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

We are a clinical-stage biotechnology company focused primarily on developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. All of our product candidates are in the preclinical or early clinical development stage, and none of our product candidates have been approved for marketing or are being marketed or commercialized. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial.

As a result, we have no meaningful historical operations upon which to evaluate our business and prospects and have not yet demonstrated an ability to obtain marketing approval for any of our product candidates or successfully overcome the risks and uncertainties frequently encountered by companies in the biopharmaceutical industry. As a result,Furthermore, we have not been profitable and have incurred significant operating losses in every reporting period since our inception. For the year ended December 31, 2024,2025, we reported a net loss of approximately $15.0$20.8 million and as of December 31, 2024,2025, we had an accumulated deficit of approximately $60.4$81.3 million.

For the foreseeable future, we expect to continue to incur losses, which will increase significantly from historical levels as we expand our development activities, seek regulatory approvals for our product candidates, and begin to commercialize them if they are approved by the FDA, the European Medicines Agency, or the EMA, or comparable foreign authorities.losses. Further, the net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. Even if we succeed in developing and commercializing one or more product candidates, we may never become profitable, or even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

We have incurred net losses and utilized cash in operations since inception as described above. In addition, as of December 31, 2024,2025, we had approximately $5.8$8.5 million and during the twelve months ended December 31, 2024,2025, we used $12.3$14.8 million of cash in operations and expect to continue to incur significant cash outflows and incur future additional losses to execute our operating plan. We believe that the cash and cash equivalents as of December 31, 2024 together with proceeds from our January 2025 financing, will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2025.2026. We will need to increase our capital resources through equity and/or debt financings. We may also seek to finance our cash needs through collaborations, strategic alliances, or license agreements with third parties and/or debt or equity financings. If sources of financing are available, they may result in substantial dilution to our stockholders. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. Due to the uncertainty in securing additional funding, and as existing cash resources are not sufficient to fund planned operations for at least 12 months from the date of this Annual Report, we have concluded that substantial doubt exists about our ability to continue as a going concern. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. As such, there can be no assurance that we will be able to continue as a going concern.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and/or debt financings and collaborations, licensing agreements or other strategic arrangements. We may seek additional capital through a combination of private and public equity offerings, “at-the-market” issuances, equity-linked and structured transactions, debt (straight, convertible, or otherwise) financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. For example, in June 2022, we entered into an at the market offering agreement, which was amended on September 1, 2022, with a sales agent pursuant to which we may offer and sell from time to time shares of our common stock for aggregate gross proceeds of up to $3.7 million, and in 2024, we sold 152,000 shares of our common stock for aggregate gross proceeds of approximately $0.4 million. On August 6, 2024, we filed a prospectus supplement to reduce the amount of shares registered under the prospectus for the ATM to $0.00 and to suspend the ATM program, but the ATM Agreement remains in full force and effect. In August 2024, November 2024 and January 2025, we raised an aggregate of approximately $6.4 million, net of placement agent and other offering expenses. In addition, in FebruaryDecember 2025, we entered into a securities Standby Equitypurchase Purchaseagreement Agreementwith pursuantMr. toLazar for sale of an aggregate of 700,000 shares of Preferred Stock, which are convertible into 111,000,000 shares of common stock. Additionally, we have theconsistently right,raised butcapital notthrough private and public offerings over the obligation,last few years and may continue to sellraise upadditional capital as the need arises, which may result in further dilution to $20.0 million of our commonshareholders. We stock during a 36 month period, subject to the restrictions and satisfaction of the conditions in the Standby Equity Purchase Agreement. We may also issue in the future equity securities that provide for rights, preferences and privileges senior to those of our common stock. Given our need for cash and that equity issuances are the most common type of fundraising for similarly situated companies, the risk of dilution is particularly significant for our stockholders. Depending upon market liquidity at the time, additional sales of shares registered at any given time could cause the trading price of our common stock to decline. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

We have spent significant time, money and effort on the development of our lead product candidate, Decoy20. As a result, our business is largely dependent on the commencement of and success of clinical trials evaluating Decoy20 and our ability to complete the development of, obtain regulatory approval for, and successfully commercialize Decoy20 in a timely manner. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. The process to develop, obtain regulatory approval and commercialize Decoy20 is long, complex, costly and uncertain as to the outcome.

