crvo20251231_10k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-K
(Mark one)
For the fiscal year ended December 31, 2025
OR
For the transition period fromto
Commission file number: 001-37942
CervoMed Inc.
(Exact Name of Registrant as specified in its Charter)
(617) 744-4400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share CRVO NASDAQ Capital Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicated by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common stock beneficially owned by non-affiliates of the registrant, calculated based upon the closing sale price of the common stock as quoted by the Nasdaq Capital Market on June 30, 2025 (the last business day of the registrant’s second fiscal quarter), was approximately $39.9 million.
As of March 11, 2026, 9,258,719 shares of common stock of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K: Certain information required in Part III of this Annual Report on Form 10-K is incorporated by reference from the Registrant’s Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission.
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TABLE OF CONTENTS
Page No.
Introductory Notes 4
Part I
Item 1: Business 9
Item 1A: Risk Factors 37
Item 1B: Unresolved Staff Comments 75
Item 1C: Cybersecurity 75
Item 2: Properties 76
Item 3: Legal Proceedings 76
Item 4: Mine Safety Disclosures 77
Part II
Item 6: [Reserved] 77
Item 7A: Quantitative and Qualitative Disclosure About Market Risk 85
Item 8: Financial Statements and Supplementary Data 85
Item 9A: Controls and Procedures 106
Item 9B: Other Information 107
Part III
Item 10: Directors, Executive Officers and Corporate Governance 107
Item 11: Executive Compensation 107
Item 14: Principal Accountant Fees and Services 107
Part IV
Item 15: Exhibit and Financial Statement Schedules 107
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INTRODUCTORY NOTES
Note Regarding Company References and Other Defined Terms
Unless the context otherwise requires, all references in this Annual Report to (i) “CervoMed,” the “Company,” “we,” “our,” or “us,” refer to the business of CervoMed Inc. for all dates and periods subsequent to (and including) August 16, 2023 and to the business of EIP Pharma, Inc. (“EIP”), our wholly-owned subsidiary and the accounting acquirer in the Merger (as defined below) for all dates and periods prior to August 16, 2023 and (ii) “common stock” refer to our common stock, par value $0.001 per share.
We have also used several other defined terms in this Annual Report, many of which are explained or defined below:
Term Definition
2015 Equity Plan CervoMed Inc. 2015 Equity Incentive Plan, as amended
2025 Equity Plan CervoMed Inc. 2025 Equity Incentive Plan
401(k) Plan CervoMed Inc. 401(k) Defined Contribution Plan
AD Alzheimer’s Disease
Annual Report this Annual Report on Form 10-K
AAIC Alzheimer's Association International Conference
ACA Affordable Care Act and the Healthcare and Education Reconciliation Act
AI artificial intelligence
AIA America Invents Act
AKS anti-kickback statute
ALS amyotrophic lateral sclerosis
ALT alanine aminotransferase
ANDA abbreviated new drug application
API active pharmaceutical ingredient
ASC Accounting Standard Codification of the FASB
AST aspartate aminotransferase
ASU Accounting Standards Update
Bayh-Dole Act Bayh-Dole Act of 1980
BID twice daily
BFC basal forebrain cholinergic
Board our board of directors
CARES Act Coronavirus Aid, Relief, and Economic Security Act
CCPA the California Consumer Privacy Act
CDMO contract development and manufacturing organization
CDR-SB Clinical Dementia Rating Sum of Boxes test
cGMP current good manufacturing practices
ChAT+ neurons neurons staining positively for choline acetyl transferase
CMC chemistry, manufacturing and controls
CMO contract manufacturing organization
CMS the US Centers for Medicare & Medicaid Services
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CNPV Commissioner's National Priority Voucher
CNS central nervous system
Code the US Internal Revenue Code of 1986, as amended
CODM chief operating decision maker
CPRA the California Privacy Rights Act
CRL Complete Response Letter
CRO contract research organization
DGCL Delaware General Corporation Law
DGM deep grey matter
DLB dementia with Lewy bodies
DNP the FDA’s Division of Neurology Products
DP drug product
DS drug substance
DSCSA Drug Supply Chain Security Act
EEA European Economic Area
EEG electroencephalogram
Effective Time the effective time of the Merger on August 16, 2023
EIP EIP Pharma, Inc., our wholly-owned subsidiary
EMA European Medicines Agency
EOAD Early Onset Alzheimer’s Disease
EOT end of treatment
ERISA the Employment Retirement Income Security Act
Exchange Act Securities Exchange Act of 1934, as amended
FASB Financial Accounting Standards Board
FCA False Claims Act
FCPA the Foreign Corrupt Practices Act
FDA US Food and Drug Administration
FDCA Federal Food, Drug, and Cosmetic Act
FDIC Federal Deposit Insurance Corporation
FTC Federal Trade Commission
FTD frontotemporal disorders
GCP good clinical practices
