our master cell banksbank and working cell banks for our fibroblast cell-based product candidatesbank to enable our planned twelve-week Phase 1/2 clinical trials.trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia. If the CDMO is unable to producemaintain our master cell banks,bank and working cell banksbank andfor ourCYWC628 or produce CYWC628 or any other fibroblast cell-based product candidates to enable clinical trials, we may encounter delays, additional costs, or technical failure of one or more of our product candidates. For example, timelines for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia were extended as we worked with our CDMO to resolve process issues encountered with the manufacturing training run and increased the number of test manufacturing runs needed to confirm no sterility issues.

If we were to need an alternate CDMO, we would incur added costs and delays in identifying and qualifying any such replacement. In addition, we expect to order drug product and services on a statement of work or purchase order basis and do not plan to enter into long-term dedicated capacity or minimum supply arrangements with any commercial manufacturer. We may not be able to timely secure needed supply arrangements on satisfactory terms, or at all. Our failure to secure these arrangements as needed could have a material adverse effect on our ability to complete the development of our product candidates or,or to commercialize them, if approved. We may be unable to conclude agreements for commercial supply with third-party manufacturers or may be unable to do so on acceptable terms. There may be difficulties in scaling up to commercial quantities and formulation of our product candidates, and the costs of manufacturing could be prohibitive.

As product candidates proceed through preclinical studies to late-stage clinical trials towards potential marketing approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, formulation, materials, and processes, are altered along the way in an effort to optimize processes and product characteristics. Such alterations can also occur due to changes in manufacturers. Such changes carry the risk that they will not achieve their intended objectives. Any such changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with product candidates produced using the modified manufacturing methods, materials, and processes. Such changes may also require additional testing, FDA notification or FDA approval. This could delay the completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials beyond those we currently anticipate, increase clinical trial costs, delay approval of our product candidates and jeopardize our ability to commercialize our product candidates if approved. In addition, we may be required to make significant changes to our upstream and downstream processes across our pipeline, which could delay the development of future product candidates. For example, we encountered process issues with the manufacturing training run of CYWC628 and increased the number of test manufacturing runs needed to confirm no sterility issues, which we had to resolve and complete before we could begin the manufacture of CYWC628 for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia. These issues required us to extend the initial timelines for the initiation and completion of the clinical trial.

We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing partners for compliance with cGMP regulations for manufacturing our cell therapy product candidates. Third-party manufacturers may be unable to comply with cGMP regulations or similar regulatory requirements outside the United States. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, the EMA, or other regulatory authorities, we will not be able to produce our product candidates. In addition, we do not have control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. For example, we encountered process issues with the manufacturing training run of CYWC628 and increased the number of test manufacturing runs needed to confirm no sterility issues, which we had to resolve and complete before we could begin the manufacture of CYWC628 for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia. If these issues were not resolved and completed, we would have been unable to manufacture CYWC628 for our clinical trial in a timely manner. If the FDA, the EMA, or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain marketing approval for or market our product candidates, if approved. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and harm our business and results of operations. Furthermore, the raw materials for our product candidates may be sourced, in some cases, from a single-source supplier. If we were to experience an unexpected loss of supply of any of our product candidates or any of our future product candidates for any reason, whether as a result of manufacturing, supply, or storage issues or otherwise, we could experience delays, disruptions, suspensions, or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials.

In addition to our operations in the United States, which may be subject to healthcare and other laws relating to the privacy and security of health information and other personal information, we our contemplated twelve-week Phase 1/2 clinical trial for treatment of diabetic foot ulcers will be conducted in Australia and subject us to additional Australian data privacy laws, regulations and guidelines, including the Privacy Act 1988 and the thirteen (13) Australian Privacy Principles, which regulate the collection, use, disclosure, and storage of personal and health information. Key Australian requirements include obtaining informed, voluntary consent, ensuring data security, and managing cross-border transfers. We may also seek to conduct clinical trials in the United Kingdom or the European Economic Area, or the EEA, and may become subject to additional European data privacy laws, regulations and guidelines, including the GDPR. The GDPR applies extraterritorially, and we may be subject to the GDPR because of our data processing activities that involve the personal data of individuals located in the EEA or UK, such as in connection with clinical trials in those jurisdictions. Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

Our business exposes us to significant product liability risks inherent in the development, testing, manufacturing, and marketing of therapeutic treatments. Product liability claims could delay or prevent completion of our development programs. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. If we succeed in marketing product candidates, such claims could result in an FDA, EMA, or other regulatory authority investigation of the safety and effectiveness of our product candidates, our manufacturing processes and facilities or our marketing programs. FDA, EMA, or other regulatory authority investigations could potentially lead to a recall of our product candidates or more serious enforcement action, limitations on the approved indications for which they may be used or suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our product candidates, if approved, injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources and substantial monetary awards to trial participants or patients. WeWhile our Australian subsidiary maintains clinical trial insurance for our contemplated twelve-week Phase 1/2 clinical trial in Australia for treatment of diabetic foot ulcers, we currently have do not maintain clinical trial or product liability insurance thatin wethe believeUnites is appropriate for our stage of developmentStates and may need to obtain highersuch levelscoverage prior to commencing clinical trials in the United States or marketing any of our product candidates, if approved. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have an adverse effect on our business and financial condition.

To date, we have only completed one clinical trial,trial in Mexico, we will conduct our contemplated twelve-week Phase 1/2 clinical trial for the treatment of diabetic foot ulcers in Australia, and we may choose to conduct international clinical trials in the future. The acceptance of study data by the FDA, the EMA or other comparable foreign regulatory authority from clinical trials conducted outside of their respective jurisdictions may be subject to certain conditions. In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the United States population and United States medical practice; (ii) the trials are performed by clinical investigators of recognized competence and pursuant to current GCP requirements; and (iii) the FDA is able to validate the data through an on-site inspection or other appropriate means, to the extent necessary. Additionally, the FDA’s clinical trial requirements, including the adequacy of the patient population studied and statistical powering, must be met. In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA, the EMA, or any applicable foreign regulatory authority will accept data from trials conducted outside of its applicable jurisdiction. Additionally, recent policy proposals in the United States may make acceptance by the FDA or inclusion in a marketing application of foreign data more difficult or costly. If the FDA, the EMA, or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval for commercialization in the applicable jurisdiction.

For example, the ACA substantially changed the way healthcare is financed by both the government and private insurers, and significantly impacts the U.S. biopharmaceutical industry. Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. These changes include aggregate reductions to Medicare payments and may result in additional reductions in Medicare and other healthcare funding, as well as the potential for the government to select certain single-source drugs and biologics for drug price negotiations under Medicare, all of which could have a material adverse effect on customers for our product candidates, if approved, and accordingly, our financial operations. For additional information, see the section of this report entitled, “Business—Regulatory Environment—Healthcare Reform.”

