Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial conditions and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Item 1A, Risk factors, in this Annual Report on Form 10-K.
Overview
We are a clinical-stage biopharmaceutical company engaged in the discovery and development of innovative, small molecule therapeutics targeting age-related degenerative diseases and disorders of the central nervous system (“CNS”) and retina. Currently available therapies for these diseases are limited, with few Alzheimer’s disease (“AD”) treatments, two approved treatments for geographic atrophy (“GA”) secondary to dry age-related macular degeneration (“dAMD”) and no approved treatments for dementia with Lewy bodies. Our goal is to develop disease-modifying treatments for participants with these degenerative disorders.
Since our inception in 2007, we have incurred significant operating losses and devoted substantially all of our time and resources to developing our lead product candidate, zervimesine, building our intellectual property portfolio, raising capital and recruiting management and technical staff to support these operations. As of December 31, 2025, we had an accumulated deficit of $198.6 million. We incurred net losses of $23.5 million and $34.0 million for the years ended December 31, 2025 and 2024, respectively.
To date, we have funded our operations primarily with proceeds from grants awarded by the National Institute of Aging (the “NIA”), a division of the National Institutes of Health (the “NIH”), and proceeds from our initial public offering (the “IPO”), completed in October 2021, proceeds from our follow-on public offerings, sales of our common stock through the at the market offerings, sales of our convertible promissory notes, convertible preferred stock, simple agreements for future equity (“SAFE”) and stock option exercises. Since our inception, we have raised approximately $175.1 million in net proceeds from sales of our equity securities, convertible notes, SAFE, stock option exercises, IPO, follow-on public offerings, ATM, and equity line financing with Lincoln Park. As of December 31, 2025, we had cash, cash equivalents, and restricted cash equivalents of $37.0 million. As of December 31, 2025, we had approximately $35.7 million available from obligated NIA funds for applicable expenses to be incurred in the future.
On December 23, 2022, we entered into a sales agreement (“the Previous Sales Agreement”) with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (“B. Riley”), providing for the offering, issuance and sale by us of up to $40.0 million of our common stock from time to time in “at-the-market” offerings (the “2022 ATM”). For the period ended December 31, 2025, we sold 13,624,062 shares of common stock pursuant to the 2022 ATM for gross proceeds of approximately $9.4 million. On December 16, 2025, we delivered written notice to B. Riley to terminate the Previous Sales Agreement, effective December 18, 2025. We are not subject to any termination penalties related to the termination of the Previous Sales Agreement. Prior to termination, approximately $12.5 million remained in gross proceeds available for future issuances of common stock under the 2022 ATM.
On March 10, 2023, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Lincoln Park Purchase Agreement”). The Lincoln Park Purchase Agreement provides that, subject to the terms and conditions set forth therein, we have the right, but not the obligation, to direct Lincoln Park to purchase up to $35.0 million of shares of common stock at our sole discretion, over a 36-month period commencing on March 10, 2023. We filed a prospectus supplement to our registration statement on Form S-3 (File No. 333-268992) covering the resale of shares of common stock that are issued under the Lincoln Park Purchase Agreement. During the year ended December 31, 2025, we did not sell any shares of common stock to Lincoln Park. As of December 31, 2025, $34.8 million was available to draw pursuant to the Lincoln Park Purchase Agreement. The Lincoln Park Purchase Agreement’s term expired on March 10, 2026.
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On March 14, 2024, we completed our follow-on public offering, pursuant to which we issued and sold 6,571,428 shares of our common stock at a public offering price of $1.75 per share. On March 28, 2024, the underwriters exercised their option to purchase 985,714 shares of our common stock at a public offering price of $1.75 per share. In connection with the follow-on public offering, we received net proceeds of approximately $11.9 million, after deducting underwriting discounts and commissions and other offering related expenses.
On August 29, 2025, we completed our registered direct offering, pursuant to which we issued and sold 14,700,000 shares of our common stock at an offering price of $2.05 per share. We received net proceeds of approximately $27.9 million, after deducting underwriting discounts, commissions, placement agent fees, and other offering related expenses payable by us. In connection with the registered direct offering, we agreed to pay the placement agent an aggregate cash fee of 7.0% of the gross proceeds raised from the sale and issuance of the shares of common stock minus certain expenses. We agreed to issue warrants to the placement agent to purchase up to 514,500 shares of common stock which have an exercisable price equal to $2.78 and will be exercisable commencing six months from the close of the registered direct offering with a term of five (5) years from the date of the Placement Agency Agreement.
On December 18, 2025, we filed a shelf registration statement with the SEC and a prospectus supplement, which registered the offering, issuance and sale of up to $300.0 million of various equity and debt securities and up to $75.0 million of common stock pursuant to an at-the-market equity offering program with Jefferies LLC (“Jefferies”) (the “2025 ATM”). For the period ended December 31, 2025, we did not sell any shares of common stock pursuant to the 2025 ATM. As of December 31, 2025, $75.0 million remain in gross proceeds available for future issuances of common stock under the 2025 ATM.
We expect to continue to incur significant and increasing expenses and net losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings, debt financings or other sources, such as potential collaboration agreements and strategic alliances, licensing or similar arrangements with third parties. To the extent available, we expect to continue our pursuit of non-dilutive research contributions, or grants, including additional NIA grant funding. However, we may fail to receive additional NIA grants, or we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to obtain additional NIA grants or raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition.
Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to raise capital, maintain our research and development efforts, expand our business or continue our operations at planned levels, and as a result we may be forced to substantially reduce or terminate our operations.
We do not own or operate manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture of zervimesine for preclinical studies and clinical trials, as well as for commercial manufacture if zervimesine obtains marketing approval. We also rely, and expect to continue to rely, on third parties to manufacture, package, label, store, and distribute zervimesine, if marketing approval is obtained. We believe that this strategy allows us to maintain a
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more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of zervimesine.
Components of Our Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of direct and indirect costs incurred for our research activities, including development of our drug discovery efforts and the development of our product candidates. Direct costs include laboratory materials and supplies, contracted research and manufacturing, clinical trial costs, consulting fees, and other expenses incurred to sustain our research and development program. Indirect costs include personnel-related expenses, consisting of employee salaries, related benefits, and stock-based compensation expense for employees engaged in research and development activities, facilities, and other expenses consisting of direct and allocated expenses for rent and depreciation, and lab consumables.