GDPR European Union General Data Protection Regulation
GFAP glial fibrillary acidic protein
GLP good laboratory practice
HIPAA the Health Insurance Portability and Accountability of Act of 1996
IEEPA International Emergency Economic Powers Act
IMM irreversible morbidity and mortality
IND investigational new drug (application)
IRA Inflation Reduction Act of 2022
IRB institutional review board
IT information technology
MA marketing authorization
MAPK mitogen-activated protein kinase
MCI mild cognitive impairment
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MMRM mixed-effects model for repeated measures
MoCA Montreal Cognitive Assessment
MRI magnetic resonance imaging
MSN medial septal nucleus
Nasdaq Nasdaq Stock Market, LLC
NCE new chemical entity
NDA new drug application
NfL neurofilament light chain protein
nfvPPA non-fluent variant primary progressive aphasia
NGF nerve growth factor
NIA the National Institute on Aging of the National Institutes of Health
NIH National Institutes of Health
NOL net operating loss
NTB Neuropsychological Test Battery
NYSE New York Stock Exchange
p38α p38 mitogen-activated protein kinase alpha
PBM pharmacy benefit manger
PD Parkinson’s disease
PDAB prescription drug affordability board
PDMA Prescription Drug Marketing Act
PDUFA Prescription Drug User Fee Act, as amended
PK pharmacokinetics
POC proof-of-concept
PPA primary progressive aphasia
PREA Pediatric Research Equity Act
ptau181 plasma phosphorylated tau at position 181
RA rheumatoid arthritis
RAS Recovery After Stroke
Regulation S-K Regulation S-K promulgated under the Securities Act
REMS Risk Evaluation and Mitigation Strategy
RLD reference-listed drug
ROU right-of-use
SAB scientific advisory board
SAE serious adverse events
SAP statistical analysis plan
SEC US Securities and Exchange Commission
Section 382 Section 382 of the Code
Securities Act Securities Act of 1933, as amended
TCJA Tax Cuts and Jobs Act of 2017
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TEAE treatment-emergent adverse event
TID three times daily
TUG Timed Up and Go test
UK United Kingdom
UPL upper payment limit
US United States of America
US GAAP US generally accepted accounting principles
USPTO US Patent and Trademark Office
Vertex Vertex Pharmaceuticals Incorporated
Note Regarding Forward-Looking Statements
This Annual Report (including, for purposes of this Note Regarding Forward-Looking Statements, any information or documents incorporated herein by reference) includes express and implied forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change, and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, liquidity, and prospects may differ materially from the forward-looking statements contained in this Annual Report. In addition, even if our results of operations, financial condition, liquidity, and prospects are consistent with the forward-looking statements contained in this Annual Report, they may not be predictive of actual results or reflect unanticipated developments in future periods.
Forward-looking statements appear in a number of places throughout this Annual Report. We may, in some cases, use terms such as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “aims,” “seeks,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately,” “potential,” “target,” “project,” “contemplate,” “predict,” “forecast,” “continue,” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements also include statements regarding our intentions, beliefs, projections, outlook, analyses or expectations concerning, among other things:
● our future obligations under the Vertex Agreement;
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● recently enacted and future legislation related to the healthcare system;
As a result of these and other factors, known and unknown, actual results could differ materially from our intentions, beliefs, projections, outlook, analyses, or expectations expressed in any forward-looking statements in this Annual Report. Accordingly, we cannot assure you that the forward-looking statements contained in this Annual Report will prove to be accurate or that any such inaccuracy will not be material. You should also understand that it is not possible to predict or identify all such factors, and you should not consider any such list to be a complete set of all potential risks or uncertainties. In light of the foregoing and the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. For all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Any forward-looking statements that we make in this Annual Report speak only as of the date of such statement, and, except as required by applicable law or by the rules and regulations of the SEC, we undertake no obligation to update such statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events. Comparisons of current and any prior period results are not intended to express any ongoing or future trends or indications of future performance, unless explicitly expressed as such, and should only be viewed as historical data.