As the biopharmaceutical industry expands and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties. We cannot provide any assurances that third-party patents do not exist which might be enforced against our current product candidates or future products, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties. Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published, we may be unaware of third-party patents that may be infringed by commercialization of any of our product candidates, and we cannot be certain that we were the first to file a patent application related to a product candidate or technology. Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our product candidates and other proprietary technologies we may develop, could be found to be infringed by our product candidate. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. Any claims of patent infringement asserted by third parties would be time consumingtime-consuming and could:

As of December 31, 2024,2025, we had thirteen15 full-time employees. In order to successfully implement our development and commercialization plans and strategies, we expect to need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:

As a listed company on Nasdaq, we are required to meet certain financial, public float, bid price and liquidity standards on an ongoing basis to continue the listing of our common stock. If we fail to meet these continued listing requirements, our common stock may be subject to delisting, which could materially impact the liquidity of our common stock making it more challenging to buy and sell shares of our common stock. We are currently listed on the Nasdaq GlobalCapital Market and trade under the symbol “FBLG.” On March 27, 2025, we submitted to Nasdaq an application to transfer the listing of our common stock from theThe Nasdaq Global Market to the Nasdaq Capital Market. This transfer will allowallowed us to satisfy less stringent financial, liquidity, and market capitalization requirements to continue the listing of our common stock. For example, the market value requirement of the Nasdaq Capital Market is $35 million versus $50 million for the Nasdaq Global Market and the stockholders’ equity requirement for the Nasdaq Capital Market is $2.5 million versus $10 million for the Nasdaq Global Market. Nasdaq approved our application to transfer the listing of our common stock from the Nasdaq Global Market to the Nasdaq Capital Market and our common stock will be transferred to the Nasdaq Capital Market at the opening of business on April 1, 2025. Following the transfer, we will remain subject to the $1 minimum bid price requirement and continued listing requirements for the Nasdaq Capital Market, and no assurance can be given that we will be able to satisfy these requirements. If we fail to meet any of thesethe continued listing requirements afterof the transfer,Nasdaq Capital Market, our securitiescommon stock may be delisted from Nasdaq.

In addition, we cannot predict the prices at which our common stock may trade on Nasdaq, and the market price of our common stock may fluctuate significantly in response to various factors, some of which are beyond our control. For example, between March 1, 2024 and MarchFebruary 1, 2025, 2026, the closing price of our common stock on Nasdaq ranged from $13.00 per share to $1.05$0.225 per share.

In addition, securities exchanges have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner often unrelated to the operating performance of those companies. These fluctuations may be even more pronounced in the trading market for our common stock following the listing of our common stock on Nasdaq as a result of the supply and demand forces described above.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) having the option of delaying the adoption of certain new or revised financial accounting standards, (iii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements, and registration statements and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these exemptions until such time that we are no longer an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. Further, pursuant to Section 107 of the JOBS Act, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our results of operations and consolidated financial statements may not be comparable to the results of operations and consolidated financial statements of other companies who have adopted the new or revised accounting standards.

Despite the implementation of security measures, we, like other organizations in our industry, have experienced and expect to continue to experience threats to our internal computer systems. Our systems and those of our current and any future CROs, CDMOs, and other contractors, consultants, collaborators, and third-party service providers, are vulnerable to damage from computer viruses, cybersecurity threats, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failure. For example, the third-party service provider of our equity management system experienced a cybersecurity event in the third quarter of 2025 that prevented us from accessing the system for several days before the matter was resolved. Information security risks for us and our third-party vendors have increased significantly in recent years, in part because of the proliferation of new technologies, including artificial intelligence, the ubiquity of internet connections, and the increased sophistication and activities of threat actors. Because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period. If such an event were to occur and cause interruptions in our operations or result in the unauthorized acquisition of or access to personally identifiable information or individually identifiable health information, it could result in a material disruption of our discovery and development programs and our business operations, whether due to a loss of our trade secrets or other similar disruptions. Some of the federal, state, and foreign government requirements include obligations of companies to notify individuals of security breaches involving particular personally identifiable information, which could result from breaches experienced by us or by our vendors, contractors, or organizations with which we have formed strategic relationships. Notifications and follow-up actions related to a security breach could impact our reputation, cause us to incur significant costs, including legal expenses and remediation costs. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the lost data. We also rely on third parties for certain portions of our manufacturing process, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could be exposed to litigation and governmental investigations, the further development and commercialization of our product candidates could be delayed, and we could be subject to significant fines or penalties for any noncompliance with certain state, federal and/or international privacy and security laws.

Our business could be adversely affected by unstable economic and political conditions within the United States and foreign jurisdictions, including as a result of an economic downturn and geopolitical events, such as changes in U.S. federal policy that affect the geopolitical landscape. Changes to policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation, and other areas. For example, duringin the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico. On February 1,April 2025, the U.S.United States imposed abroad 25% tarifftariffs on imports from Canada andvirtually Mexico,all whichcountries, werewith subsequentlyparticularly suspendedhigh for a period of one month, and a 10% additional tarifftariffs on imports from China. Since this announcement, most tariffs for countries other than China have been suspended or reduced temporarily. Historically, tariffs have led to increased trade and political tensions, between not only the U.S. and China, but also between the U.S. and other countries in the international community. In response to tariffs, othersome countries have implemented retaliatory tariffs on U.S. goods.goods, while others seek to negotiate agreements regarding U.S.-imposed tariffs. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations. Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

The global credit and financial markets have also generally experienced extreme volatility and disruptions (including as a result of actual or perceived changes in interest rates, inflation, and macroeconomic uncertainties), which has included severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, high inflation, uncertainty about economic stability, global supply chain disruptions, and increases in unemployment rates. The financial markets and the global economy may also be adversely affected by military conflict, including the ongoing conflicts between Russia and Ukraine,Ukraine and Israelin andthe Hamas,Middle East, terrorism, or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also continue to adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. A severe or prolonged economic downturn could result in a variety of risks to our business, including a decrease in the demand for our product candidates and any other potential future product candidates and in our ability to raise additional capital when needed on acceptable terms, if at all.

There are also current geopolitical tensions with China that may affect our operations. For example, there have been previously contemplated Congressional legislative proposals, such as the billrecently titled theenacted BIOSECURE Act, which would have,which, among other things, prohibitedprohibits U.S. federal funding in connection with biotechnology equipment or services produced or provided by certain named Chinese “biotechnology companies of concern” and loans and grants to, and federal contracts with any entity that uses biotechnology equipment or services from one of these entities. The legislation would have also given the federal government the authority to name additional “biotechnology companies of concern” that are engaged in research activities with the Chinese government and that pose a risk of U.S. national security. The most recent version of the BIOSECURE Act (which was not passed) would have delayed the application of the BIOSECURE Act’s provisions (1) until January 1, 2032, with respect to biotechnology equipment and services provided or produced by named biotechnology companies of concern under a contract or agreement entered before the effective date of the legislation and (2) for a period of five years after the identification of new biotechnology companies of concern, with respect to biotechnology equipment and services provided or produced by an entity that the government identifies in the future as a biotechnology company of concern. Any additional executive action, legislative action similar to the BIOSECURE Act or potential sanctions with China could materially impact manufacturing partners and our agreements with them. We continue to assess any legislation as it develops to determine the effect, if any, on our contractual relationships. Furthermore, any disruptions to our supply chain as a result of unfavorable global economic conditions, including due to geopolitical conflicts or public health crises, could negatively impact the timely execution of our ongoing and future clinical trials.