To date, no clinical trials designed to provide substantial evidence of safety, purity, potency or efficacy have been completed with any of our product candidates. All of our product candidates will require additional development, including clinical trials as well as further preclinical studies to evaluate their toxicology and optimize their formulation and regulatory approvals before they can be commercialized. Positive results obtained during early development do not necessarily mean later development will succeed or that regulatory approvals will be obtained. Our development efforts may not lead to commercial products, either because our product candidates fail to be safe and effective, or in the case of our product candidates regulated as biologics, safe, pure and potent, or because we have inadequate financial or other resources to advance our product candidates through the clinical development and approval processes. If any of our product candidates fail to demonstrate safety, purity, potency or efficacy at any time or during any phase of development, we would experience potentially potentially significant delays in, or be required to abandon, development of the product candidate.

WeThe do not know whether our planned clinical trials will begin on time or be completed on schedule, if at all. The commencement, data readouts and completion of clinical trials can be delayed for a number of reasons, including delays related to:

We expectmay to continueneed to incur significant research and development expenses and other operating expenses,expenses to advance our product candidates, which may make it difficult for us to attain profitability.

We have currently discontinued enrollment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. Accordingly, we expect to incur less research and development expenses compared to prior years. However, in the event we commence enrollment and dosing of patients again, we will need to expend substantial funds in research and development, including preclinical studies and clinical trials of our product candidates, candidates, and to manufacture and market any product candidates in the event they are approved for commercial sale. We also may need additional funding to develop or acquire complementary companies, technologies and assets, as well as for working capital requirements and other operating and general corporate purposes. Moreover, our plannedany increases in staffing will dramatically increase our costs in the near and long-term.

Due to our limited financial and managerial resources, we must focus on a limited number of research programs and product candidates and on specific indications. As such, we arehave currentlybeen focused on the development of Decoy20. As a result, we may forego or delay pursuit of of opportunities with other product candidates or for other indications for anti-cancer and anti-viral immunotherapy that later prove to to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products.

If our product candidates are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trial, when used alone or in combination with other approved products or product candidates, we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial.

Patients in ourany ongoing and plannedfuture clinical trials may, in the future,may suffer significant adverse events or other side effects not observed in our preclinical studies or previous clinical trials. Patients treated with our product candidates may also be undergoing surgical, radiation or chemotherapy treatments, which can cause side effects or adverse events that are unrelated to our product candidate, but may still impact the success of our clinical trials. The inclusion of critically ill patients in our clinical trials may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using or due to the gravity of such patients’ illnesses. If such significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to the clinical trials, or we may be required to abandon the trials or our development efforts of that product candidate altogether. We, the FDA, other comparable regulatory authorities or an IRB may suspend clinical trials of a product candidate at any time for various reasons, including a belief that subjects in such trials are being exposed to unacceptable health risks or adverse side effects. Even if the side effects do not preclude the product candidate from obtaining or maintaining regulatory approval, undesirable side effects may inhibit market acceptance due to tolerability concerns as compared to other available therapies. Any of these developments could materially harm our business, financial condition and prospects.

We may find it difficult to enroll patients in ourany future clinical trials. If we encounter difficulties enrolling patients in our clinical trials, trials, our clinical development activities could be delayed or otherwise adversely affected.

Additionally, other pharmaceutical companies targeting these same diseases are recruiting clinical trial patients from these patient populations, which may make it more difficult to fully enroll our clinical trials. We also rely on, and will continue to rely on, CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and preclinical studies. Though we have entered into agreements governing their services, we will have limited influence over their actual performance. Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates and jeopardize our ability to obtain regulatory approval for the sale of our product candidates. Furthermore, even if we are able to enroll a sufficient number of patients for our clinical trials, we may have difficulty maintaining enrollment of such patients in our clinical trials. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. We do not have any current plans to initiate a new clinical trial.

