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

We are developing a therapeutic and diagnostic product candidates,candidate, but to date have no approved products and until 2025 have concentrated substantially all of our resources in recent years on research and development efforts on experimental methods for the treatment of Alzheimer’s disease. As we advance development of our TSC-related epilepsy product candidate and explore expansion into other therapeutic indications, we expect that we will continue to expend substantial resources on research and development. All of the product candidates that we seek to develop are subject to significant development risk, as the development of new pharmaceutical treatments is inherently risky.

Developing and, if approved, commercializing a novel treatment for a central nervous system disorder, such as Alzheimer’s disease or TSC-related epilepsy, subjects us to many challenges, including obtaining regulatory approval from FDA and other regulatory authorities.

Our lead drug candidate, simufilam, is based ontargets a newscaffolding approachprotein called filamin A. In light of stabilizing—butexisting notresearch, removing—we believe that filamin A is a criticalpromising proteintarget infor thedrug brain.development Wewith respect to TSC-related epilepsy. However, we cannot be certain that our novel technologies will yield clinical results that support the approval of a safe and effective therapeutic product or, if approvable, that such a product will be marketable. In addition, because FDA has limited comparators to evaluate our lead drug candidate, we could experience a longer than expected regulatory review process and increased development costs.

Identifying and qualifying patients to participate in clinical studies is critical to the success of the relevant product candidate. The timing of clinical studies depends, in part, on the speed of recruitment of patients to participate in testing such product candidates as well as completion of required follow-up periods. WeFor any study that we initiate, we may not be able to identify, recruit and enroll a sufficient number of patients or patients with required or desired characteristics to achieve the objectives of the study. If patients are unable or unwilling to participate in such studies, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our technology, failure to meet study endpoints or objectives or termination of the clinical studies altogether.

Furthermore, our efforts to build relationships with patient communities may not succeed, which could result in delays in patient enrollment in our clinical trials. In addition, any negative results wein may report inprevious clinical trials of our drug candidate may make it difficult or impossible to recruit and retain patients in other clinical trials of that same drug candidate. For example, our enrollment efforts for future clinical trials, regardless of indication, may face headwinds as a result of the failure of our RETHINK-ALZ and REFOCUS-ALZ clinical trial to achieve itstheir primary endpoints.

ToWe theface extentparticular thatchallenges we pursuepursuing an indication for simufilam for TSC-related epilepsy, we may face particular challenges.epilepsy. Because TSC is a rare neurological disorder, there are limited patient pools from which to draw in order to complete clinical trials in a timely and cost-effective manner. Identifying and qualifying patients to participate in our clinical trials would be critical to our success in pursuing an indication in TSC for simufilam. The number of patients suffering from TSC is smallapproximately 45,000 people in the United States and has not been established with precision. If the actual number of patients with TSC is smaller than we anticipate, we may encounter difficulties in enrolling patients in our clinical trials, thereby delaying or preventing development and approval of a drug candidate. Even once enrolled we may be unable to retain a sufficient number of patients to complete trials for TSC-related epilepsy.

Our business is substantially dependent on our ability to successfully complete clinical development and obtain regulatory approval for simufilam, which may never occur. InUntil recent years,2025, we have invested a significant portion of our efforts and financial resources in the development of simufilam and, to a much lesser extent, SavaDx, for the treatment and detection of Alzheimer’s disease, respectively.disease. We alsoare currently subject to a full clinical hold. If we are successful in our efforts to have the clinical hold lifted, we intend to conduct exploratorya preclinicalproof-of-concept studiesclinical study to better understand simufilam’s potential as a treatment for TSC-related seizures.epilepsy.