We contract with our CRO and other vendors in foreign countries and expect to contract with clinical trial sites in foreign countries in the normal course of business. We are, therefore, subject to fluctuations in foreign currency rates in connection with these agreements. Our principal exchange rate exposure is with the Euro and Australian dollar against the U.S. dollar. Fluctuations in foreign currency exchange rates could negatively impact our results of operations. Any changes in foreign currency exchange rates would be reflected as a foreign currency exchange gain or loss. We do not hedge against our foreign currency exchange rate risk.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biotechnology company focused on developing and commercializing fibroblast-based therapies for patients suffering from chronic diseases with significant unmet medical needs, including wound healing, multiple sclerosis, degenerative disc disease, psoriasis andpsoriasis, certain cancers, and potential human longevity applications including thymic involution reversal.reversal using a thymic organoid. Our most advanced product candidates are CYWC628, CYPS317, CYMS101 and CybroCell™.

We arehave incompleted our IND-enabling pre-clinical studies for the late pre-clinical stagesdevelopment of developing CYWC628 as ana topically administered allogeneic fibroblast cell-based therapy for wound healing. Our pre-clinical studies focused on utilizing single cell fibroblasts, fibroblast spheroids, and fibroblast-derived materials to treat wounds in diabetic mice. We completed pre-clinical studies investigating (i) multiple administrations of CYWC628 spheroids on a chemically induced chronic wound NONcNZO10/LtJ and BKS.Cg-Dock7m +/+ LeprdbLepRdb/J mouse model, (ii) dose titration to provide information on the proposed dose range of CYWC628, and (iii) acute and chronic toxicity. The results of our studies have shown statistically significant acceleration in the rate of wound closureclosure, and statistically significant improvement in the quality of the healed wounds in comparison with both a marketed wound care product and control, and improved quality of healed wounds.control. Based upon our results achieved to date,results, we are planning to initiate a twelve-week Phase 1/2 clinical trial in Australia for treatment of diabetic foot ulcers in the secondfirst halfquarter of 2025.2026.

We are developing CYMS101 as aan topically intravenously administered allogeneic fibroblast single cell, and fibroblast spheroidspheroid, cell-based therapy to treat MS. After completing animal studies using CYMS101, we received approval from a U.S.-based IRB to conduct clinical investigations in Mexico using the fibroblast cell composition for patients with MS, and completed a Phase 1 study. The study was conducted in five participants. The primary objective of the study was to assess safety, and the secondary objective was to assess efficacy. The primary objective was achieved as we saw no adverse events related to the treatment - no adverse events during intravenous injection of the tolerogenic fibroblasts, no short or long-impact in complete blood count tests during the 16-week monitoring period, and no short or long impact in electrocardiogram results during the 16-week monitoring period. In addition, the study assessed clinical activity using a standard set of neurological assessments routinely used to assess MS. We are currently conducting further research to more fully characterize the mode of action of fibroblasts in oligodendrocyte expansion. We plan to file an IND application for a Phase 1/2 clinical trial relating to MS in the United States asin fundingthe allows.first half of 2026. We expect to seek a strategic partner to collaborate with us on the development of CYMS101 either before initiating the Phase 1/2 study, or after its completion, if successful, and prior to commencing a potential Phase 3 clinical trial.

CybroCell™ is an investigational intradiscal administered allogeneic fibroblast cell-based therapy in development for degenerative disc disease and is being designed as an alternative method for repairing the cartilage of the intervertebral disc (or any other articular cartilage). We have completed two animal studies in rabbit models. The results from the studies were positive and supported our IND application to run a “first in human” trial. We received IND clearance from the FDA in 2018, conditional upon approval of our master cell bank, to evaluate this candidate in a planned clinical trial. A timeline for the trial will be determined in connection with discussions with the FDA.

CYPS317 is our allogeneic intravenously administered fibroblast spheroid cell-based investigational therapeutic for the treatment of psoriasis. We have completed anpreliminary early phaseIND-enabling pre-clinical projectstudies utilizing achronic and acute psoriasis mouse modelmodels to assess the potential use of intravenous administration of fibroblast spheroids for the treatment of psoriasis. We arealso in the process of continuing our potentiallycompleted IND-enabling animal model studies, which include carrying out a dosage titration animal model studystudies to determine the optimal efficacious dose range,range in addition to determiningand the durability of treatment for mild to moderate, and moderate to severe psoriasis,psoriasis. On December 30, 2025, we filed a Phase 1/2 Investigational New Drug (IND) application with a projected completion timeline of the fourthU.S. quarterFood and Drug Administration (FDA) seeking regulatory clearance to initiate clinical trials of 2025.CYPS317.

We also have human longevity, certain cancer, and artificial pancreatic organoid research programs in the very early stages of research and development,development. and weWe plan to accelerate such programs as funding allows.

WeThe contracted with a CDMO for the productionmanufacturing of our master cell bank and working cell bank for CYWC628.CYWC628 is now complete and both are certified as released by our CDMO. This CDMO will also manufacture CYWC628 for use in our contemplated twelve-week Phase 1/2 clinical trial for treatment of diabetic foot ulcers that we plan towill conduct in AustraliaAustralia. inWe successfully carried out experiments that demonstrated the secondability half ofto 2025. We contracted with a CDMO foruse the productionCYWC628 of ourspheroid master cell bank andfor workingthe manufacturing of a modified CybroCell™ drug product. We also supported animal trials confirming that the therapeutic effects of the fibroblast-derived chondrocyte spheroids derived from the CYWC628 master cell bank for CybroCell™. We are currentlysignificantly inbetter theto processthose of finalizingsingle-cell thefibroblasts, experimentalwhich cellsupported bankour productionIND clearance with the CDMOFDA for the planned Phase I clinical trial. Based on these results, we will work to amend the IND clearance with the FDA to replace single-cell fibroblasts with fibroblast-derived chondrocyte spheroids derived from the CYWC628 master cell bank. A timeline for the trial will be determined in accordanceconnection with FDAdiscussions requirements. with the FDA. If any of our product candidates receive marketing approval, we expect to evaluate the feasibility of building our own cGMP manufacturing facility or continuing to outsource manufacturing to a CDMO for clinical testing and commercial supply. We expect to rely on third parties for our cell therapy manufacturing process for the foreseeable future.