WeThe intend to expand our existing pipeline of core assets. However, the process of researching and developing new product candidates is expensive, time-consuming and unpredictable. Data from our current preclinical programs may not support the clinical development of our product candidates, and we may not identify any additional products suitable for recommendation for clinical development. Moreover, any product candidate we recommend for clinical development may not demonstrate, through preclinical studies, indications of safety and potential efficacy that would support advancement into clinical trials. Such findings would potentially impede our ability to maintain or expand our clinical development pipeline. Our ability to develop new product candidates and advance them into clinical development also depends upon our ability to fund our research and development operations, and we cannot be certain that additional funding will be available on acceptable terms, or at all.

WeIf arewe commence manufacturing of our products, we will be subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit the supply of our product candidates.

Risks Related to Competition, Retaining Key EmployeesCompetition and Managing Growth

Our information technology systems and those of our third-party service providers, strategic partners and other contractors or consultants are vulnerable to attack and damage or interruption from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization. We have also outsourced elements of our information technology infrastructure, and as a result a number of third-party vendors may or could have access to our confidential information. Moreover, we have not instituted strict processes to oversee and identify such risks from cybersecurity threats associated with our use of any third-party service provider so we rely on risk management strategies implemented by them and have no assurance that they follow best practices or are robust in nature.

We have in the past fallen out of compliance with the minimum bid price requirement although we have subsequently been able to regain compliance. No assurance can be given that we will be able to regain compliance with the Rule. Failure to meet applicable Nasdaq continued listing standards could result in a delisting of our common stock. A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.

We are considered a “smaller reporting company.” We are therefore entitled to rely on certain reduced disclosure requirements, such as an exemption from providing selected financial data and executive compensation information. These exemptions and reduced disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict whether investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock prices may be more volatile. Furthermore, as a result of voting power of the Preferred Stock, we may determine that we are a “controlled company” as defined in the Nasdaq Listing Rule 5615 and, therefore, are not subject to the Nasdaq Listing Rules that would otherwise require us to have (a) a majority of independent directors; (b) director nominees selected, or recommended for the Board selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors; (c) a nominating committee composed solely of independent directors; (d) compensation of our chief executive officer and all other officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and/or (e) a compensation committee charter which provides the compensation committee with the authority and funding to retain compensation consultants and other advisors.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act and The Nasdaq Stock Market LLCLLC, (“Nasdaq”)or the Nasdaq, rules. The requirements of these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and place strain on our personnel, systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition.

If the Domestication Merger (defined below), taken together with the Merger (defined below), fails to qualify as a Section 351(a) Exchange, former U.S. holders of Intec PharmaPharma, (“or Intec Israel”)Israel, ordinary shares may recognize taxable gain as a result of the Domestication Merger.

On July 27, 2021, Intec Israel, Indaptus Therapeutics, Inc. and Domestication Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of Indaptus, completed a domestication mergermerger, (or the “Domestication Merger”),Merger, pursuant to the terms and conditions of an Agreement and and Plan of Merger and Reorganization, dated April 27, 2021, whereby Domestication Merger Sub Ltd. merged with and into Intec Israel, with with Intec Israel being the surviving entity and a wholly-owned subsidiary of Indaptus Therapeutics, Inc. On August 3, 2021, Indaptus Therapeutics, Therapeutics, Inc. completed its merger with Decoy, pursuant to an Agreement and Plan of Merger and ReorganizationReorganization, (or the “Merger Agreement”), Agreement, dated March 15, 2021, following which Decoy became the surviving entity and a wholly-owned subsidiary of Indaptus Therapeutics, Inc. and the business conducted by Decoy became the business conducted by the combined company. Intec Israel intended for the Merger to qualify as a Section 351(a) Exchange. The position of Intec Israel is not binding on the IRS or the courts, and Intec Israel does not intend to request a ruling from the IRS with respect to the Merger. Accordingly, there can be no assurance that the IRS will not challenge the qualification of the Domestication Merger and the Merger as a Section 351(a) Exchange or that a court will not sustain such a challenge. If the IRS were to be successful in any such contention, or if for any other reason the Domestication Merger was not treated as part of a Section 351(a) Exchange, the Domestication Merger could be a taxable event to the former U.S. holders of ordinary shares of Intec Israel. Former holders of Intec Israel’s ordinary shares are urged to consult with their own tax advisors with respect to the tax consequences of the Domestication Merger.