An unfavorable outcome in one or more of the clinical trials that we conduct would be a major setback for our product candidates and for us and may require us to delay, reduce or re-define the scope of, or eliminate one or more product candidate development programs, any of which could have a material adverse effect on our business, financial condition and prospects. For example, on November 25, 2024, we announced that the topline results from our Phase 3 RETHINK-ALZ study of simufilam in Alzheimer’s disease did not meet each of the pre-specified co-primary, secondary and exploratory biomarker endpoints. Following the failure of REITHINK-ALZ, we discontinued our Phase 3 REFOCUS-ALZ study as well as all of our open-label extension studies in Alzheimer’s disease. Following the release of the topline REFOCUS-ALZ results, we intend to evaluate the results and determine the next steps for the future advancement, if any, of its Alzheimer’s program.

We have a limited operating history in our business targeting Alzheimer’s disease and TSC-related epilepsy and no history of product approvals for commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.

We are a clinical-stage biopharmaceutical company with a limited operating historyhistory. in ourOur business initially targetingtargeted Alzheimer’s disease through mid-2025 and nowcurrently evaluatingtargets TSC-related epilepsy as a target.epilepsy. Since we commenced operations in 1998, we have had no product candidates approved for commercial sale and have not generated any revenue from product sales. Drug development is a highly uncertain undertaking and involves a substantial degree of risk. To date, we have not completed a successful pivotal Phase 3 clinical study in Alzheimer’s disease or TSC-related epilepsy, obtained marketing approval for any product candidates,candidates or conducted sales and marketing activities necessary for successful product commercialization. Our long operating history as a company without product revenue makes any assessment of our future success and viability subject to significant uncertainty.

To date, we have invested substantial effort and financial resources to identify, procure intellectual property for, and develop our programs in neurodegeneration and other central nervous system disorders, including conducting preclinical and clinical studies for our product candidates,candidate, simufilam and SavaDx,simufilam, and providing general and administrative support for these operations. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our product candidates, and we may fail to do so for many reasons, including the following:

We may not be successful in our efforts to further develop our product candidates. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates. SavaDx is in the early stages of development. Simufilam, our lead product candidate, will require successful completion of a Phase 3 program, management of preclinical, clinical, and manufacturing activities, regulatory approval, adequate manufacturing supply, a commercial organization, and significant marketing efforts before we generate any revenue from product sales, if at all.

Results of any of our preclinical studies or Phase 1 or Phase 2 clinical trials with simufilam are not predictive of the future results of any other trial, including any later-stage Phase 3 clinical trials. Notwithstanding promising results in earlier stage trials, our firsttwo Phase 3 trialtrials in Alzheimer’s disease did not meet each of the pre-specified co-primary, secondary and exploratory biomarker endpoints. Simufilam may fail to show the desired safety and efficacy in additional Phase 3 clinical trials despite having progressed successfully through preclinical studies and initial clinical trials in the applicable indication. Many biopharmaceutical companies have suffered significant setbacks in Phase 3 clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. We cannot be certain that our product candidates under development will not continue to face similar setbacks.

In addition, preliminary conclusions based on data from analyses of Phase 1 and Phase 2 clinical studies and open-label results may not be reproduced when implemented in large, well-controlled, randomized clinical trials. Particular caution should be exercised when interpreting preliminary data, data relating to a small number of patients and data from open-label uncontrolled studies, which are generally not capable of providing interpretable evidence of efficacy. Phase 1 studies are designed to assess the initial safety characteristics of simufilamsimufilam. and suchSuch studies are not designed to, and do not, evaluate safety, tolerability and efficacy of simufilam in patients. Similarly, Phase 2 clinical studies with simufilam that we conduct are designed to assess the safety characteristics of simufilam in patients. Such Phase 2 programs are not designed to, and do not, evaluate large-scale or long-term safety, tolerability and efficacy of simufilam in patients. There can be no assurance that future large, well-controlled, multi-dose studies will demonstrate the safety, tolerability or efficacy of simufilam to treat patients with any indication, including Alzheimer’s disease or TSC-related epilepsy.

Results observed in preclinical studies and early-stageearly stage clinical trials for simufilam are not regulatorysufficient evidence of drug safety or efficacy.efficacy for purposes of regulatory approval.