Since our spinoffApril 2021 separation from FibroGenesis in April 2021,FibroGenesis, our operationsactivities have includedconsisted businessprimarily of (i) corporate and strategic planning, hiring(ii) recruiting and retaining personnel, raising(iii) capital,financing building our operations, (iv) prosecuting, maintaining and expanding our intellectual property portfolio, and performing(v) conducting preclinical and other research and development onrelated to our product candidatescandidates. andThese activities allow us to continue building our fibroblast technology, leveraging the clinical benefits of fibroblasts as the basis of our cellcell-based therapy platform.platform..

We have incurred net losses since inception and expect to incur losses in the future as we continue our research and development activities. To date, we have funded our operations primarily through investment from FibroGenesis, the sale of $5.6$15.0 million of our convertible promissory notes, which were all subsequently converted to equity, the sale of $18.6 million of preferred stock, $10.4 million in proceeds from the sale of common stockstock, $0.00001 par value per shares, or the Common Stock, through the share purchase agreement, dated November 12, 2021, or the GEM CapitalSPA, Stockwith PurchaseGEM Agreement,Global Yield LLC SCS, or GEM Global, and $9.4GEM Yield Bahamas Limited, or GYBL, and together with GEM Global, GEM, $13.1 million in proceeds from the issuance of additional convertible promissory notes.notes, and $6.7 million in net proceeds from the sale of Common Stock in direct placements.

Due to the numerous risks and uncertainties associated with biopharmaceutical product development and the economic and developmental uncertainty, we may be unable to accurately predict the timing or magnitude of all expenses. Our ability to ultimately generate revenue to achieve profitability will depend heavily on the development, approval, and subsequent commercialization of our product candidates. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. As a result, we will need substantial additional funding to support our short-term and long-term continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. We may not be able to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we will have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for any of our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. We cannot predict if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates and, even if we do, we may never generate revenue that is significant enough for us to achieve profitability.

Change in fair value of warrant liability was $0 and a gain of $5.4 million and a loss of $7.2 million for the years ended December 31, 20242025 and 2023, 2024, respectively. The liability instrument to investors under the Share Purchase Agreement among us, GEM Global Yield LLC SCS, or GEM, and GEM Yield Bahamas Limited, or GYBL, dated November 12, 2021, or the GEM SPA, was comprised of the contingent warrant liability and contingent put option. The $7.2$5.4 million loss occurred from the initial recognition of the warrant liability as of December 31, 2023. The $5.4 million gain during the year ended December 31, 2024 resulted from the mark to market of the warrant liability, which occurred at the end of each reporting period until the warrant liability was derecognized in December 2024, and resulted primarily from the decrease in our stock price.

Change in fair value of forward contract liability was a$0 net loss ofand $0.4 million and $0.0 for the years ended December 31, 20242025 and 2023,2024, respectively. A forward contract liability to sell shares to the investor at 90% of the average daily closing price per share over the Draw Down Pricing Period is recorded each time we issue a Draw Down Notice to GEM under the Share Purchase Agreement. The forward contract liability is remeasured at the end of each quarter, if open, and again upon receipt of the Closing Notice from the investor. The forward contract liability iswas derecognized upon receipt of the Closing Notice and funds from the investor.

We received advances in the form of convertible notes pursuant to our Standby Equity Purchase Agreement in December 2024 and June 2025 and elected to account for the short-term convertible notes under the fair value option. Under the fair value option, all costs associated with raising the funds were expensed immediately and the difference between the net proceeds and the fair value of the convertible notes at issuance was recorded as a $0.1 million gain.gain during the year ended December 31, 2024. The convertible notes were adjustedpaid tooff theirin fairNovember values2025 atand during the year ended December 31, 20242025, with the Company recorded a $0.1$1.8 million gainloss of change in fair value resulting from the decrease in fair value.

Commitment fee expense was $0 and $2.2 million for the years ended December 31, 2025 and 2024, respectively. A $2 million commitment fee pursuant to the GEM SPA became payable to GEM upon completion of the Direct Listing in January 2024. The commitment fee is payable to GEM as drawdown notices are issued, with any remaining balance payable one year after public listing. We sold $3.0 million of common stock to GEM under the GEM SPA during the three months ended March 31, 2024, which made approximately $0.1 million of the commitment fee payable immediately. This $0.1 million portion of the commitment fee was netted against the proceeds received in additional paid-in capital. The remaining $1.9 million was expensed immediately because we were planning to raise funds through other sources and had no plans to issue further Draw Down Notices to GEM prior to the one-year anniversary of our public listing when this remaining amount would have been due.

A $0.3 million commitment fee was duerecorded during the year ended December 31, 2024 following the closing of the first pre-advance under our Standby Equity Purchase Agreement entered into in December 2024.

There were no placement agent and tail fee expenses in the year ended December 31, 2025. In the year ended December 31, 2024, we recorded a $0.7 million tail fee expense for amounts due to Maxim under our agreements dated April 24, 2023 and February 5, 2024 as a result of issuing $10.0 million of convertible debt in December 2024. We also recorded a $0.7 million placement agent expense for amounts due to the placement agent upon the execution of our Standby Equity Purchase Agreement and receipt of advances in the form of convertible notes in December 2024.

We There was no gain on termination of warrant and commitment fee liabilities in the year ended December 31, 2025. In the year ended December 31, 2024, we entered into a side letter agreement with GEM GLOBALto YIELD LLC SCS and GEM YIELD BAHAMAS LIMITED (together, GEM) in December 2024 to issue 1,152,074 shares to GEM at a valuation of $2.17 per share to satisfy the remaining commitment fee and warrant liabilities due to GEM. We recorded a $1.2 million gain for the amount by which the combined value of the commitment fee and warrant liabilities exceeded the $2.5 million value of the shares issued.

Other income loss was $0.0$0.6 million for the year ended December 31, 2024,2025, compared with Other lossincome of $0.2 million$32,000 for the year ended December 31, 2023, 2024, which is comprised of the payments to FibroGenesis in excess of the derivative liability established at inception of the Agreement Regarding Right of First Negotiation entered into by us and FibroGenesis in January 2023, or the ROFN Agreement.

Interest income for the years ended December 31, 2025 and 2024 was $0.2 million and $0.3 million, respectively and is comprised of interest income and unrealized gain/losses on cash equivalents.

Interest expense was $0.0$0.2 million and $0.1approximately million$20,000 for the years ended December 31, 20242025 and 2023,2024, respectively. The decreaseincrease of $0.1$0.2 million was due to the maturities and conversionspayoff of the convertible notes during the year ended December 31, 2023.2025. Interest expense was recorded in 2023 2024 for the nominal interest rate of 6.0% plus the amortization of the discount on the 2022 convertible notes. Interest expense in 2024 was primarily due to financing D&O insurance premiums.