We expense research and development costs as incurred. Non-refundable advance payments for goods and services that will be used over time for research and development are capitalized and recognized as goods are delivered or as the related services are performed. In-licensing fees and other costs to acquire technologies used in research and development that have not yet received regulatory approval and that are not expected to have an alternative future use are expensed when incurred. We track direct costs by stage of program, clinical or preclinical. However, we do not track indirect costs on a program specific basis because these costs are deployed across multiple programs and, as such, are not separately classified.
We cannot reasonably determine the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. Product candidates in later stages of development generally have higher development costs than those in earlier stages. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, as our product candidates advance into later stages of development, as we begin to conduct larger clinical trials, as we seek regulatory approvals for any product candidates that successfully complete clinical trials, as we expand our product pipeline, as we maintain, expand, protect and enforce our intellectual property portfolio, and as we incur expenses associated with hiring additional personnel to support our research and development efforts.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including employee salaries, related benefits, and stock-based compensation expense for our employees in the executive, finance and accounting, and other administrative functions. General and administrative expenses also include third-party costs such as legal costs, insurance costs, accounting, auditing and tax-related fees, consulting fees and facilities and other expenses not otherwise included as research and development expenses. We expense general and administrative costs as incurred.
Other Income (Expense)
Grant Income
Grant income relates to the grants and donations received from government and other (non-government) parties. Grants awarded are conditional cost reimbursement grants and are recognized as grant income as allowable costs are incurred and the right to payment is realized. The grants awarded relate to agreed upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to CROs, research institutions and /or consortiums involved in the grant, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which we are reimbursed for eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the
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NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. As of December 31, 2025, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension. Our clinical trials have been funded by approximately $171.0 million in cumulative grants awarded primarily by the NIA, which includes an approximately $81.0 million grant from the NIA to fund our Phase 2 (COG0203-START) study of zervimesine in patients with early-stage Alzheimer’s disease, an approximately $30.5 million grant from the NIA to fund our Phase 2 (COG0201-SHINE) study of zervimesine in patients with mild-to-moderate Alzheimer’s disease, and an approximately $29.5 million grant from the NIA to fund our Phase 2 (COG1201-SHIMMER) study of zervimesine in patients with DLB.
Other Income, Net
Other income, net consists primarily of interest income from money market funds, offset partially by other fees such as costs incurred to establish financing opportunities.
Interest Expense
Interest expense primarily consists of interest expense related to the insurance premium financing arrangement with a lender.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table summarizes our results of operations (in thousands):
Year Ended December 31,
Consolidated Statements of Operations Data:
Operating Expenses:
Other income (expense):
Interest expense (13) (25) 12
Loss on currency translation from liquidation of subsidiary — (195) 195
Research and Development Expenses
The following table summarizes our research and development expenses (in thousands):
Year Ended December 31,
Total research & development expenses $ 37,187 $ 41,676 $ (4,489)
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Research and development expenses were $37.2 million for the year ended December 31, 2025, compared to $41.7 million for the year ended December 31, 2024. The decrease of $4.5 million was primarily due to the following:
General and Administrative Expenses
General and administrative expenses were $10.6 million for the year ended December 31, 2025, compared to $12.3 million for the year ended December 31, 2024. The change in general and administrative expenses was driven primarily by a decrease in equity-based compensation, which was partially offset by an increase in professional fees.
Other Income (Expense)
Grant Income
Grant income was $23.4 million for the year ended December 31, 2025, compared to $19.5 million for the year ended December 31, 2024. The change in grant income is correlated with the increase in eligible reimbursable costs related to clinical trials incurred during 2025 as compared to 2024 and grant income recognized from the donation received.
Other Income, Net
Other income, net was $0.9 million for the year ended December 31, 2025, compared to $0.7 million for the year ended December 31, 2024. The change in other income, net, was insignificant period over period.
Interest Expense
Interest expense was less than $0.1 million for the year ended December 31, 2025, compared to interest expense of less than $0.1 million for the year ended December 31, 2024. Interest expense was not significant in either period.
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Liquidity and Capital Resources
Sources of Liquidity
To date, we have funded our operations primarily with proceeds from grants awarded by the NIA and proceeds from the sales of our convertible promissory notes, convertible preferred stock, SAFE, stock option exercises, IPO, follow-on equity offerings, sales under our 2022 ATM and 2025 ATM, and equity line financing. Since our inception, we have been awarded grant awards primarily from the NIA in the aggregate amount of approximately $171.0 million and have raised approximately $175.1 million in net proceeds from sales of our equity securities, convertible notes and SAFE, stock option exercises, our 2022 ATM, our equity line financing with Lincoln Park, our IPO and our follow-on public offering. On December 23, 2022, we entered into a sales agreement with B. Riley, providing for the offering, issuance and sale by us of up to $40.0 million of our common stock from time to time in ATM offerings. As of December 18, 2025, immediately prior to termination of the 2022 ATM, we sold 36,396,325 shares of common stock under the 2022 ATM for gross proceeds of approximately $27.5 million. In addition, in March 2023, we entered the Lincoln Park Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), giving the Company the right, but not the obligation to sell to Lincoln Park up to $35.0 million worth of shares of our common stock. As of December 31, 2025, $34.8 million was available to draw pursuant to the Lincoln Park Purchase Agreement. The Lincoln Park Purchase Agreement’s term expired on March 10, 2026.
On March 14, 2024, we closed a follow-on public offering of 6,571,428 shares of our common stock at a public offering price of $1.75 per share. As part of the follow-on offering, the underwriters exercised their option to purchase 985,714 shares of our common stock on March 28, 2024, at a public offering price of $1.75 per share. The net proceeds were approximately $11.9 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us. On August 29, 2025, we completed the registered direct offering of 14,700,000 shares of our common stock at an offering price of $2.05 per share. As part of the registered direct offering, we agreed to issue warrants to the placement agent to purchase up to 514,500 shares of common stock which have an exercise price equal to $2.78. The net proceeds were approximately $27.9 million, after deducting underwriting discounts, commissions, placement agent fees, and other offering related expenses payable by us. On December 18, 2025, we entered into a Sales Agreement with Jefferies, providing for the offering, issuance and sale by us of up to $75 million of our common stock from time to time in ATM offerings. As of December 31, 2025, we have not sold any shares of common stock under the 2025 ATM.