You should read the following discussion and analysis of our financial condition and results of operations along with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. You should review the sections titled “Summary Risk Factors” and Part I, Item 1A. “Risk Factors” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described below. Please also see the “Cautionary Note Regarding Forward-Looking Statements” section in the forepart of this Annual Report.

We are a clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of four different classes of existing agents, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology has demonstrated activation of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen in preclinical models. In 2023, we initiated a Phase 1 clinical trial with our lead clinical candidate, Decoy20, in patients with advanced solid tumors where currently approved therapies have failed. In May 2025, we decided to conclude enrollment in the dosing of Decoy20 as a monotherapy and focus on the Combination Study. As of the date of this Annual Report on Form 10-K, we have discontinued further enrollment in the Combination Study and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. For further information regarding our business and operations, see “Part I. Item 1. Business.”

WeOur expect our research and development expenses to increase substantially for the foreseeable future as we continue to ramp up our clinical development activities and incur expenses associated with hiring additional personnel to support our research and development efforts. Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. completion. The duration, costs and timing of preclinical studies and clinical trials and development of product candidates will depend on a variety of factors, including:

The process of conducting the necessary clinical research to obtain FDA and other regulatory approval is costly and time consuming and the successful development of product candidates is highly uncertain. These risks and uncertainties associated with our research and development projects are discussed more fully in Part I. Item 1A. “Risk Factors - We expect to continue tomay incur significant research and development expenses and other operating expenses, which may make it difficult for us to attain profitability.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extentextent, we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates.

WeGeneral expect our general and administrative expenses to increase for the foreseeable future as we continue to increase our headcount to support our research and development activities and operations generally, the growth of our business and, if any of our product candidates receive marketing approval, commercialization activities. We also expect to continue to incurinclude additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the Nasdaq Capital Market and the SEC, additional director and officer insurance expenses, investor relations activities, and other administrative and professional services.

Our research and development expenses for the year ended December 31, 20242025 amounted to approximately $7.2$9.3 million, aan decreaseincrease of approximately $0.4$2.1 million, or approximately 4.9%,28.8%, compared with approximately $7.6$7.2 million for the year ended December 31, 2023.2024. This decreaseincrease was attributable primarily to ahigher decreaseclinical trial costs of approximately $1.3$1.5 million forrelated the development of our manufacturing processes of Decoy20 that were mainly conducted in 2023 and was offset by an increase of approximately $0.9 million in costs associated withto our Phase 1 clinicalstudy trial.and to higher payroll and related expenses of approximately $0.6 million following entering into the Modification Agreements, as described in Item 11.

Our general and administrative expenses for the year ended December 31, 20242025 amounted to approximately $8.1$10.5 million, aan decreaseincrease of approximately $0.7$2.4 million, or approximately 7.3%,29.3%, compared with approximately $8.8$8.1 million for the year ended December 31, 2023.2024. This decreaseincrease was attributable primarily to higher payroll and related expenses of approximately $1.9 million following entering into the Modification Agreements, as described in Item 11, and increase of approximately $1.4 million in transaction-related expenses associated with the private placement of convertible notes and warrants completed in June 2025, professional fees and franchise tax. This increase was partially offset by a decrease of approximately $1.3$0.9 million in legal fees, recruitment costs, payroll and related expenses, franchise tax, and directors’ and officers’D&O insurance expenses, and was offset by an increase of approximately $0.6 million inpremium, investor relations and businessboard development expenses.fees.