Through December 31, 2024,2025, we have financed our operations primarily with investment from FibroGenesis, proceeds from borrowings under our convertible loan agreements, proceeds from the issuance of preferred stock, and proceeds from the sale of common stock through the GEM CapitalSPA, Stock Purchaseand Agreement.proceeds Fromfrom registered direct offerings. We have incurred net losses since inception throughand Decemberexpect 31,to 2024,incur losses in the future as we continue our research and development activities. To date, we have receivedfunded aggregateour proceedsoperations primarily through investment from FibroGenesis, the sale of approximately $15.0 million from sales of our convertible promissory notes, which were all subsequently converted to equity, the sale of $18.6 million from the sales of preferred stock, and $10.4 million in proceeds from the sale of common stock, $0.00001 par value per shares, or the Common Stock, through the share purchase agreement, dated November 12, 2021, or the GEM SPA, with GEM Global Yield LLC SCS, or GEM Global, and GEM Yield Bahamas Limited, or GYBL, and together with GEM Global, GEM, $13.1 million in proceeds from the issuance of commonadditional stock. convertible promissory notes, and $6.7 million in net proceeds from the sale of Common Stock in direct placements. As of December 31, 2024,2025, we had cash and cash equivalents of approximately $14.0$4.9 million and an accumulated deficit of approximately $35.5 $54.2 million. As of December 31, 2024, we had $10.0 million principal balance of outstanding debt with a fair value of $9.2 million.

Net cash used in operating activities was $11.9$16.4 million and $6.4$11.9 million for the years ended December 31, 20242025 and 2023,2024, respectively, and consisted primarily of net losses of $11.2$18.6 million and $16.5$11.2 million, respectively. Net losses for the year ended December 31, 2025 were partially offset by $2.7 million in noncash stock-based compensation expense, $0.4 million in noncash change in fair value of SEPA put option liability, a change in fair value of convertible debt of $1.9 million, an increase of $1.2 million in prepaid expenses, noncash depreciation expense of $0.2 million, and a decrease in accounts payable and accrued expenses of $1.5 million, and a decrease in operating lease liability of $0.6 million. Net losses for the year ended December 31, 2024 were partially offset by $2.2 million in noncash stock-based compensation expense, $1.9 million in noncash change in commitment fee payable to GEM, $0.4 million in noncash change in fair value of forward contract liability, an increase of $1.3 million in accounts payable and accrued expenses, noncash depreciation expense of $0.2 million, and were combined with a $5.4 million decrease in warrant liability, $1.2 million gain on termination of warrant and commitment fee liabilities, $0.1 million gain on issuance of convertible note, $0.1 million change in fair value of convertible debt, $0.2 million decrease in prepaid expenses, and $0.1 million decrease in payable to Parent. Net losses for the year ended December 31, 2023 were partially offset by $7.2 million in other loss due to increase in liability instrument, $1.8 million in noncash stock-based compensation expense, an increase of $0.7 million in accounts payable and accrued expenses, $0.1 million increase in payable to Parent, $0.1 million net change in operating lease right-of-use asset and liability, and other noncash expenses of $0.1 million in noncash amortization of convertible notes debt discount and $0.1 million in other loss on derivative liability.

Net cash used in investing activities was approximately $0.2$0.3 million and $0.5$0.2 million for the years ended December 31, 20242025 and 2023,2024, respectively. In 2025, we purchased approximately $0.3 million of equipment for cash. In 2024, we purchased approximately $0.1 million of equipment for cash and $0.1 million of equipment in accounts payable and accrued expenses.

We have incurred operating losses since our formation and expect such losses to continue in the future as we build infrastructure, develop intellectual property and conduct research and development activities. Moreover, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company. We do not have any products approved for sale, and we have never generated any revenue from product sales. We have primarily relied on a combination of angel investors, private debt placements, convertible debt issuances, and sales of equity to fund our operations. As of December 31, 2024,2025, we had an accumulated deficit of $35.5$54.2 million and cash and cash equivalents of $14.0$4.9 million. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current or future product candidates and we do not know when, or if, that will occur. Unless and until such time that revenue and net income are generated, we will need to continue to raise additional capital. These factors raise substantial doubt about our ability to continue as a going concern for one year from the issuance of the consolidated financial statements included in this Annual Report. The consolidated financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We have material cash requirements and other contractual obligations related to our office and lab rent (as described in Note 10, “Leases” to the consolidated financial statements in this Annual Report).

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, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods. In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis. We base our estimates on 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 define our critical accounting estimates as those under GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements included elsewhere in this Annual Report, we believe the following are the critical accounting estimates used in the preparation of our consolidated financial statements that require significant estimates and judgments.

On December 20, 2024, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with a certain investor. Pursuant to the SEPA, the investor will advance to the Company, subject to the satisfaction of certain conditions, a total principal amount of $15,000 thousand,$15.0 million, which will be evidenced by short-term convertible notes, in three tranches. We received net proceeds of $4,300$4.3 thousandmillion on December 20, 2024 from the first tranche of short-term convertible notes with $5,000$5.0 thousandmillion principal (the “First Note”), and we received net proceeds of $4,375$4.4 thousandmillion on December 30, 2024 from the second tranche of short-term convertible notes with $5,000 thousand$5.0 million principal (the “Second Note”). TheWe received net proceeds of $4.4 million on June 15, 2025 from the third tranche hasof notshort-term yetconvertible beennotes received.with $5.0 million principal (the “Third Note”). We elected to account for the short-term convertible notes under the fair value option in accordance with ASC 825-10-15-4 (“ASC 825”), and Note 5 includes further discussion of their fair values. In November 2025, these convertible notes were paid off.

See Notes 5 and 9 to our auditedconsolidated financial statements included elsewhere in this Annual Report for further information concerning the SEPA and the assumptions we used in in determining fair values.

The SEPA was accounted for as a liability under ASC 815 because it includes an embedded put option and an embedded forward option. The put option was recognized at inception and the forward option will be recognized upon the issuance of a notice for the sale of the Company’s Common Stock. The fair value of the derivative liability related to the embedded put option was estimated at $460$0.5 thousandmillion at inception of the agreement on December 20, 2024, and at December 31, 2024. The $460$0.1 thousandmillion SEPA put option liability as of December 31, 2024 2025 is recognized as a current liability on the balance sheet. The estimated issuance date fair value is presented as a single line item within other income (expense) in the accompanying statements of operations under the caption Change in fair value of SEPA put option liability.

See Notes 5 and 98 to our audited consolidated financial statements included elsewhere in this Annual Report for further information concerning the SEPA and the assumptions we used in in determining fair values.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. If we were to subsequently elect instead to comply with these public company effective dates, such election would be irrevocable pursuant to the JOBS Act.

These factors raise substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our Common Stock, and it may be more difficult for us to obtain financing. If existing or potential collaborators decline to do business with us or potential investors decline to participate in any future financings due to such concerns, our ability to increase our cash position may be limited. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations. We have prepared our condensed consolidated financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. During the threesix months ended MarchJune 31,30, 2026, we have implemented measures to reduce operating expenses including delaying certain research and development project spend while prioritizing near term pipeline projects, limiting finance, legal and administrative costs, and pursuing options to limitdecreasing spend on office space. If we are unable to continue as a going concern, we will be forced to further delay, reduce, or discontinue our research and development programs or consider other various strategic alternatives and you could lose all or part of your investment in us.