As of December 31, 2025, we had $37.0 million in cash, cash equivalents, and restricted cash equivalents and have not generated positive cash flows from operations. Based on our current business plans, we believe that our existing cash and cash equivalents, income from non-dilutive grants and donations, and net proceeds from our March 2024 follow-on public offering and August 2025 registered direct offering will be sufficient for us to fund our operating expenses and capital expenditures requirements through the second quarter of 2027, which assumes no usage from the 2025 ATM. We have based these estimates on assumptions that may prove to be incorrect or require adjustment as a result of business decisions, and we could utilize our available capital resources sooner than we currently expect.
Future Funding Requirements
We expect to continue to incur significant and increasing expenses and net losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel, and operate as a public company. We anticipate that we will need to raise additional funding in the future to fund our operations, including the commercialization of any approved product candidates. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.
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Our future funding requirements will depend on many factors, including, but not limited to:
● the costs, timing and outcome of regulatory review of our product candidates;
Until such time as we can generate significant revenue from product sales, we expect to finance our operations through a combination of public or private equity offerings, debt financings or other sources, such as potential collaboration agreements and strategic alliances, licensing or similar arrangements with third parties. To the extent available, we expect to continue our pursuit of non-dilutive research contributions, or grants, including additional NIA grant funding. However, we may fail to receive additional NIA grants, or we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to obtain additional NIA grants or raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Adequate funding may not be available when needed or on terms acceptable to us, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, the ongoing global and regional conflicts, inflation, liquidity constraints, failures and instability in U.S. and international financial banking systems, and otherwise. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. Insufficient liquidity may also require us to relinquish rights to product
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candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. We cannot assure you that we will ever be profitable or generate positive cash flows from operating activities.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Year Ended December 31,
Cash flows used in operating activities $ (24,588) $ (28,474)
Cash flows provided by (used in) investing activities 9 (4)
Cash flows provided by financing activities 36,570 23,565
Cash used in operating activities
Net cash used in operating activities for the years ended December 31, 2025, and 2024 was $24.6 million and $28.5 million, respectively. The change in cash used in operating activities of $3.9 million was driven by a decrease in net loss of $10.5 million, combined with a decrease in non-cash adjustments of $1.8 million and a decrease of $4.8 million in net operating assets and liabilities. The decrease in non-cash adjustments of $1.8 million was primarily related to a decrease in equity-based compensation of $1.6 million. The decrease of $4.8 million in net operating assets and liabilities was primarily related to a decrease in grant receivables of $5.8 million.
Cash provided by (used in) investing activities
Net cash provided by (used in) investing activities for the years ended December 31, 2025, and 2024 was less than $0.1 million.
Cash provided by financing activities
Net cash provided by financing activities was $36.6 million and $23.6 million for the years ended December 31, 2025, and 2024, respectively. The change in net cash provided by financing activities is primarily related to net proceeds from the issuance of common stock in the registered direct offering in August 2025 of $27.9 million and net proceeds from the issuance of common stock under the 2022 ATM of $9.1 million, as compared to the net proceeds of $11.9 million in our follow-on offering in March 2024 and net proceeds of $12.5 million under the 2022 ATM.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2025 (in thousands):
Less than 1 to 3 3 to 5 More than 5
1 Year Years Years years Total
Operating lease obligations $ 155 $ 175 $ 38 $ — $ 368
Other obligations 307 — — — 307
In October 2024, we entered into an insurance premium financing arrangement whereby we financed $0.4 million of certain premiums at a 8.65% annual interest rate. Payments of less than $0.1 million are due monthly from November 2024 through July 2025. As of December 31, 2025, there was no outstanding balance on the loan.
In October 2025, we entered into an insurance premium financing arrangement whereby we financed $0.4 million of certain premiums at a 7.95% annual interest rate. Payments of less than $0.1 million are due monthly from November 2025 through August 2026. As of December 31, 2025, the outstanding principal of the loan was $0.3 million.
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We have entered into an operating lease for office and laboratory facilities under agreements that run through May 31, 2029. The amounts reflected in the table above consist of the future minimum lease payments under the non-cancelable lease arrangements.
On August 31, 2022, we entered into an agreement to lease 2,980 square feet of office space in Pittsburgh, Pennsylvania. The lease has a term of 45 months and commenced on October 1, 2022. The annual base rent under the lease is less than $0.1 million throughout the term of the lease. Total payments due over the term of the lease are $0.2 million. Additionally, on August 31, 2022, we modified one of our existing lease agreements with the landlord for approximately 3,706 square feet of lab space at the same location to extend the lease term termination date from June 30, 2023 until June 30, 2026.
On July 1, 2021, we entered into an agreement to lease 2,864 square feet of office space in Purchase, New York. The lease has a term of 89 months and commenced on December 9, 2021. The annual base rent under the lease is less than $0.1 million for the first lease year and is subject to annual increases of between 1.82% and 2.04%. We provided a security deposit in the form of a Letter of Credit in the amount of less than $0.1 million pursuant to the terms of the lease.
We enter into contracts in the normal course of business with CROs and other vendors to assist in the performance of our research and development and other services and products for operating purposes. These contracts typically do not contain minimum purchase commitments and generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations.
Critical Accounting Policies and Use of Estimates
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, see Note 2 of the notes to our audited consolidated financial statements for the year ended December 31, 2025, included elsewhere in this Annual Report.
Emerging Growth Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We 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 that we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our IPO.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” as that term is defined in Rule 229.10(f)(1), we are not required to provide the information required by this Item.
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
As of and for the years ended December 31, 2025 and 2024
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 42) 110
Consolidated Balance Sheets as of December 31, 2025 and 2024 111
Notes to Consolidated Financial Statements 115
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Cognition Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Cognition Therapeutics, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2020.
Philadelphia, Pennsylvania
March 26, 2026
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COGNITION THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
As of December 31,
Assets
Current assets:
Prepaid expenses and other current assets 1,068 1,860
Restricted cash equivalents 190 —
Property and equipment, net 93 181
Right-of-use assets, operating leases 306 498
Liabilities and Stockholders’ Equity
Current liabilities:
Deferred grant income, current 367 1,066
Operating lease liabilities, current 136 193
Other current liabilities 307 279
Operating lease liabilities, non-current 195 342
Commitments and contingencies (Note 7)
Stockholders’ equity:
Total liabilities and stockholders’ equity $ 48,390 $ 30,234
The accompanying notes are an integral part of these consolidated financial statements.