Note Regarding Trademarks, Trade Names, and Service Marks
This Annual Report includes trademarks, trade names, and service marks owned by us or other companies. All trademarks, service marks and trade names included in this Annual Report are the property of their respective owners. To the extent any such terms appear without the trade name, trademark, or service mark notice, such presentation is for convenience only and should not be construed as being used in a descriptive or generic sense.
Note Regarding Data from Clinical Trials and Nonclinical Studies
All analyses reported from clinical trials and nonclinical studies are exploratory in nature. P-values and 95% confidence intervals are reported to provide a measure of the probability that any differences identified between the samples are due to chance. All ptau181 measurements for the RewinD-LB Trial are reported based on the Quanterix v2.1 assay scale, which utilizes a different standard than the prior version of such assay (v2.0) on which ptau181 measures for our AscenD-LB Trial are reported. Quantitative values on the v2.1 scale are approximately ten-fold higher than corresponding values on the v2.0 scale related to the standard that is used for the assay.
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PART I
ITEM 1. BUSINESS
Overview
We are a clinical-stage biotechnology company developing treatments for age-related brain disorders. Our lead drug candidate, neflamapimod, is an investigational, orally administered small-molecule drug that readily crosses the blood brain barrier and selectively inhibits the enzyme p38α, a key driver of neuroinflammation and synaptic dysfunction. By targeting the critical disease processes underlying degenerative disorders of the brain, neflamapimod has the potential to reverse synaptic dysfunction, improve neuron health, and slow or prevent disease progression. Neflamapimod is currently in clinical development for the treatment of DLB, our lead indication, as well as nfvPPA, RAS, and ALS.
Our novel approach focuses on reducing the impact of neuroinflammation, which we believe is a key factor in the manifestation of degenerative diseases of the brain. Chronic activation of p38α in the brains of people with certain neurodegenerative diseases is believed to impair how neurons communicate through synapses. This synaptic dysfunction leads to deterioration of cognitive and motor abilities. Left untreated, synaptic dysfunction can result in irreversible neuronal loss that leads to devastating disabilities, significant reliance on a caretaker, long term care living, and, ultimately, death. However, before neuronal loss commences, disease progression in many major neurodegenerative disorders, including DLB, initially involves a protracted period of reversible functional loss, particularly with respect to the synapses. We believe that inhibiting p38α activity in the brain has the potential to reverse the clinical progression observed in the early stages of certain neurodegenerative diseases, as well as slow further progression by delaying permanent synaptic dysfunction and neuron death, by interfering with key pathogenic drivers of disease.
We believe we are a leader in the industry in developing a treatment for DLB, a disease with no approved therapies in the US or European Union, despite being the second most common progressive dementia. Neflamapimod is the only clinical drug candidate that, to our knowledge, has shown statistically significant improvements on clinical endpoints and a biomarker of neurodegeneration in both a Phase 2a and Phase 2b clinical trial. Differentiating our approach from potential competitors, we believe we are also the only company specifically targeting the treatment of DLB patients without AD co-pathology. While DLB patients with AD co-pathology generally have significant, irreversible neuronal loss, DLB without AD co-pathology is primarily a disease of functional deficits of synapses that we believe is more treatable. We believe if neflamapimod is given in the early stages of certain degenerative diseases of the brain like DLB without AD co-pathology, it may reverse synaptic dysfunction, improve neuron health and function, and slow further progression by delaying synaptic dysfunction and neuronal death. We believe this approach enhances the alignment of our development path with neflamapimod’s mechanism of action, reduces the heterogeneity of our target patient population, and provides the opportunity to demonstrate heightened clinical effect in shorter duration trials.