Manufacturing cell therapy products is complex and subject to both human and systemic risks. Our third-party manufacturers and suppliers or we may encounter difficulties in production and sourcing and may be subject to variations and supply constraints of critical components. If we or any of our third-party manufacturers and suppliers encounter such difficulties, our ability to supply our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented.

The manufacture of biologic cell therapy product candidates, and products, if approved, is complex and requires significant expertise and capital investment, including developing advanced manufacturing techniques and process controls. Manufacturers of biologic products often encounter difficulties in production and sourcing, particularly in scaling up or out, validating the production process, and assuring high reliability of the manufacturing processes (including the absence of contamination), in light of variations and supply constraints of critical components. These problems include logistics and shipping, difficulties with production costs and yields, quality control, including consistency, stability, purity, and efficacy of the product, product testing, operator error, mechanical malfunctions, equipment failures, and availability of qualified personnel, as well as compliance with strictly enforced federal, state, and foreign regulations. For example, (i) timelines for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia were extended as we worked with our CDMO to resolve process issues with the manufacturing training runs and increase the number of aseptic process simulation runs needed to confirm sterility of the manufacturing process before we began the manufacture of CYWC628 for the clinical trial, and (ii) lowlower than expected yields from the manufacture of the first twothree batches of the CYWC628 drug product willhave required, and may require us to spend significant financial resources to manufacture additional batches of the CYWC628 drug product, as needed, in order to complete the DFU trial. Furthermore, if contaminants are discovered in our supply of our product candidates or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We cannot assure you that any stability, purity, and efficacy failures, deficiencies, or other issues relating to manufacturing our product candidates will not occur in the future.

Our failure, or the failure of our third-party manufacturers,manufacturers or suppliers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or voluntary recalls of product candidates, operating restrictions, and criminal prosecutions, any of which could significantly affect supplies of our product candidates. The facilities used by our contract manufacturers to manufacture our product candidates must be evaluated by the FDA. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with cGMPs. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, the EMA, or other comparable regulatory authorities, we may not be able to secure and/or maintain regulatory approval for our product candidates manufactured at these facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA finds deficiencies or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Contract manufacturers may face manufacturing or quality control problems causing drug substance production and shipment delays or a situation where the contractor may not be able to maintain compliance with the applicable cGMP requirements. Any failure to comply with cGMP requirements or other FDA, EMA and comparable foreign regulatory requirements could adversely affect our clinical research activities and our ability to develop our product candidates and market our products, if approved.

We have contracted with CDMOs for the production of our master cell banks and working cell banks for our fibroblast cell-based product candidates to enable clinical trials. If the CDMO is unable to produce our master cell banks, working cell banks and our fibroblast cell-based product candidates to enable clinical trials, we may encounter delays, additional costs, or technical failure of one or more of our product candidates. For example, (i) timelines for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia were extended as we worked with our CDMO to resolve process issues with the manufacturing training run and increase the number of aseptic process simulation runs needed to confirm sterility of the manufacturing process before we began the manufacture of CYWC628 for the clinical trial and (ii) lowlower than expected yields from the manufacture of the first twothree batches of the CYWC628 drug product willhave required, and may require us to spend significant financial resources to manufacture additional batches of the CYWC628 drug product, as needed, in order to complete the DFU trial.

As product candidates proceed through preclinical studies to late-stage clinical trials towards potential marketing approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, formulation, materials, and processes, are altered along the way in an effort to optimize processes and product characteristics. Such alterations can also occur due to changes in manufacturers. Such changes carry the risk that they will not achieve their intended objectives. Any such changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with product candidates produced using the modified manufacturing methods, materials, and processes. Such changes may also require additional testing, FDA notification or FDA approval. This could delay the completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials beyond those we currently anticipate, increase clinical trial costs, delay approval of our product candidates and jeopardize our ability to commercialize our product candidates if approved. In addition, we may be required to make significant changes to our upstream and downstream processes across our pipeline, which could delay the development of future product candidates. For example, (i) we encountered process issues with the manufacturing training run of CYWC628 and needed to increase the number of aseptic process simulation runs needed to confirm sterility of the manufacturing process before we began the manufacture of CYWC628 for the clinical trial, and (ii) lowlower than expected yields from the manufacture of the first twothree batches of the CYWC628 drug product willhave required, and may require us to spend significant financial resources to manufacture additional batches of the CYWC628 drug product, as needed, in order to complete the DFU trial. These issues have caused us to extend the timelines for the initiation and completion of our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia. If changes are needed to the manufacturing methods for CYWC628 as a result of these issues, the timing for the completion of our clinical trial in Australia may be further delayed.

We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing partners for compliance with cGMP regulations for manufacturing our cell therapy product candidates. Third-party manufacturers may be unable to comply with cGMP regulations or similar regulatory requirements outside the United States. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, the EMA, or other regulatory authorities, we will not be able to produce our product candidates. In addition, we do not have control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. For example, (i) we worked with our CDMO to resolve process issues with the manufacturing training runs of CYWC628 and increase the number of aseptic process simulation runs needed to confirm sterility of the manufacturing process before we began the manufacture of CYWC628 for our planned twelve-week Phase 1/2 clinical trial utilizing CYWC628 for treatment of diabetic foot ulcers in Australia, and (ii) lowlower than expected yields from the manufacture of the first twothree batches of the CYWC628 drug product willhave required, and may require us to spend significant financial resources to manufacture additional batches of the CYWC628 drug product, as needed, in order to complete the DFU trial. If these issues are not resolved, we will be unable to manufacture the required batches of CYWC628 to complete our clinical trial in a timely manner. If the FDA, the EMA, or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain marketing approval for or market our product candidates, if approved. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and harm our business and results of operations. Furthermore, the raw materials for our product candidates may be sourced, in some cases, from a single-source supplier. If we were to experience an unexpected loss of supply of any of our product candidates or any of our future product candidates for any reason, whether as a result of manufacturing, supply, or storage issues or otherwise, we could experience delays, disruptions, suspensions, or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials.

We currently rely on third-party manufacturers and suppliers to produce our product candidates. In the event that we or any of our third-party manufacturers or suppliers fail to comply with such requirements or to perform with certain requirements in relation to quality, timing, or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to enter into an agreement with another third party, which we may not be able to do on commercially reasonable terms, if at all. In particular, any replacement of our third-party manufacturers could require significant effort and expertise because there may be a limited number of qualified replacements. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to us or the third-party manufacturer. We may have difficulty transferring such skills or technology to another third party, and a feasible alternative may not exist. In addition, certain of our product candidates and our own proprietary methods have never been produced or implemented outside of our company. Therefore, we may experience delays in our development programs if we attempt to establish new third-party manufacturing arrangements for these product candidates or methods. These factors would increase our reliance on such manufacturers or require us to obtain a license from such manufacturers in order to have another third party manufacture our product candidates. If we are required to or voluntarily stop manufacturing our product candidates for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines and that the product produced is equivalent to that produced in our facility. The delays associated with the verification of a new manufacturer and equivalent product could negatively affect our ability to develop product candidates in a timely manner or within budget.