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COGNITION THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
For the Year Ended
December 31,
Operating Expenses:
Other income (expense):
Other income, net 919 666
Interest expense (13) (25)
Loss on currency translation from liquidation of subsidiary — (195)
Foreign currency translation adjustment, including reclassifications — 195
Total comprehensive loss $ (23,487) $ (33,776)
Net loss per share:
Diluted $ (0.32) $ (0.86)
Weighted-average common shares outstanding:
The accompanying notes are an integral part of these consolidated financial statements.
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COGNITION THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Accumulated
Additional Other Total
Common Stock Paid-in Accumulated Comprehensive Stockholders’
Shares Amount Capital Deficit Loss Equity
Exercise of common stock options 93,350 — 82 82
Equity-based compensation — — 3,748 — — 3,748
Net loss — — — (33,971) — (33,971)
Exercise of common stock options 50,375 — 71 — — 71
Equity-based compensation — — 2,087 — — 2,087
Net loss — — — (23,487) — (23,487)
The accompanying notes are an integral part of these consolidated financial statements.
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COGNITION THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Year Ended December 31,
Cash flows from operating activities:
Depreciation and amortization 36 107
Equity-based compensation 2,087 3,748
Amortization of right-of-use assets 192 159
Loss on currency translation from liquidation of subsidiary — 195
Realized loss on sale of property and equipment 41 —
Changes in operating assets and liabilities:
Prepaid expenses and other assets 1,173 1,633
Accounts payable and accrued expenses 3,510 1,854
Deferred grant income and other liabilities (699) (635)
Operating lease liabilities (204) (159)
Net cash used in operating activities (24,588) (28,474)
Cash flows from investing activities:
Payments for property and equipment — (4)
Proceeds from sale of property and equipment 9 —
Net cash provided by (used in) investing activities 9 (4)
Cash flows from financing activities:
Proceeds from the exercise of common stock options 71 82
Payments on loan payable (353) (739)
Net cash provided by financing activities 36,570 23,565
Cash, cash equivalents, and restricted cash equivalents
Supplemental disclosures of non-cash financing activities:
Prepayment of insurance through third-party financing $ 381 $ 475
The accompanying notes are an integral part of these consolidated financial statements.
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COGNITION THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
1. Description of Business and Financial Condition
Cognition Therapeutics, Inc. (the “Company”) was incorporated as a Delaware corporation on August 21, 2007. The Company is a biopharmaceutical company developing disease modifying therapies targeting age-related degenerative diseases and disorders of the central nervous system (“CNS”) and retina. The Company’s pipeline candidates were discovered using proprietary biology and chemistry platforms designed to identify novel drug targets and disease-modifying therapies that address dysregulated pathways specifically associated with neurodegenerative diseases. The Company was founded on the unique combination of biological expertise around these targets, including proprietary assays that emphasize functional responses, and proprietary medicinal chemistry intended to produce novel, high-quality small-molecule drug candidates.
On December 23, 2022, the Company filed a Registration Statement on Form S-3 (File No. 333-268992) (the “Shelf”) with the Securities and Exchange Commission (“SEC”) in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $200,000 in aggregate. The Shelf was declared effective on January 3, 2023 by the SEC. The Company also simultaneously entered into a sales agreement (the “Previous Sales Agreement”) with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (“B. Riley”) providing for the offering, issuance and sale by the Company of up to $40,000 of its common stock from time to time in “at-the-market” offerings under the Shelf (the “2022 ATM”). On December 16, 2025, the Company delivered written notice to B. Riley to terminate the Previous Sales Agreement, effective December 18, 2025. The Company is not subject to any termination penalties related to the termination of the Previous Sales Agreement. Prior to termination, approximately $12,465 remained in gross proceeds available for future issuances of common stock under the 2022 ATM. Refer to Note 8 – Stockholders’ Equity for further details.
On March 10, 2023, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Purchase Agreement”). The Purchase Agreement provides that, subject to the terms and conditions set forth therein, the Company has the right, but not the obligation, to direct Lincoln Park to purchase up to $35,000 of shares of common stock in the Company’s sole discretion, over a 36-month period commencing on March 10, 2023. During the year ended December 31, 2025, the Company did not sell any shares of common stock to Lincoln Park. As of December 31, 2025, $34,795 was available to draw pursuant to the Purchase Agreement. Refer to Note 8 – Stockholders’ Equity for further details.
In August 2025, the Company entered into Securities Purchase Agreements with two institutional investors relating to the issuance of an aggregate of 14,700,000 shares of the Company’s common stock to such investors at a purchase price of $2.05 per share in a registered direct offering (the “Registered Direct Offering”). The Company also entered into a Placement Agency Agreement on such date (the “Purchase Agency Agreement”) with Titan Partners Group LLC, a division of American Capital Partners, LLC, (“Titan”) acting as the sole placement agent for the Registered Direct Offering. The Company closed this offering on August 29, 2025. The Company received net proceeds of approximately $27,890, after deducting $2,245 of unwriting discounts, commissions, placement agent fees, and other offering related expenses payable by the Company. Refer to Note 8 – Stockholders’ Equity.
On December 18, 2025, the Company filed a shelf registration statement with the SEC and a prospectus supplement, which registered the offering, issuance and sale of up to $300,000 of various equity and debt securities and up to $75,000 of common stock pursuant to an at-the-market equity offering program with Jefferies LLC (“Jefferies”) (the “2025 ATM”). For the period ended December 31, 2025, the Company did not sell any shares of common stock pursuant to the 2025 ATM. As of December 31, 2025, $75,000 remain in gross proceeds available for future issuances of common stock under the 2025 ATM. Refer to Note 8 – Stockholders’ Equity.
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Liquidity
The Company has incurred recurring losses since inception, including net losses of $23,487 for the year ended December 31, 2025 and $33,971 for the year ended December 31, 2024. As of December 31, 2025, and 2024, the Company had cash and cash equivalents of $36,810 and $25,009, respectively. The Company has incurred losses and negative cash flows from operations and had an accumulated deficit of $198,647 as of December 31, 2025. The Company expects to continue to incur losses for the foreseeable future.