Our Pipeline
Set forth below is a table presenting our clinical pipeline:
Anticipated Milestones
Set forth below are our anticipated clinical development milestones during the next 12 months, subject to, among other things, available funding:
Anticipated Milestones
2Q26 Complete enrollment in Phase 2a clinical trial in nfvPPA
Mid-2026 Complete enrollment in Phase 2a RESTORE Trial in RAS
Mid-2026 Initial Phase 2a biomarker data in nfvPPA
2H26 Topline Phase 2a clinical data in RAS
2H26 Initial Phase 2a clinical data in nfvPPA
2H26 Initiation of planned Phase 3 trial in DLB
YE26 First patient dosed with neflamapimod in EXPERTS-ALS trial in ALS
1H27 Topline Phase 2a clinical and biomarker data in nfvPPA
Our Strategy
Our mission is to develop and commercialize innovative medicines that change the course of the disease in patients who suffer from age-related brain disorders.
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The key elements of our strategy are:
Neflamapimod in Dementia with Lewy Bodies
DLB Background
Significant Disease Burden & High Unmet Medical Need
DLB is the second most common progressive dementia after AD, representing approximately 10-20% of all dementia cases and affecting millions worldwide. The Lewy Body Dementia Association suggest there are more than 700,000 individuals with DLB in each of the US and the European Union, and neuropathology studies suggest true incidence may be significantly higher due to underdiagnosis in current practice. Despite this prevalence, there are currently no approved treatments specifically for DLB in the US or the European Union.
The disease is characterized by progressive dementia and fluctuating cognition (particularly deficits in attention), visual hallucination, motor dysfunction (disturbances in gait and balance), and sleep disturbances. While DLB afflicts fewer total patients than AD, it is arguably a more debilitating disease. With respect to life expectancy, in a large cohort of DLB and AD cases (251 DLB, 222 AD), after controlling for age at diagnosis, comorbidity, and antipsychotic prescribing, the average survival for DLB patients (<4 years) was nearly 50% was shorter than the average survival for AD patients (~7 years). The average time progression to severe dementia was also shorter by nearly two years in DLB and, even in the mild-to-moderate stages, the disease burden with respect to quality of life and caregiver burden is greater in DLB than in AD, with deficits occurring in both cognitive and motor function. For example, in a large prospective study, mild dementia patients with DLB were admitted to a nursing home after only a median of 1.8 years from presentation and diagnosis, nearly two years shorter than the 3.7-year median in the AD group. Patients with DLB are also more frequently admitted to general hospitals, are more prone to falls, and utilize inpatient care to a substantially higher degree than patients with AD and the general elderly population.
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In sum, DLB often progresses quickly and severely impacts not only the daily lives of patients suffering from the disease but that of their caregivers. There are currently no approved treatments available for DLB in the US or European Union, so management of DLB focuses on transient relief of symptoms, including its cognitive manifestations and motor components via cholinesterase inhibitors and dopaminergic medications, respectively. Even with these treatments, the cognitive and functional impairments progress rapidly, caregiver burden remains high, and new options are needed for these patients. No prior approaches have been shown to clinically slow neuronal loss or prevent cognitive decline in DLB, and neflamapimod is one of only a handful of drug candidates that have demonstrated positive effects in a Phase 2 clinical trial.
Neflamapimod’s Mechanism of Action & Scientific Rationale
Our approach is based on an understanding of the mechanism by which neuroinflammation leads to the initiation and establishment of the neurodegenerative process in DLB. The process of neurodegeneration starts with dysfunction of synapses. Treating synaptic dysfunction has emerged as a major therapeutic objective to address progression of neurodegenerative diseases, particularly in the early stages prior to the onset of significant cell death. Importantly, in animal models, while neurodegeneration is irreversible, synaptic dysfunction has been observed to be reversible. In addition, even in animal models of rapidly progressive neurodegenerative disorders, interventions that reverse synaptic dysfunction both improve function and “arrest” the neurodegenerative process. Thus, therapeutic interventions that target synaptic dysfunction have the potential to both reverse and slow disease progression in the early stages of neurodegenerative dementias.
The basal forebrain – specifically, nerve cells producing the neurotransmitter acetylcholine known as cholinergic neurons – plays critical roles in controlling and optimizing a wide range of cognitive, motor, and visual tasks. Synaptic dysfunction in the BFC system is the primary pathogenic driver of disease expression and progression in DLB. In collaborative work we conducted with the New York University Langone Medical Center, and later published in the journal Nature Communications, we demonstrated that neflamapimod targets the specific molecular mechanisms underlying BFC dysfunction and degeneration, and may successfully reverse disease progression in the early stages of BFC dysfunction.