As a listed company on Nasdaq, we are required to meet certain financial, public float, bid price and liquidity standards on an ongoing basis to continue the listing of our common stock. If we fail to meet these continued listing requirements, our common stock may be subject to delisting, which could materially impact the liquidity of our common stock making it more challenging to buy and sell shares of our common stock. On April 1, 2025, the listing of our common stock was moved from the Nasdaq Global Market to the Nasdaq Capital Market. We requested this move to allow us to satisfy less stringent financial, liquidity, and market capitalization requirements to continue the listing of our common stock. For example, the market value requirement of the Nasdaq Capital Market is $35 million versus $50 million for the Nasdaq Global Market and the stockholders’ equity requirement for the Nasdaq Capital Market is $2.5 million versus $10 million for the Nasdaq Global Market. Following the transfer, weWe remain subject to the $1 minimum bid price requirement and continued listing requirements for the Nasdaq Capital Market, including the new market value of listed securities of $5 million requirement approved by the SEC on July 22, 2026 (which is not afforded a cure period to regain compliance), and no assurance can be given that we will be able to satisfy these requirements. If we fail to meet any of these requirements after the transfer,requirements, our securities may be delisted from Nasdaq.

We are a clinical-stage biotechnology company focused on developing and commercializing fibroblast-based therapies for patients suffering from chronic diseases with significant unmet medical needs, including wound healing, psoriasis, multiple sclerosis, degenerative disc disease, psoriasis, certain cancers, and potential human longevity applications including thymic involution reversal using a thymic organoid. Our most advanced product candidates are CYWC628, CYPS317, CYMS101 and CybroCell™.

We have completed our IND-enabling pre-clinical studies for the development of CYWC628 as a topically administered allogeneic fibroblast cell-based therapy for wound healing. Our pre-clinical studies focused on utilizing single cell fibroblasts, fibroblast spheroids, and fibroblast-derived materials to treat wounds in diabetic mice. We completed pre-clinical studies investigating (i) multiple administrations of CYWC628 spheroids on a chemically induced chronic wound NONcNZO10/LtJ and BKS.Cg-Dock7m +/+ LepRdb/J mouse model, (ii) dose titration to provide information on the proposed dose range of CYWC628, and (iii) acute and chronic toxicity. The results of our studies have shown statistically significant acceleration in the rate of wound closure, and statistically significant improvement in the quality of the healed wounds in comparison with both a marketed wound care product and control. BasedWe uponhave our results, we are progressinginitiated a twelve-week Phase 1/2 clinical trial in Australia for treatment of diabetic foot ulcers.

CYPS317 is our allogeneicallogeneic, intravenously administered fibroblast spheroid cell-based investigational therapeutic for the treatment of psoriasis. We have completed preliminary IND-enabling pre-clinical studies utilizing chronic and acute psoriasis mouse models to assess the potential use of intravenous administration of fibroblast spheroids for the treatment of psoriasis. We also completed IND-enabling animal model studies to determine the optimal efficacious dose range and the durability of treatment for mild to moderate, and moderate to severe psoriasis. On December 30, 2025, we filed a Phase 1/2 Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) seeking regulatory clearance to initiate clinical trials of CYPS317. We are in the process of updating our submission to the FDA based on feedback received.

We are developing CYMS101 as an intravenously administered allogeneic fibroblast single cell, and fibroblast spheroid, cell-based therapy to treat multiple sclerosis ("MS").or MS. After completing animal studies using CYMS101, we received approval from a U.S.-based IRB to conduct clinical investigations in Mexico using the fibroblast cell composition for patients with MS, and completed a Phase 1 study. The study was conducted in five participants. The primary objective of the study was to assess safety, and the secondary objective was to assess efficacy. The primary objective was achieved as we saw no adverse events related to the treatment - no adverse events during intravenous injection of the tolerogenic fibroblasts, no short or long-impact in complete blood count tests during the 16-week monitoring period, and no short or long impact in electrocardiogram results during the 16-week monitoring period. In addition, the study assessed clinical activity using a standard set of neurological assessments routinely used to assess MS. We are currently conducting further research to more fully characterize the mode of action of fibroblasts in oligodendrocyte expansion. We plan to file an IND application for a Phase 1/2 clinical trial relating to MS in the United States in 2026 after we receive FDA clearance for our IND relating to CYPS317. We expect to seek a strategic partner to collaborate with us on the development of CYMS101 either before initiating the Phase 1/2 study, or after its completion, if successful, and prior to commencing a potential Phase 3 clinical trial.

CybroCell™ is an investigational intradiscal administered allogeneic fibroblast cell-based therapy in development for degenerative disc disease and is being designed as an alternative method for repairing the cartilage of the intervertebral disc (or any other articular cartilage). We have completed two animal studies in rabbit models. The results from the studies were positive and supported our IND application to run a “first in human” trial. We received IND clearance from the FDA in 2018, conditional upon approval of our master cell bank, to evaluate this candidate in a planned clinical trial. We successfully carried out experiments that demonstrated the ability to use the CYWC628 spheroid master cell bank for the manufacturing of a modified CybroCell™ drug product for the treatment of degenerative disc disease. We also supported animal trials confirming that the therapeutic effects of the fibroblast-derived chondrocyte spheroids derived from the CYWC628 master cell bank are significantly better to those of single-cell fibroblasts, which supported our IND clearance with the FDA for the planned Phase I clinical trial for degenerative disc disease. Based on these results, we plan to work to amend the IND clearance with the FDA to replace single-cell fibroblasts, CybroCell™, with fibroblast-derived chondrocyte spheroids derived from the CYWC628 master cell bank. A timeline for the trial will be determined in connection with discussions with the FDA.

The manufacturing of our master cell bank and working cell bank for CYWC628 is now complete and both are certified as released by our CDMO. This CDMO willhas also manufacturemanufactured CYWC628 for use in our twelve-week Phase 1/2 clinical trial for treatment of diabetic foot ulcers that we willare conductconducting in Australia. If any of our product candidates receive marketing approval, we expect to evaluate the feasibility of building our own cGMP manufacturing facility or continuing to outsource manufacturing to a CDMO for clinical testing and commercial supply. We expect to rely on third parties for our cell therapy manufacturing process for the foreseeable future.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $1.5$3.5 million. Since our inception, we have incurred significant operating losses. We incurred net losses of $5.0$9.1 million and $5.0$9.6 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $59.2$63.3 million.