Liquidity and Capital Resources

In June 2022, we entered into anthe At The Market OfferingATM Agreement (thewith “ATM Agreement”)Wainwright, which was amended on September 1, 2022 with H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”),2022, pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock, par value $0.01 per share,stock for aggregate gross proceeds of up to $3.7$6.3 million. The issuances issuance and salesales of common stock by us under the ATM Agreement iswere being made pursuant to our effective “shelf” registration statement statements on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022.2022 Inand 2024,most recently on August 13, 2025 and declared effective on August 20, 2025. As of the date of this Annual Report, we have sold 152,000525,428 shares of our common stock for aggregate gross proceeds of approximately $0.4$2.7 million. On August 6, 2024, we filed a prospectus supplement to reduce the amount of shares registered under the prospectus for the ATM to $0.00 and to suspend the ATM program, but the ATM Agreement remains in full force and effect.

In February 2025, we entered into athe SEPA with YorkvilleYorkville, pursuant to which we have the right, but not the obligation, to sell up to $20.0 million of our common stock during a 36 monthmonths period, subject to the restrictions and satisfaction of the conditions in the SEPA. Upon execution of the SEPA, we issued to Yorkville 305,96010,927 commitment shares. NoAs of March 16, 2026, we sold and issued 89,902 shares of common stock have been sold under the SEPA.SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, we terminated the SEPA with Yorkville, and the SEPA is no longer in effect.

We believe that theour cash and cash equivalents of approximately $5.8$8.5 million that we had as of December 31, 20242025, together withwhich includes the net proceeds of $2.0 $5.9 million from ourthe JanuaryInvestment 2025Transaction financing,with Mr. Lazar, will enable us to fund our operating expenses and capital expenditure requirements requirements into the second quarter of 2025.2026. We will need to increase our capital resources through equity or debt financings, and we may need to do so sooner than we expect. We may also seek to finance our cash needs through collaborations, strategic alliances, or license agreements with third parties. If sources of financing are available, they may result in substantial dilution to our stockholders. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. If we are unable to consummate a financing or other transaction, we may need to delay, reduce, or eliminate our research and development development programs, which could adversely affect our business prospects, or cease operations. These conditions raise substantial doubt regarding regarding our ability to continue as a going concern within one year after the date of this prospectus. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

Net cash used in operating activities was approximately $14.8 million for the year ended December 31, 2025, compared with net cash used in operating activities of approximately $12.3 million for the year ended December 31, 2024, compared with net cash used in operating activities of approximately $13.4 million for the year ended December 31, 2023.2024. The approximately $1.1$2.5 million decreaseincrease in in net cash used was primarily attributable to the increase in the net loss that was partially offset by changes in operating assets and liabilities.

Net cash provided by financing activities for the year ended December 31, 2025 was approximately $17.5 million, which was provided by the issuance and sale of our common stock and warrants in the January 2025 Financing, the issuance and sale of our common stock under the SEPA, the issuance of convertible notes and warrants in the June 2025 Financing and issuance and sale of our common stock under the ATM Agreement. Net cash provided by financing activities for the year ended December 31, 2024 was approximately $4.8 $4.7 million, which was provided by issuance and sale of our common stock under the ATM Agreement and issuance and sale of our common stock and warrants in the August 2024 Offering and in the November 2024 Offering. There was no net cash provided by or used in financing activities for the year ended December 31, 2023.

We believe that our existing cash and cash equivalents and marketable securities as of December 31, 20242025 are adequate to fund our ongoing activities into the second quarter of 2025.2026 and we expect to continue to incur operating expenses in the future in connection with our ongoing activities and our plans to pursue a strategic transaction involving either an investment in or acquisition of an operating business.

IdentifyingWe potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for the next couple of years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of current macroeconomic conditions and market volatility. As a result, we may face difficulties raising capital through sales of our common stock on acceptable terms, if at all. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report and “Risk Factors” in Item 1A. of this Annual Report.