Data results from any preclinical and non-Phaseearly 3stage studies that we conduct do not constitute, and should not be interpreted as, regulatorysufficient evidence of safety or efficacy for simufilam to obtain regulatory approval in the applicable indication, including Alzheimer’s disease or TSC-related epilepsy. Rigorous evidence for drug safety and efficacy is derived only from one or more large, randomized, placebo-controlled studies. The size and open-label design of portions of our non-Phaseearly 3stage studies may introduce clinical or statistical bias or may generate results that may not fully distinguish between drug effects and random variation. Different methods of statistical analysis on clinical data from the same study may lead to objectively different numerical results. These and other statistical and clinical features of our non-Phaseearly 3stage studies add complexity or limitations to the scope of data interpretation.

Clinical testing is expensive, time consuming, and subject to uncertainty. We cannot guarantee that any clinical studies will be conducted as planned, enroll patients as planned or be completed on schedule, if at all. As demonstrated by the clinical hold issued by FDA for our planned proof of concept trial in TSC-related epilepsy, regulatory action can delay a clinical study’s initiation and/or completion. Moreover, even after our studies begin, safety or other issues may arise that could suspend or terminate such clinical studies. A failure of one or more clinical studies can occur at any stage of testing, and our ongoing or future clinical studies may not be successful. Events that may prevent successful or timely initiation or completion of clinical studies include:

All of theOur product candidates in our pipeline are still in development. Such product candidates will take several years to develop and must undergo extensive clinical and scientific validations. Even if we are successful in developing any of our product candidates through clinical and scientific validation, we may not be able to develop a drug or a diagnostic that:

We currently do not have nothe in-house capabilities to manufacture or commercialize our product candidates, and we rely on a third-party commercial drug manufacturersmanufacturing organization for supplies of simufilam. If we are unable to develop our own manufacturing, sales, marketing and distribution capabilities, or if we are not successful in contracting with third parties for these services on favorable terms, or at all, our product revenues could be adversely impacted.

We currently do not have nothe sales, marketing or distribution capabilities.capabilities necessary to support a commercial program. We have not established commercial strategies regarding any of our product candidates. In order to commercialize our products, if any are approved by FDA, we will either have to develop such capabilities internally or collaborate with third parties who can perform these services for us.

We substantially rely and expect to continue to rely on third parties, such as contract research organizations (CROs),CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct some aspects of our research and preclinical testing and our clinical studies. For example, Pentara Corporation, an independent consulting firm that specializes in complex statistical analysis of clinical trials, has conducted statistical analysis relating to cognition endpoints in our clinical studies. Any of these third parties may terminate their engagements with us or be unable to fulfill their contractual obligations. If we need to enter into alternative arrangements, it will delay our product development activities.

If our third-party vendors do not successfully carry out their contractual duties, meet expected deadlines, or conduct studies in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for any product candidates we may develop and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates. For example, one of our vendors in the past failed to fully comply with certain Good Laboratory Practice (GLP) norms in its research facility, which required us to repeat a lab study at a different research site.

OurUntil 2025, our drug development strategy has been focused on clinically testing our product candidates in Alzheimer’s disease, our primary indication.disease. We mayare expandnow expanding our research efforts outside of this primary indication and into other areas of clinical medicine based on a variety of factors.factors, Forwith example,an initial focus on TSC-related epilepsy. We are currently subject to a full clinical hold. If we planare successful in our efforts to have the clinical hold lifted, we intend to conduct exploratorya preclinicalproof-of-concept studiesclinical in collaboration with the TSCAstudy to better understand simufilam’s potential as a treatment for seizuresTSC-related in TSC.epilepsy. Conducting clinical studies for additional indications for our product candidates will require substantial technical, financial and human resources and is prone to the inherent risks of failure in drug development. We cannot provide any assurance that we will be successful in our effort to expand our technology or our product candidates in additional indications.