We have manufactured two batches of the CYWC628 drug product in accordance with FDA’s Good Manufacturing Practices (CGMP). The batches will be released after they successfully pass all required safety and quality testing. We expectplan to begin manufacturing the third batch of CYWC628 in May 2026. We also completed site onboarding as outlined in the protocol for the DFU clinical trial in Australia and will activate additional sites if needed to support recruitment objectives. Based upon our progress to date, we expect to begin screening, enrolling and dosing patients in the second quarter of 2026. We will report six-week interim safety and primary efficacy data of the clinical trial once 28 patients from each of the three arms of the study have completed at least 6 weeks of treatment, which we expect will occur in the thirdsecond quarterhalf of 2026. We willplan to report the final primary safety and efficacy data of the study once all the continuously enrolled patients that remain in all arms of the study have completed at least 12 weeks of treatment, which we expect will occur in the fourth quarter of 2026. Secondary outcome results of the study, which include monitoring for wound recurrence at the same site, will be reported once all the patients in each arm of the study that remain in the study have been assessed for a 6-month follow-up. For the second period of the clinical trial, patients enrolled in the standard of care arm of the study whose wounds did not heal, and still meet the inclusion/exclusion criteria of the study, will be provided the option of receiving the dose of CYWC628 with the highest efficacy from the first part of the study for up to 12 weeks to generate additional secondary outcome results. We expect to release the final report of the study, which will include all the primary and secondary outcomes outlined in the clinical trial, in the third quarter of 2027. These timelines have been extendedextended, and may be further extended, as we resolve issues that arisehave arisen and may continue to develop during the manufacturing and development process. Please see “Risk Factors – Risks Related to Manufacturing” and “– Risks Related to Development, Regulatory Approval and Commercialization” in our Annual Report and “Item 1A. Risk Factors – Risks Related to Manufacturing” and “– Risks Related to Development, Regulatory Approval and Commercialization” in this Quarterly Report.

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

The following tables set forth our results of operations for the three months ended MarchJune 31,30, 2026 and 2025.

Research and development expenses were $3.0$1.7 million and $1.8$2.0 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease of $1.2$0.4 million was primarily due to:

decreased contract researchCRO costs of $0.3 million as clinical validation changed to manufacturing, and certain costs were capitalized to research and development supplies; and decreased supplies expenses of $0.3$0.1 million Research and development expenses are not tracked by product candidate.

General, administrative and other expenses were $2.1$2.4 million and $2.8$2.4 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease of $0.6$0.1 million was primarily due to:

decreased personnel expenses of $0.2 million which consisted of severance and vacation accrual costs in the prior year decreasedincreased professional fees of $0.4$0.1 million such as legal and accountingpatent filing fees decreased travelfacilities expenses of $0.1 million increased costs associated with maintaining our Nasdaq listing costs of $0.1 million TheThere was no change in the fair value of the SEPA put option liability during the three months ended June 30, 2026. There was a $0.1 million gain in the change in the fair value of $0.1the millionSEPA put option liability during the three months ended MarchJune 31,30, 20262025 and resultedresulting primarily from changes in stock price and other assumptions used in the valuation model.

We received advances in the form of convertible notes pursuant to the SEPA in December 2024 and June 2025 and elected to account for the short-term convertible notes under the fair value option. Under the fair value option, all costs associated with raising the funds were expensed immediately. The convertible notes were fully paid off in November 2025.

There is $2,000$0.1 million of other expense for the three months ended MarchJune 31,30, 2026 primarily for foreignthe currencyloss exchangeon ratethe lease termination and none$0.6 inmillion otherof incomenon-cash original discount on convertible debt for the three months ended MarchJune 31,30, 2025.

Interest income was approximately $20,000$15,000 and $0.1 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Interest income is comprised of interest income and unrealized gain/losses on cash equivalents.

Interest expense was approximately $4,000$7,000 and $0 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Through MarchJune 31,30, 2026, we have financed our operations primarily with various borrowings and stock offerings. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $1.5$3.5 million and an accumulated deficit of $59.2$63.3 million.

The following table sets forth a summary of our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025.

Net cash used in operating activities was $4.4$7.7 million and $5.3$9.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, and consisted primarily of net losses of $5.0$9.1 million and $5.0$9.6 million, respectively. Noncash expenses consisting of stock-based compensation expense of $0.7$1.4 million, and amortization of operating lease right-of-use asset of $0.2$0.3 million partially offset the net loss, while aan decreaseincrease in prepaid expenses of $0.4$0.9 million, aan decreaseincrease in accounts payable and accrued expenses of $0.1$0.9 million, and a decrease in operating lease liability of $0.2 million added to the cash used in operations in the threesix months ended MarchJune 31,30, 2026. In addition, we issued a note receivable of $0.4 million. For the threesix months ended MarchJune 31,30, 2025, noncash expenses consisting of change in fair value of convertible debt of $0.3 million, change in fair value of SEPA put option liability of $0.1 million, net loss on issuance of Common Stock in exchange for convertible debt of $0.2 million, stock-based compensation expense of $0.6 million, and amortization of operating lease right-of-use asset of $0.1 million partially offset the net loss, while an increase in prepaid expenses of $0.4 million, a decrease in accounts payable and accrued expenses of $1.0 million, and a decrease in operating lease liability of $0.1 million added to the cash used in operations.

Net cash used in investing activities was $0.0 million and approximately $43,000$0.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, and consisted primarily of laboratory equipment purchases.

Net cash provided by financing activities was $1.0$6.3 million and $0.0$4.4 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. During the threesix months ended MarchJune 31,30, 2026, the Companywe issued stock fromunder itsthe SEPA for $0.8 million and stock from our ATM of $0.3 million. We also sold stock in a registered offering for net proceeds of $2.6 million and a private placement for net proceeds of $2.6 million. In addition, the companywe received proceeds from a loan for D&O costs of $0.3 million and repaid $0.1$0.2 million.

We have incurred operating losses since our formation and expect such losses to continue in the future as we build infrastructure, develop intellectual property and conduct research and development activities. Moreover, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company. We do not have any products approved for sale, and we have never generated any revenue from product sales. We have primarily relied on a combination of angel investors, private debt placements, convertible debt issuances, and sales of equity to fund our operations. As of MarchJune 31,30, 2026, we had an accumulated deficit of $59.2$63.3 million and cash and cash equivalents of $1.5$3.5 million. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current or future product candidates and we do not know when, or if, that will occur. Unless and until such time that revenue and net income are generated, we will need to continue to raise additional capital. These factors raise substantial doubt about our ability to continue as a going concern for one year from the issuance of the financial statements included in this Quarterly Report. The financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Our ability to continue as a going concern is dependent on our ability to raise additional capital. We believe we will be able to obtain additional capital through equity financings or other arrangements to fund operations; however, there can be no assurance that such additional financing, if available, can be obtained on acceptable terms. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our preclinical studies, clinical trials, research and development programs or commercialization efforts. During the threesix months ended MarchJune 31,30, 2026, we have implemented measures to reduce operating expenses including delaying certain research and development project spend while prioritizing near term pipeline projects, limiting finance, legal and administrative costs, and pursuing options to limitdecreasing spend on office space. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, and other licensing arrangements. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.