As of March 26, 2026, the date of issuance of these consolidated financial statements, the Company believes that its cash and cash equivalents as of December 31, 2025, is sufficient to fund operations for the period through one year after the date of this filing as a result of net proceeds from equity transactions.
To execute its business plans, the Company will need substantial additional funding to support its continuing operations and pursue its growth strategy. Until such time that the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of common stock in public offerings and/or private placements, debt financing or other capital sources, including collaborations with other companies or other strategic transactions. The terms of any financing may adversely affect the holdings or the rights of the Company’s stakeholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or abandon its product development programs, which could have a material adverse effect on its business prospects.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents, and Restricted Cash Equivalents
Cash, cash equivalents, and restricted cash equivalents consist primarily of interest-bearing deposits at various financial institutions and money markets. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The following table provides a reconciliation of cash, cash equivalents, and restricted cash equivalents reported on the consolidated balance sheet which, in aggregate, represents the amount reported in the consolidated cash flows for the years ended December 31, 2025 and 2024:
As of December 31,
Restricted cash equivalents 190 —
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Grant Receivables
Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Aging (“NIA”) a division of the National Institute of Health (“NIH”) and are carried at their estimated collectible amounts. The Company expects all receivables to be collectible, and accordingly, there is no allowance for doubtful accounts required on these grant receivables.
Grant Income
The Company generates grant income through grants and donations from government and other (non-government) parties. Grant income is recognized in other income (expense) in the period in which the reimbursable research and development services are incurred and the right to payment is realized. Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred. For the year ended December 31, 2025 and 2024, the Company generated grant income of $23,406 and $19,549, respectively, primarily from reimbursements from the NIA for aging research. For the year ended December 31, 2025 and 2024, deferred grant income was $367 and $1,066, respectively.
The grants awarded relate to agreed-upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grants, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which the Company is reimbursed for its eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. While these NIH grants do not contain payback provisions, the NIH or other government agency may review the Company’s performance, cost structures and compliance with applicable laws, regulations, policies and standards and the terms and conditions of the applicable NIH grant. If any of the expenditures are found to be unallowable or allocated improperly or if the Company has otherwise violated terms of such NIH grant, the expenditures may not be reimbursed and/or the Company may be required to repay funds already disbursed. To date, the Company has not been found to have breached the terms of any NIH grant. As of December 31, 2024, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension.
Deferred Offering Costs
The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of an equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the financings.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful life of the asset. The Company estimates the useful life to be 5 and 6 years for equipment and furniture and fixtures, respectively. The cost of repairs and maintenance is charged to expense as incurred. Equipment finance leases are included in Property and Equipment, net and other liabilities on the consolidated balance sheet.
The Company reviews the recorded values of property and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. There were no indicators of impairment of long-lived assets during the years ended December 31, 2025 or 2024.
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Research and Development Costs
The Company is involved in research and development of treatments for a variety of diseases related to the central nervous system, with a focus on Alzheimer’s disease, dementia with Lewy bodies (“DLB”), and geographic atrophy (“GA”) secondary to dry age-related macular degeneration. Research and development costs are expensed as incurred. Research and development expenses consist principally of personnel costs, including salaries, stock-based compensation, and benefits for employees, third-party license fees and other operational costs related to its research and development activities, including allocated facility-related expenses and external costs of outside vendors, including CROs, and other direct and indirect costs. Non-refundable research and development costs are deferred and expensed as the related goods are delivered or services are performed. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Costs for certain research and development activities are recognized based on the pattern of performance of the individual arrangements, which may differ from the pattern of billings incurred, and are reflected in the consolidated financial statements as prepaid expenses or as accrued research and development expenses.
Income Taxes
The Company accounts for income taxes under the asset and liability method pursuant to authoritative guidance.
Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this authoritative guidance, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
The Company accounts for uncertainty in income taxes using a recognition threshold of more-likely-than-not to be sustained upon examination by the appropriate taxing authority. Measurement of the uncertainty occurs if the recognition threshold is met. The Company has determined that there were no uncertainties as of December 31, 2025 and 2024 that met the recognition threshold.
On July 4, 2025, President Trump signed H.R.1, the One Big Beautiful Bill Act (OB3) into law. OB3 introduced significant changes to the U.S. federal corporate tax system, including retroactive relief for certain small business taxpayers, such as reinstatement of immediate expensing for domestic research and development expenditures and modifications to the business interest expense limitation. Under U.S. GAAP, the effects of changes in tax laws are recognized in the period in which the new law is enacted. Accordingly, the provisions impacting the Company have been reflected in the financial statements for the year ended December 31, 2025, and did not have a material impact as the Company has a valuation allowance against its net deferred tax assets.
Equity-based Compensation
Following the provisions of ASC 718, Compensation — Stock Compensation, the Company recognizes compensation expense for equity-based grants using the straight-line attribution method, in which the expense is recognized ratably over the requisite service period within operating expenses based on the grant date fair value. The Company also has granted awards subject to performance-based vesting. The Company recognizes compensation expense for these awards commencing in the period in which the vesting condition becomes probable of achievement. The grant date fair value of stock options are estimated on the date of grant using the Black-Scholes option pricing model. Forfeitures are recognized in the period in which they occur.
Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to a lack of sufficient public market data for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life
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science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for stock options granted to employees whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the stock options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Refer to Note 9 – Equity-based Compensation for additional information.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to credit risks consist of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limit. The Company has not experienced any losses in these accounts and does not believe it is exposed to any significant credit risk related to these funds.
Fair Value of Financial Instruments
The Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
The carrying value of the Company’s cash and cash equivalents, grants receivable, prepaid expense, other receivables, other assets, accounts payable, accrued expenses and other liabilities approximate fair value because of the short-term maturity of these financial instruments.
The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:
Warrant Accounting
Warrants are accounted for either as equity or liabilities based upon the characteristics and provisions of each instrument in accordance with ASC 815, Derivatives and Hedging, and ASC 480, Distinguishing Liabilities from Equity. Warrants classified as equity are recorded at fair value as of the date of issuance on the consolidated balance sheets and no further adjustments to their valuation are made. Warrants classified as liabilities and other financing instruments that require accounting as liabilities are recorded on the consolidated balance sheets at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes
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in the fair value between reporting periods recorded as other income or expense. Management estimates the fair value of these liabilities using the Black-Scholes model and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions, expected volatility, expected life, yield, and risk-free interest rate.