We record the costs associated with services provided by CROs and CMOs as they are incurred. Though the scope and timing of work are generally generally based on signed agreements, some judgement is involved in determining periodic expenses because payment flows do not always match the periods over which services and materials are provided to us. As a result, our management is required to make estimates of services received and efforts expended pursuant to agreements established with these third-partiesthird parties at each period-end date. During the year ended December 31, 2024,2025, we incurred approximately $7.2$9.3 million of research and development expenses, of which approximately $4.0$5.8 million were for services provided by our CROs and CMOs. As of December 31, 2024,2025, we recorded an accrued liability of approximately $0.8$1.1 million for expenses incurred, but not yet invoiced, and prepaid expenses and non-current other assets of approximately $0.8 $0.4 million for payments made that relate to future periods. Overestimating or underestimating the services received or efforts expended could cause us to overstate or understate research and development expenses incurred within a reporting period, and related accrued and prepaid expenses.

Compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized over the requisite service period of the individual grant, generally equal to the vesting period, on a straight-line basis. We determine the estimated fair value of each stock option on the date of grant using the Black-Scholes valuation model which uses assumptions regarding a number of complex and subjective variables. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. Expected volatility is based on an analysis of the historical volatility of a peer group of companies. The expected term represents the period that we expect our stock options to be outstanding. The expected term assumption is estimated using the simplified method set forth in the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin Topic 14, which is the mid-point between the option vesting date and the expiration date. We have never declared or paid dividends on our common stock and have no plans to do so in the foreseeable future. Changes in these assumptions may lead to variability with respect to the amount of stockstock-based compensation expense we recognize related to stock options.

Recent changes in executive management may create uncertainties during the Company’s transition periodperiod.

As previously disclosed, on March 23, 2026, certain securities previously held by Mr. David E. Lazar were transferred to third-party purchasers pursuant to the terms of the applicable Securities Purchase Agreement. Following these transactions, changes to the Company’s executive management occurred, including the resignation of Messrs. Lazar and Jeffrey Meckler from their executive officer positions. In addition, on April 16, 2026, Dr. Michael Newman, resigned as Chief Scientific Officer of the Company.

During this transition period, the Company may experience operational, organizational and governance-related adjustmentschallenges as the current management team continues to evaluate corporate priorities, internal processesprocesses, and capital allocation initiatives. In addition, there may be further changes to the Company’s executive management team in the future. Any such developments could createdisrupt uncertaintiesthe thatCompany’s mayoperations and strategic initiatives and adversely affect the Company’s business, financial conditioncondition, and results of operations.

In April 2026, the Company appointed Joe Z. Tsien as a scientific consultant to support the Company’s ongoing evaluation of certain research and data-related initiatives involving sleep-related biological signals, neurophysiological activity patterns, immune-therapeutic immune-therapeutic response pathways and functional physiological assessment methods. We continue to evaluate how these additional research capabilities may contribute to our longer-term scientific and strategic objectives.

Currently, we have discontinued further enrollmentclinical todevelopment theof Combination StudyDecoy20 and there are no participants remaining in the study. We do not have any any current plans to initiate a new clinical trial. As a result, we expect our research and development expenses to decrease in the short term.

With the discontinuation and winding down of the Combinationclinical Study,development of Decoy20, we expect our general and administrative expenses to decrease in the short term, however, this may be offset by additional costs related to any Post InvestmentPost-Investment Transaction.

For the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025

The following table sets forth our results of operations for the three months ended MarchJune 31,30, 2026 and 2025 and the relative dollar and percentage change between the two periods.

Our research and development expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $0.5$0.4 million and $2.8$2.2 million, respectively, a decrease of $2.3$1.8 million or 83%, primarily attributable to a decrease in clinical costs related to our Phase 1 study of approximately $1.9 millionDecoy20 as well as a decrease in payroll and related expenses of approximately $0.4 million due to reductions to headcount and base salaries.

Our general and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $1.7$1.4 million and $1.8$2.3 million, respectively, respectively, representing a decrease of $0.1$0.8 million or 5%.37%. The decrease was primarily attributable to a decrease in certain expenses related to operating as a public company related to the transition of management.management as well as a decrease in payroll and related expenses due to reductions to headcount and base salaries.