The results of our preclinical studies with our product candidates may not be predictive of the results of early-stage or later-stage clinical studies, and results of early clinical studies of our product candidates may not be predictive of the results of later-stage clinical studies. The results of clinical studies in one set of patients or disease indications may not be predictive of those obtained in another. In some instances, there can be significant variability in safety or efficacy results between different clinical studies of the same product candidate due to numerous factors, including changes in study procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen, and other clinical study protocols and the rate of dropout among clinical study participants. Product candidates in later stages of clinical studies may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical studies. Most new product candidates for central nervous system disorders that begin clinical studies are never approved by regulatory authorities for commercialization.

Several pharmaceutical and biotechnology companies are currently pursuing the development of products for the treatment of central nervous system disorders, including Alzheimer’s disease and TSC-related epilepsy. Many of these current or potential competitors, either alone or with their strategic partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical studies, obtaining regulatory approvals, and marketing approved products than we do.

We are currently managing inquiries from U.S. government agencies, as well as civil claims under federal and state laws, relating to and/or arising out of research and development of our product candidates, including grant applications, securities disclosures and other aspects of our business. For additional information regarding legal proceedings, see "“Notes to Consolidated Financial Statements—Contingencies"”. New claims or inquiries may arise in the future.

In response to governmentsuch documentlegal requests and other claims asserted against us,proceedings, we have established a comprehensive document retention policy that strictly governs how we handle, store and protect our documents and data. Failure to comply with our document retention policy would expose us to risk of enforcement actions and penalties under applicable laws.

Legal proceedings are inherently unpredictable, and large judgments or penalties sometimes occur. As a consequence, we may in the future incur judgments or penalties that could involve large cash payments, including the potential repayment of amounts allegedly obtained improperly and other penalties, including enhanced damages. For example, the Company paid a civil monetary penalty of $40 million in November 2024 as part of a settlement with the SEC resolving the SEC investigation of the Company’s disclosures regarding its Phase 2b Study and related matters. In addition, the Company has recently agreed to pay $31.25 million to settle certain securities litigation. While we maintain insurance coverage for certain types of claims, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.

Activities subject to laws also involve the improper use of information obtained in the course of patient recruitment for clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation. Further, itIt is not always possible to identify and deter misconduct by employees and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including reputational damage and the imposition of significant fines or other sanctions.

In the U.S., the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the “Medicare Modernization Act”) established the Medicare Part D program and provided authority for limiting the number of drugs that will be covered in any therapeutic class thereunder. The Medicare Modernization Act, including its cost reduction initiatives, could limit the coverage and reimbursement rate that we receive for any of our approved products. Private payors may follow Medicare coverage policies and payment limitations in setting their own reimbursement rates resulting in similar limits in payments from private payors.

We solelyown ownor exclusively control a portfolio of issued patents and pending patent applications directed to simufilam and related diagnostic assets. These intellectual property rights include patents covering the composition of matter of our drugfor simufilam in the United States, Europe, Australia, IsraelIsrael, and Canada.Canada, Weas solelywell ownas patents covering certain methods of use of our drug simufilam in the United States, EuropeEurope, and Japan. We solelyalso own pending patent applications that covercovering diagnostic assets forrelated to simufilam in the United States, Europe, Japan, China, Canada, and Australia.Australia, Weas solelywell ownas additional pending patent applications that covercovering other diagnostic assets in the United States, Europe, Japan, ChinaChina, and Canada. We have no obligation to pay any royalty to any third party in connection with any of the foregoing described patents and patent applications. In the United States, our patent protection with respect to simufilam, its solid forms, and uses of simufilam for Alzheimer’s disease and other neurodegenerative diseases includes nine issued United States patents, with terms expiring on dates ranging from 2029 to 2040, subject to any patent extensions that may be available for such patents. Corresponding foreign filings have been made for each of the Unites States filings.