Net Loss Per Share
Basic net loss per share is computed by dividing the net loss per share by the weighted-average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.
Segments
The Company has determined that it operates and manages one operating segment, which is the business of development of clinical and preclinical product candidates for neurodegenerative disorders, such as Alzheimer’s disease and DLB. The Company’s chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources. Refer to Note 13 – Segment Reporting for more information.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has 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 that it is (a) no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Recent Accounting Pronouncements
Recently Adopted
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements (“ASU 2023-06”), to clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB ASC with the SEC's regulations. The Company adopted ASU 2023-06 for the annual period ended December 31, 2025 which did not have a material impact on the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The Company adopted the new standard during the year ended December 31, 2025 and the amendment has been applied retrospectively to all prior periods presented in the consolidated financial statements. Refer to Note 12 – Income Taxes for more information..
Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public business entities to provide more detailed information in the notes to the financial statements about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included
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in certain expense captions presented on the consolidated statement of operations and comprehensive loss. The guidance is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) (“ASU 2025-07”), to clarify the application of derivative accounting to contracts with features based on the operations or activities of one of the parties to the contract and the diversity in accounting for share-based noncash consideration from a customer that is consideration for the transfer of goods or services. ASU 2025-07 is effective for the fiscal year beginning after December 15, 2026, and interim periods within those annual reporting periods. The Company is currently evaluating ASU 2025-07 to determine its impact on the Company’s consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-10, Government Grants under ASC 832 (“ASU 2025-10”), which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the asset’s cost basis. The ASU also requires enhanced disclosures regarding the nature of government grants, significant terms and conditions, accounting policies applied, and amounts recognized in the financial statements. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-10 on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”), which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11 on its consolidated financial statements and related disclosures.
3. Financial Instruments and Fair Value Measurements
Financial assets and liabilities measured at fair value are summarized below:
Significant
Quoted Priced in Significant Other Unobservable
Active Markets Observable Inputs Inputs
(Level 1) (Level 2) (Level 3) Total
Assets:
Cash equivalents:
Money market funds $ 36,422 $ — $ — $ 36,422
Restricted cash equivalents:
Money market funds 190 — — 190
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Significant
Quoted Priced in Significant Other Unobservable
Active Markets Observable Inputs Inputs
(Level 1) (Level 2) (Level 3) Total
Assets:
Cash equivalents:
Money market funds $ 23,999 $ — $ — $ 23,999
There were no Level 3 financial instruments during the year ended December 31, 2025 and 2024.
4. Property and Equipment
Property and equipment, net, consisted of the following:
As of December 31,
Furniture and fixtures 138 140
Less: Accumulated depreciation (187) (1,156)
Property and equipment, net $ 93 $ 181
Depreciation expense for the years ended December 31, 2025 and 2024 was $36 and $107, respectively.
5. Accrued Expenses
Accrued expense consists of the following:
As of December 31,
Employee compensation, benefits, and related accruals $ 1,569 $ 1,526
Research and development costs 9,887 5,654
Professional fees and other accruals 539 440
6. Other Current Liabilities
In October 2023, the Company entered into an insurance premium financing agreement with a lender. Under the agreement, the Company financed $721 of certain premiums at a 8.65% annual interest rate. Total payments of approximately $62, including interest and principal, are due monthly from November 2023 through October 2024. The outstanding principal of the loan was paid off in October 2024.
In October 2024, the Company entered into an insurance premium financing agreement with a lender. Under the agreement, the Company financed $356 of certain premiums at a 8.65% annual interest rate. Total payments of approximately $41, including interest and principal, are due monthly from November 2024 through July 2025. The outstanding principal of the loan was paid off in July 2025.
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In October 2025, the Company entered into an insurance premium financing agreement with a lender. Under the agreement, the Company financed $381 of certain premiums at a 7.95% annual interest rate. Total payments of approximately $40, including interest and principal, are due monthly from November 2025 through August 2026. As of December 31, 2025, the outstanding principal of the loan was $307.
7. Commitments and Contingencies
Operating Leases
The Company’s principal executive offices are located in Purchase, New York where the Company currently occupies 2,864 square feet of office space under a lease that expires in May of 2029. The Company also leases approximately 6,068 square feet of laboratory and office space located in Pittsburgh, Pennsylvania under leases that expire in June of 2026.
Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of December 31, 2025 and 2024 were as follows, in thousands:
As of December 31,
Assets
Operating lease assets $ 306 $ 498
Total operating lease assets $ 306 $ 498
Liabilities
Current
Operating lease liabilities $ 136 $ 193
Noncurrent
Operating lease liabilities, net of current 195 342
Total operating lease liabilities $ 331 $ 535
Operating lease costs for the year ended December 31, 2025 and 2024 was $215 and $218, respectively.
The maturities of the operating lease liabilities and minimum lease payments as of December 31, 2025 were as follows:
For the Years Ended December 31, Operating Leases
Thereafter —
Total undiscounted lease payments $ 368
Less: Imputed interest (37)
Present value of operating lease liabilities $ 331
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The following table summarizes the lease term and discount rate as of December 31, 2025 and 2024:
As of December 31,
Weighted-average remaining lease term (years)
Operating leases 2.8 3.3
Weighted-average discount rate
Operating leases 8.1% 8.1%
Operating cash flows used for operating leases for the year ended December 31, 2025 and 2024 was $222 and $224, respectively.
Litigation and Contingencies
From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can reasonably be made.
As of December 31, 2025 and 2024, there was no litigation or contingency with at least a reasonable possibility of a material loss.
8. Stockholders’ Equity
Common and Preferred Stock
The Company is authorized to issue up to 250,000,000 shares of common stock with a par value of $0.001 per share, and 10,000,000 shares of preferred stock with a par value of $0.001 per share. As of December 31, 2025 and 2024, there were 88,904,161 and 59,854,877 shares of common stock issued and outstanding, respectively.
Common stockholders are entitled to dividends if and when declared by the Company’s board of directors subject to the rights of the preferred stockholders. As of December 31, 2025, no dividends on common stock had been declared by the Company.