The change in our other income (expense), net between the three months ended MarchJune 31,30, 2026 and three months ended March 31, 2025 was approximately $0.4$0.8 million and consists primarily of the warrantchange repricingin the fair value of outstanding convertible promissory notes during the three months ended MarchJune 31,30, 20262025 aswith no wellsimilar as income earned on the Company’s cash and cash equivalent accounts, the balances of which were lowercharges during the three months ended March 31, 2026 compared to the three months ended MarchJune 31,30, 2025.2026.

In June 2022, we entered into the ATM Agreement with Wainwright,H.C. Wainwright & Co. (“Wainwright”), which was amended on September 1, 2022, pursuant to which we may offer offer and sell, from time to time through Wainwright, shares of our common stock for aggregate gross proceeds of up to $6.3 million. The issuances and sales of common stock by us under the ATM Agreement were being made pursuant to “shelf” registration statements on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022 and most recently on August 13, 2025 and declared effective on August 20, 2025. As of the date of this Quarterly Report, we have sold 525,428 shares of our common stock for aggregate gross proceeds of approximately $2.7 million.

In February 2025, we entered into the SEPA with Yorkville, pursuant to which we have the right, but not the obligation, to sell up to $20.0 $20.0 million of our common stock during a 36-month36 month period, subject to the restrictions and satisfaction of the conditions in the SEPA. Upon execution of the SEPA, we issued to Yorkville 10,927 commitment shares. As of March 16, 2026, we sold and issued 89,902 shares of common common stock under the SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, we terminated the SEPA with Yorkville, and the SEPA is no longer in effect.

In June 2025, we completed a private placement (the “June 2025 Financing”) of convertible notes to certain investors, including our then Chief Executive Officer, which automatically converted in July 2025 into 501,566 shares of our common stock and pre-funded warrants to purchase 190,795 shares of our common stock at a conversion price of $8.302 per share. In connection with the offering, we also issued to the investors warrants to purchase 1,384,722 shares of our common stock, exercisable at $8.302 per share and expiring on July 27, 2030. The total gross proceeds were approximately $5.7 million and placement agent fees and other offering expenses were approximately $0.8 million million. As of the date hereof, all pre-funded warrants have been exercised into an aggregate of 190,795 shares of common stock.

Net cash used in operating activities was approximately $7.0$8.9 million for the threesix months ended MarchJune 31,30, 2026, compared with net cash used in operating activities of approximately $5.0$9.1 million for the threesix months ended MarchJune 31,30, 2025. The approximatelychange $2.0 million increase in net cash used wasis primarily attributable to the reduction in our net loss of approximately $5.4 million and the decrease in our accounts payable and other current liabilities andof approximately partially$5.5 offset by the decrease in the net loss.million. The decrease in our accounts payable and other current liabilities was primarily a result of the payment of certain expenses accrued as of December 31, 2025 during the threesix months ended MarchJune 31,30, 20262026, combined with significantly reduced operating operating expenses accrued and payable as of March 31, 2026 due to the wind-down of the Phase 1 trial and decreases in executive compensation.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 20252026 was approximately $3.1$12.0 million, which was provided by the issuance and sale of our common stock and warrants in the January 2025 Financing and the issuance and sale of our common stock under thepursuant SEPA. There was no such activity duringto the threeJune months2026 endedPrivate March 31, 2026.Placement.

We believe that our existing cash and cash equivalents as of MarchJune 31,30, 2026 are adequate to fund our ongoing activities through the second quarter of 20262027 and we expect to continue to incur operating expenses in the future in connection with our ongoing activities and our plans to pursue a Post InvestmentPost-Investment Transaction.

We will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of current macroeconomic conditions and market volatility. As a result, we may face difficulties raising capital through sales of our common stock on acceptable terms, if at all. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. For additional information, see Note 1 to our unaudited interim condensed consolidated financial statements included elsewhere elsewhere in this Quarterly Report.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our 2025 Annual Report on Form 10-K. During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting policies from those discussed in our 2025 Annual Report on Form Form 10-K.

Certain recently issued accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the accompanying unaudited interimcondensed condensed consolidated financial statements.