Exploratory Preclinical Studies with Simufilam inAbout Tuberous Sclerosis Complex (TSC)

Preclinical research conducted at Yale indicateindicates that simufilam (then PTI-125) may be effective in reducing TSC-related seizure activity. A study conducted by Angelique Bordey, PhD, at Yale and published in the peer-reviewed journal Neuron in 2014 found overexpression of FLNAfilamin A and neuronal abnormalities in brain tissue from TSC patients.patients, as well as in brain tissue from mice that had been genetically altered to model TSC. The study further found that genetically normalizing filamin A expression in the mice prevented neuronal abnormalities. The paper, MEK-ERK1/2-Dependent FLNA Overexpression Promotes Abnormal Dendritic Patterning in Tuberous Sclerosis Independent of mTOR (Neuron. 2014 Oct 1. PMID: 25277454), was co-authored by Zhang L, Bartley CM, Gong X, Hsieh LS, Lin TV and Feliciano DM. A later study conducted by Dr. Bordey and published in the peer-reviewed journal Science Translational Medicine in 2020 likewise found elevated FLNA in brains of a related mouse model. That study further demonstrated that simufilam treatment in the mouse model reduced the number of seizing mice and reduced seizure frequency. This 2020 paper, Filamin A Inhibition Reduces Seizure Activity in a Mouse Model of Focal Cortical Malformations (Sci Transl Med. 2020 Feb 19. PMID: 32076941), was co-authored by Zhang L, Huang T, Teaw S, Nguyen LH, Hsieh LS, Gong X, and Lindsay Burns, a former employee of the Company. While these data are promising, understanding their true significance requires additional exploration.

On February 26, 2025, we entered into the License Agreement with Yale pursuant to which we were granted exclusive worldwide rights, with rights to sublicense, to Yale’s interest in certain patent and other intellectual property rights that could be useful or necessary to the development and commercialization of simufilam for the treatment of TSC-related epilepsy and other potential indications. Pursuant to the License Agreement, we have agreed to use reasonable commercial efforts to implement a plan that it has designed for such development and commercialization.

In exchange for the rights acquired pursuant to the License Agreement, we agreed to paypaid Yale (i) a nominal upfront license fee, and agreed to pay (ii) payments upon the achievement of specified clinical, regulatory and commercial milestones, totaling up to $4.5 million and (iii) upon transfer to a third party of a regulatory priority review voucher, if issued, a low-to-mid double digit percentage of any consideration received for such transfer. We also agreed to pay Yale tiered royalties, ranging from a low- to mid- single digit percentage, on aggregate net sales of licensed products, subject to tiered minimum annual royalty payments ranging from the low- to mid- hundreds of thousands of dollars.

We focus substantially all of our research and development efforts in the development of simufilam. Research and development expenses for our investigational diagnostic product candidate, SavaDx, represented less than 1% of total research and development expenses for the periods presented. The SavaDx program was discontinued in mid-2025. The following table summarizes expenses by category for research and development efforts (in thousands):

Estimating the dates of completion of clinical development, and the costs to complete development, of our product candidates would be highly speculative and subjective. Pharmaceutical products take a significant amount of time to research, develop and commercialize. The clinical study portion of the development of a new drug alone usually spans several years. We expect our research and development expensesexpense to decrease significantly in 2025future periods as athe resultphase out of decreased spending for our Phase 3 program in Alzheimer's disease, as both Phase 3 studies have either been completed or discontinued. Our open label studies inthe Alzheimer's disease havedevelopment alsoprogram beenwas discontinued. The decreasecompleted in clinicalQ2 2025, and expenses for the TSC-related epilepsy program costs isare expected to be partiallysignificantly offsetlower by higher stock-based compensation expense. We expectcompared to reassess our future research and development plans based on our review of data we receive from our current research and development activities. In particular, following our release of the topline REFOCUS-ALZ results, we intend to evaluate the results and determine the next stepsthose for the futureAlzheimer's advancement, if any, of our Alzheimer’sdisease program. The cost and pace of our future research and development activities are linked and subject to change.