2022 ATM
On December 23, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $200,000 in aggregate (the “Shelf”). The Shelf was declared effective on January 3, 2023 by the SEC. The Company also simultaneously entered into the Previous Sales Agreement with B. Riley providing for the offering, issuance and sale by the Company of up to $40,000 of its common stock from time to time in ATM offerings under the Shelf. The Company sold 13,624,062 shares of common stock pursuant to the 2022 ATM during the year ended December 31, 2025, for gross proceeds of approximately $9,409. On December 16, 2025, the Company delivered written notice to B. Riley to terminate the Previous Sales Agreement, effective December 18, 2025. The Company is not subject to any termination penalties related to the termination of the Previous Sales Agreement. Prior to termination, approximately $12,465 remained in gross proceeds available for future issuances of common stock under the 2022 ATM.
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2025 ATM
On December 18, 2025, we filed a shelf registration statement with the SEC and a prospectus supplement, which registered the offering, issuance and sale of up to $300.0 million of various equity and debt securities and up to $75,000 of common stock pursuant to an at-the-market equity offering program with Jefferies. For the period ended December 31, 2025, the Company did not sell any shares of common stock pursuant to the 2025 ATM. As of December 31, 2025, $75,000 remain in gross proceeds available for future issuances of common stock under the 2025 ATM.
Lincoln Park Purchase Agreement
On March 10, 2023, the Company entered into a purchase agreement with Lincoln Park for an equity line financing. The Purchase Agreement provides that, subject to the terms and conditions set forth therein, the Company has the right, but not the obligation, to direct Lincoln Park to purchase up to $35,000 of shares of common stock in the Company’s sole discretion, over a 36-month period commencing on March 10, 2023. During the year ended December 31, 2025, the Company did not sell any shares of common stock to Lincoln Park. As of December 31, 2025, $34,795 was available to draw pursuant to the Purchase Agreement.
March 2024 Offering
In March 2024, the Company entered into an underwriting agreement with Titan relating to the issuance and sale by the Company of 7,557,142 shares of its common stock, which included the exercise of the underwriters’ option to purchase 985,714 additional shares of common stock, at a public offering price of $1.75 per share. The Company closed this offering on March 14, 2024 and the full exercise of the underwriters’ option to purchase 985,714 additional shares of common stock was closed on March 28, 2024. The Company received net proceeds of approximately $11,896, after deducting $1,329 of underwriting discounts and commissions and other offering related expenses payable by the Company.
August 2025 Registered Direct Offering and Warrant Issuance
In August 2025, the Company entered into Securities Purchase Agreements with two institutional investors relating to the issuance of an aggregate of 14,700,000 shares of the Company’s common stock to such investors at a purchase price of $2.05 per share in the “Registered Direct Offering”. The Company also entered into a Placement Agency Agreement on such date (the “Purchase Agency Agreement”) with Titan acting as the sole placement agent for the Registered Direct Offering. The Company closed this offering on August 29, 2025. The Company received net proceeds of approximately $27,890, after deducting $2,245 of underwriting discounts, commissions, placement agent fees, and other offering related expenses payable by the Company.
In connection with the Placement Agency Agreement, the Company agreed to pay Titan an aggregate cash fee of 7.0% of the gross proceeds raised from the sale and issuance of the shares of common stock minus certain expenses. Additionally, the Company agreed to issue warrants to Titan to purchase up to 514,500 shares of common stock (the “Placement Agent Warrants”). The Placement Agent Warrants have an exercise price equal to $2.78 and will be exercisable commencing six months from the close of the Registered Direct Offering with a term of five (5) years from the date of the Placement Agency Agreement. The Placement Agent Warrants are equity classified as the warrants do not contain a required cash settlement adjustment feature with respect to a transaction outside of the Company’s control or not deemed to be indexed to the Company’s stock. The Placement Agent Warrants were issued for services performed by the placement agent and were treated as offering costs. The aggregate fair value was determined to be approximately $853 using the Black-Scholes pricing model with the following assumptions: 79.97% volatility, risk free interest rate of 3.59%, an expected life of 2.8 years and no dividend. The aggregate fair market value was recorded as an offset to gross proceeds of the Registered Direct Offering and an increase to additional paid-in capital.
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As of December 31, 2025, the Company had the following equity-classified common stock warrants outstanding:
Weighted-Average
Remaining
Number of Weighted-Average Contractual Life
Warrants Exercise Price (In Years)
Balance, December 31, 2024 — $ — —
Exercised — $ — —
Expired — $ — —
Exercisable as of December 31, 2025 — $ — —
9. Equity-based Compensation
2021 Equity Incentive Plan
On October 7, 2021, the date upon which the Company’s Registration Statement on Form S-1 in connection with the IPO was declared effective, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) became effective. On the same date, the Company ceased granting awards under its 2017 Equity Incentive Plan (the “2017 Plan”). The 2021 Plan authorizes the award of both equity-based and cash-based incentive awards, including: (i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units (“RSUs”), and (v) cash or other stock-based awards. Incentive stock options may be granted only to employees. All other types of awards may be issued to employees, directors, consultants, and other service providers.
As of December 31, 2025, the aggregate number of shares of common stock of the Company that may be issued under the Plan is 4,310,186. The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2025 pursuant to an evergreen provision therein by 2,992,743 shares, representing 5% of total common shares outstanding at December 31, 2024. The aggregate number of shares will increase each anniversary of such date prior to the termination of the 2021 Plan, equal to the lesser of (i) 5% of the Company’s shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by the Company’s board of directors or the compensation committee. No more than 7,543,185 shares of common stock may be issued under the 2021 Plan through incentive stock options. Shares subject to the 2021 Plan, the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan. The total number of shares underlying the Prior Plan awards that may be recycled into the 2021 Plan will not exceed 4,334,131 shares.
2017 Equity Incentive Plan
On September 15, 2017, the Company’s board of directors approved the 2017 Plan, which provides for the granting of incentive stock options, non-qualified stock options and stock awards to employees, certain consultants and directors. The board of directors, or its designated committee, has the sole authority to select the individuals to whom awards are granted and determine the terms of each award, including the number of shares and the schedule upon which the award becomes exercisable. Upon the effectiveness of the 2021 Plan, no further awards will be granted under the 2017 Plan.
The aggregate number of shares of common stock of the Company that may be issued under the 2017 Plan is 4,334,131 (taking into account shares of common stock that may become issuable pursuant to Section 3(b) of the 2017 Plan in respect of shares of common stock reserved under the Company’s Amended and Restated 2007 Equity Incentive Plan). The 2021 Plan provides for shares granted under the Prior Plans which are cancelled, forfeited, exchanged or surrendered without having been exercised shall subsequently be available for reissuance under the 2021 Plan.