General and administrative expenses consist of personnel costs, allocated expenses and other expenses for outside professional services, including legal, human resources, audit and accounting services. Personnel costs consist of salaries, bonus, benefits and stock-based compensation. Allocated expenses consist primarily of existing facility costs. We incur insurance, audit, investor relations, SOX compliancerelations and other administrative and professional services expenses associated with operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and Nasdaq. General and administrative expense increaseddecreased to $68.8 million in 2025 from $71.8 million in 2024 from $16.5 million in 2023.2024. The 334%4% increasedecrease was due primarily to completiona $40.0 million SEC-related loss contingency recorded in 2024 being partially offset by $9.9 million in insurance recoveries. This compared to a $31.3 million securities litigation loss contingency and $4 million of theother $40litigation millioncontingencies settlementrecorded within the2025, SECfor aswhich wellthere aswere no insurance recoveries. The change also included a $7.3$2.6 million increase in stock-based compensation expense due to new grantawards awardsgranted in late 20232024. andThese 2024,increases increasedwere compensationpartially offset by a decrease in severance costs andrecorded higherin legalthe relatedprior expenses.year period which were not repeated in 2025.

Interest income was $4.6 million in 2025 compared to $8.5 million in 2024 compared to $7.8 million in 2023.2024. The increase46% in interest incomedecrease was due primarily to higher cash balances partially offset by lower interest rates and cash balances in 20242025 compared to the prior year.2024.

We expect interest income to decrease significantly in 20252026 compared to 20242025 asdue weto uselower cash balances inand operations.interest rates.

Other income,income (loss), net

We record the activities related to leasing office space to third parties in buildings we own as other income,income (loss), net, as leasing is not core to the Company’s operations. Other income,income (loss), net, was $(0.2) million during 2025 compared to $0.4 million during 2024 compared to $0.9 million during 2023.2024. We expect to continue to record a modest net loss on leasing activities in 20252026 asdue to higher vacancy rates are expectedcompared to significantlyhistoric lower rental income.occupancy.

On April 15, 2024, the Company announced that all outstanding warrants were to be redeemed on May 7, 2024 (the “Redemption Date”). The redemption price was equal to 1/10 of $0.01 per warrant. The warrants were exercisable at any time starting on January 3, 2024 until the business day prior to the Redemption Date.

From January 3, 2024 through the Redemption Date, a total of approximately 3.8 million warrants were exercised. Gross proceeds infor 2024 from the warrant distribution totaled approximately $126.3 million from the issuance of approximately 5.7 million common shares at $22.00 per share. Total net proceeds of the warrant distribution were approximately $123.6 million after deducting exercise expenses and commissions.

On MayNovember 1,12, 2023,2025, we entered into an at-the-market offering program (ATM) to sell, from time to time, shares of our common stock having an aggregate offering price of up to $200$50 million in common stock in transactions pursuant to a shelf registration statement that was fileddeclared witheffective by the U.S. Securities and Exchange Commission (SEC) on MayDecember 1,5, 2023 and became effective immediately upon filing.2025. We are obligated to pay a commission of up to 3%3.0% of the gross proceeds from the sale of shares of common stock underin the ATM.offering. We are not obligated to sell any shares in the offering. As of the filing of this Annual Report on Form 10-K, the Company is no longer a Well-Known Seasoned Issuer, as defined by the SEC. Thus, the Company is not eligible to sell securities under the ATM under its existing “automatic” shelf registration statement on Form S-3 unless and until it files a new Form S-3 that is declared effective by the SEC.

There were no common stock sales under the ATM during the yearsyear ended December 31, 2024 and 2023.2025.

Except for intellectual property licensed from third parties, including pursuant to the License Agreement with Yale, we do not owe royalties or other payments to third parties with respect to our owned patents and patent applications covering simufilam. For more information, please also refer to the section entitled “––License Agreement with Yale.”

Dr. Bordey joined the Company as Senior Vice President, Neuroscience, onin May 1, 2025, while continuing her tenured academic position at Yale School of Medicine on a part timepart-time basis. In connection with plans to initiate a clinical program in TSC-related epilepsy, the Company appointed Dr. Joseph Hulihan as Chief Medical Officer in August 2025. Dr. Hulihan, who brings over 25 years of industry experience, devotes approximately half of his professional time to the Company and will advise on the clinical development of simufilam.

Based on the results of these studies, the Company filed an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) in order to initiate a proof-of-concept clinical trial for simufilam in TSC-related epilepsy. On December 15, 2025, the Company received a formal letter from FDA confirming that the proposed clinical trial is on full clinical hold subject to the Company providing FDA with additional information, including additional pre-clinical data, and modifying the protocol design. The Company is working expeditiously to address the items identified in the letter. The timing for initiation of a clinical trial will depend on the Company’s ability to provide the requested information to FDA and on satisfactory completion of FDA’s review.

In exchange for the rights acquired pursuant to the License Agreement, we paid Yale (i) a nominal upfront license fee, and agreed to pay (ii) payments upon the achievement of specified clinical, regulatory and commercial milestones, totaling up to $4.5 million and (iii) upon transfer to a third party of a regulatory priority review voucher, if issued, a low-to-midlow- to mid- double digit percentage of any consideration received for such transfer. We also agreed to pay Yale tiered royalties, ranging from a low- to mid- single digit percentage, on aggregate net sales of licensed products, subject to tiered minimum annual royalty payments ranging from the low- to mid- hundreds of thousands of dollars.

Between 2021 and 2025 we enrolled approximately 1,900 patients—including 1,153 patients treated with simufilam during the blinded phase—in two randomized placebo-controlled Phase 3 clinical trials of oral simufilam in mild-to-moderate Alzheimer’s disease. The 800 patients enrolled in the first Phase 3 study, called RETHINK-ALZ, received either 100 mg simufilam tablets or placebo twice daily for 52 weeks (NCT04994483). The 1,125 patients enrolled in the second Phase 3 study, called REFOCUS-ALZ, received either 100 mg and 50 mg simufilam tablets or placebo twice daily for 76 weeks (NCT05026177). Patients who completed either of these Phase 3 studies or the 24-month Phase 2 safety study were eligible to enter a 12-month Open Label Extension study in which all patients received simufilam.

Throughout both of these Phase 3 trials and the subsequent open-label extension studystudy, simufilam demonstrated a favorable safety profile. The drug’s adverse event profile was comparable to placebo, and no drug-related serious adverse events were observed.

We have yet to generate any revenues from product sales. We have an accumulated deficit of $506.4$515.0 million at MarchJune 31,30, 2026. These losses have resulted principally from costs incurred in connection with research and development activities, salaries and other personnel-related costs, legal related costs and general corporate expenses. Research and development activities include costs of clinical and preclinical trials as well as clinical supplies associated with our product candidates. Salaries and other personnel-related costs include stock-based compensation associated with stock options and other equity awards granted to employees and non-employees. Our operating results may fluctuate substantially from period to period as a result of enrollment rates of clinical trials for our product candidates, timing of preclinical activities and our need for clinical supplies.

Product revenue will depend on our ability to receive regulatory approvals for, and successfully market, our product candidates. If our development efforts result in regulatory approval and successful commercialization of our product candidates, we expect to generate revenue from direct sales of our drugs and/or, if we license our drugs to future collaborators, from the receipt of license fees and royalties from sales of licensed products. We conduct our research and development programs through a combination of internal and collaborative programs. We rely on arrangements with universities, certain collaborators, contract development and manufacturing organizations (“CDMOs”),organizations, clinical research organizations ("CROs") and clinical research sites for a significant portion of our product development efforts.

There have been no material changes to our critical accounting estimates during the threesix months ended MarchJune 31,30, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 12, 2026.

Results of Operations – Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Research and development expenses were $4.5$3.3 million and $13.7$5.1 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. This 67%35% decrease was due primarily to the phase out of the Alzheimer's disease development program, which was completed in the second quarter of 2025.

General and administrative expenses were $6.6$6.1 million and $10.9$40.3 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. The 39%85% decrease was due primarily to legala $31.3 million securities litigation loss contingencies of $3.0 millioncontingency recorded in the firstsecond quarter of 2025 not being repeated in 2026.