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Employee Stock Purchase Plan
The Company’s board of directors approved the Employee Stock Purchase Plan (the “ESPP”) prior to the closing of the IPO. Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price. As of December 31, 2025, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.
Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of common stock, (ii) 1% of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the board of directors. Such shares of common stock may be newly issued shares, treasury shares or shares acquired on the open market. In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.
Stock Options
The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
Year Ended December 31,
Risk-free interest rate 4.23% – 4.45%
Dividend yield 0.00%
Expected term (years) 6.08 – 6.20
During the year ended December 31, 2025, there were no stock options granted.
Expected Volatility — Up until October 13, 2021, the Company was privately held and did not have a trading history of common stock. As such, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to be comparable to our business over a period equivalent to the expected term of the stock-based awards. The Company will continue to derive expected volatility from average historical stock volatilities of industry peers until the Company has compiled a trading history of its own for a sufficient period of time.
Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury constant maturity notes with terms approximately equal to the stock-based awards’ expected term.
Dividend Yield — The expected dividend yield is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.
Expected Term — The expected term represents the period that the stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, expected term has been calculated using the simplified method.
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Activity for options was as follows:
Options Outstanding
Weighted-Average
Aggregate Remaining
Number of Weighted-Average Intrinsic Value Contractual Life
Options Exercise Price (in 000’s) (In Years)
Options granted — $ —
Options exercised (50,375) $ 1.41
Options forfeited (22,037) $ 1.66
There were no grants of stock options for the year ended December 31, 2025. The weighted-average grant date fair value of stock options granted was $0 and $1.56 during the years ended December 31, 2025 and 2024, respectively. There were no stock options granted during the year ended December 31, 2025 and 247,500 stock options granted at an aggregate fair value of $385 for the year ended December 31, 2024. During the year ended December 31, 2025 and 2024, there were 50,375 and 93,250 stock options exercised, respectively, with an aggregate grant date fair value of $39 and $58, respectively. The intrinsic value of stock options exercised during the year ended December 31, 2025 and 2024 was $54 and $121, respectively.
Restricted Stock Units
The fair values of restricted stock units (“RSUs”) are based on the fair market value of the Company’s common stock on the date of grant. Each RSU represents a contingent right to receive one share of the Company’s common stock upon vesting. RSUs with time base vesting conditions for employees vest annually over three or four years on each anniversary of the Grant Date and RSUs for non-employee directors vest on the one-year anniversary of the Grant Date. RSUs with performance conditions for employees vest on the one-year anniversary of the performance achievement date, assuming continued service from the employee during that period of time.
For the year ended December 31, 2025 and 2024, the Company granted 2,867,409 and 358,200 RSUs awards, respectively, containing time-based vesting conditions to employees, non-employees, and non-employee directors.
For the year ended December 31, 2025 and 2024, the Company granted 0 and 515,600 RSU awards, respectively, containing performance and time-based vesting conditions to employees. The performance conditions for the RSU awards granted in 2024 were achieved in 2024 and the RSUs vest on the one-year anniversary of the achievement of the performance condition. As of December 31, 2025, the RSU awards containing performance conditions granted in 2024 had no remaining performance conditions.
The following table summarizes the Company’s RSU activity for the year ended December 31, 2025:
Number of Weighted-Average
Restricted Stock Units Grant Date Fair Value
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Equity-based Compensation Expense
The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to stock options and restricted stock units as follows:
Year Ended December 31,
Research and development $ 1,316 $ 1,080
General and administrative 771 2,668
Total equity-based compensation $ 2,087 $ 3,748
As of December 31, 2025, total future compensation expense related to unvested time-based awards yet to be recognized by the Company was $1,728, which is expected to be recognized over a weighted-average remaining vesting period of approximately 2.6 years. As of December 31, 2025, there was no future compensation expense related to unvested performance-based awards yet to be recognized by the Company.
10. Net Loss per Share
The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their antidilutive effect:
December 31,
Warrants issued and outstanding 514,500 —
11. Retirement Plan
The Company maintains a 401(k) retirement plan to provide retirement and incidental benefits for its employees. Employees may contribute a percentage of their annual compensation to the 401(k) retirement plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The Company matches employee contributions dollar for dollar up to a maximum of 6% of the employees’ compensation per person per year. All matching contributions vest immediately. Company matching contributions to the 401(k) retirement plan totaled $251 and $265 for the year ended December 31, 2025 and 2024, respectively.
12. Income Taxes
During the years ended December 31, 2025 and 2024 the Company incurred pre-tax losses from its domestic operations of $23,487 and $33,971, respectively.
During the years ended December 31, 2025 and 2024, the Company recorded no current or deferred income tax expenses or benefits as the Company has incurred losses since inception and has provided a full valuation allowance against its deferred tax assets.
The Tax Cuts and Jobs Act of 2017 required the Company to capitalize and subsequently amortize research and development expenditures over five years for research activities conducted in the United States and over fifteen years for research activities conducted outside of the United States, effective January 1, 2022. On July 4, 2025, the One Big Beautiful Bill Act was enacted in the U.S. and introduced significant changes, including retroactive relief for certain small business taxpayers, such as reinstatement of immediate expensing for domestic research and development expenditures and modifications to the business interest expense limitation. As a result, the Company amended its federal and state income
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tax returns for tax years 2022 through 2024 to reflect the immediate expensing of domestic research and development expenditures.
The Company adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements To Income Tax Disclosures" on a retrospective basis beginning with the year ended December 31, 2025. A reconciliation of the U.S. federal statutory amount and rate to the Company’s effective income tax amount and rate for the year ended December 31, 2025 and December 31, 2024 is as follows:
Year Ended December 31, 2025 Year Ended December 31, 2024
Amount Percentage Amount Percentage
Tax benefit at the U.S. statutory rate $ (4,932) 21.0 % $ (7,134) 21.0 %
Foreign Tax Effects
Change in valuation allowance — — % (373) 1.1 %
Entity dissolution — — % 373 (1.1) %
Tax credits
Federal research and development (671) 2.9 % (941) 2.8 %
Nontaxable or Nondeductible Items