Interest income was $0.8$0.7 million and $1.3$1.2 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease in interest income was due primarily to lower interest rates and cash balances in 2026 compared to 2025.

We expect interest income to decrease in future quarters as we continue to utilize cash in our operations and realize the impact of a lower interest rate environment.operations.

We record the activities related to leasing office space to third parties in buildings we own as other income (loss), net, as leasing is not core to the Company’s operations. Other income (loss), net, was $48,000$43,000 and $(82,00046,000) during the three months ended MarchJune 31,30, 2026 and 2025, respectively.

We recorded other income in the three and six months ended MarchJune 31,30, 2026 due to improved occupancy rates in 2026 compared to the prior year period. We expect to record modest net income on leasing activities in 2026 due to improved occupancy.

Since inception, we have financed our operations primarily through public and private stock offerings, payments received under collaboration agreements and interest earned on our cash and cash equivalents balances. We intend to continue to use our capital resources to fund research and development activities, capital expenditures, working capital requirements and other general corporate purposes. As of MarchJune 31,30, 2026, cash and cash equivalents were $86.6$82.7 million. Subsequent to June 30, 2026, we paid our accrued securities litigation loss contingency liability of $31.25 million into a plaintiff's escrow account pursuant to the terms of the Stipulation of Settlement in the Consolidated Securities Action discussed in Note 10 to the "Condensed Consolidated Financial Statements".

There were no common stock sales under the ATM during the threesix months ended MarchJune 31,30, 2026 or the year ended December 31, 2025.

No cash payments were authorized or made to participants under the CIB Plan as of MarchJune 31,30, 2026, or through the filing date of this Quarterly Report on Form 10-Q.

Net cash used in operating activities was $8.9$12.7 million for the threesix months ended MarchJune 31,30, 2026, resulting primarily from a net loss of $10.3$18.9 million as well as decreases in accounts payable and accrued expenses of $2.5$2.4 million and accrued compensation and benefits of $1.4$1.2 million. These factors were partially offset by a decrease in prepaid and other current assets of $0.9$1.2 million. There was also a non-cash adjustment for stock-based compensation expense of $4.1$8.1 million.

Net cash used in operating activities was $11.3$16.3 million for the threesix months ended MarchJune 31,30, 2025, resulting primarily from a net loss of $23.4$67.6 million. ImpactsThis fromchange this net loss werewas partially offset by an increase in accrued development expense of $1.6$1.3 million, an increase in accounts payable and accrued expenses of $35.2 million and a decrease in prepaid and other current assets of $5.1$5.5 million,million. andThere was also a non-cash adjustment for stock-based compensation expense of $5.2$9.8 million.

There was minimal or no net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 and 2025.

Net cash used in financing activities during the threesix months ended MarchJune 31,30, 2026 was $51,000$67,000 for costs related to the ATM. There were no sales of common stock under the ATM during the threesix months ended MarchJune 31,30, 2026.

Net cash provided by financing activities during the threesix months ended MarchJune 31,30, 2025 was $90,000 of proceeds from the exercise of stock options.

We own an office complex in Austin, Texas, a portion of which serves as our corporate headquarters. Maintenance, physical facilities, leasing, property management and other key responsibilities related to property ownership are outsourced to professional real-estate managers. The office complex measures approximately 90,000 rentable square feet. At MarchJune 31,30, 2026, we occupied approximately 25% of the property with the remainder either leased or available for lease to third parties. We expect to record modest net income on leasing activities in 2026 due to improved occupancy compared to the prior year.

We have an accumulated deficit of $506.4$515.0 million as of MarchJune 31,30, 2026. We expect our cash requirements to be significant in the future. The amount and timing of our future cash requirements will depend on regulatory and market acceptance of our drug candidates, the resources we devote to researching and developing, formulating, manufacturing, commercializing and supporting our products and other corporate needs. We believe that our current cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months. We may seek additional future funding through public or private financing in the future, if such funding is available and on terms acceptable to us. However, there are no assurances that additional financing will be available on favorable terms, or at all.