Neflamapimod was hypothesized to reduce Rab5 protein activity – a key therapeutic target in this pathogenic model for cholinergic degeneration in DLB – because of scientific literature showing that the immediate target of neflamapimod, p38α, is the major activator of Rab5. The protein Rab5 is a master regulator of endocytosis and endosomal trafficking. As shown in the figure below, cholinergic degeneration is believed to result from inflammation and various aggregated proteins that lead to aberrant activation of Rab5. This Rab5 activation leads to impaired retrograde axonal transport and a block in NGF signaling from the synapses at the ends of nerve fibers (or “axons”) back to cell body of cholinergic neurons in the basal forebrain. As NGF provides support for neuronal health, the resulting loss is then believed to lead to dysfunction, and, eventually, degeneration of cholinergic neurons – which, as noted above, plays a critical role in DLB disease expression – as these neurons’ very long fibers make them particularly vulnerable to this pathogenic process.
Molecular Mechanisms Underlying Cholinergic Neurodegeneration in DLB and Point of Intervention for Neflamapimod
Our Differentiated Approach: DLB Without AD Co-Pathology
Historically, a major challenge in developing effective drug treatments for chronic neurodegenerative diseases has been an inability to demonstrate clinically meaningful improvement in Phase 2 clinical trials of less than six-months in duration. Instead, due to a variety of factors including the nature of many such diseases, particularly AD, demonstrating effectiveness often depends on clinical trial durations of 12-18 months that enroll 1,000 or more participants. Further, prior Phase 2 clinical trial data – often utilizing a different primary endpoint than will be used in Phase 3, such as an indicative biomarker – may not provide as meaningful a predictor of these drug candidates' potential for a successful clinical outcome in Phase 3. Effectively requiring Phase 3 trials to see a clinical effect, late-stage clinical development in these indications is often associated with significant costs, time horizons, and clinical risk. Some incorrectly associate these same challenges with DLB drug development, in part due to the prominence of AD co-pathology in DLB patients.
In contrast, our DLB development program for neflamapimod is focused on the treatment of DLB without AD co-pathology, which we sometimes refer to as “pure DLB.” These patients comprise approximately 50% of all DLB patients, with hundreds of thousands of patients diagnosed in the US and millions worldwide. While DLB patients with AD co-pathology have significant, irreversible neuronal loss in the hippocampus, pure DLB is primarily a disease of reversible synaptic dysfunction in the BFC system. Relative to patients with AD co-pathology, these patients have limited neurodegeneration and neuronal loss in the cortical regions of the brain, particularly in the hippocampus. As those neurons are still alive, with successful pharmacological treatment, they can be rescued and the disease process reversed. Importantly, DLB remains a rapidly progressing disease, even in the absence of AD co-pathology, with families and caregivers often reporting seeing patients progress on a weekly or even daily basis.
The core of our differentiated approach sits at the intersection of these two features of pure DLB. The combination of less extensive neuronal loss and fixed clinical deficit, on the one hand, and rapid progression, on the other, provides the opportunity to demonstrate meaningful clinical effects compared to control in as soon as 16 weeks – as we have in our two Phase 2 trials described in more detail below – rather than the 52 weeks or more that is often required in AD trials. This approach was also central to our November 2025 alignment with the FDA on key aspects of our proposed Phase 3 clinical trial of neflamapimod for the treatment of DLB. With the FDA’s feedback, and subject to available funding, we plan to initiate a single Phase 3 clinical trial of 32 weeks duration in approximately 300 patients with DLB without AD co-pathology, utilizing the same primary endpoint (mean change in CDR-SB) as our recently completed Phase 2b trial.
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We believe that, in contrast to many late-stage trials in other neurodegenerative diseases like AD, this consistency in primary endpoint from Phase 2b has the potential to increase our probability of success in Phase 3, while the ability to demonstrate a clinically meaningful effect with fewer patients and on a shorter timeline allows us to execute towards that outcome with more capital efficiency.
AscenD-LB Trial: Our Phase 2a Trial in Dementia with Lewy Bodies
The AscenD-LB Trial was an exploratory, Phase 2a clinical trial designed to evaluate the effects of neflamapimod against a range of clinical endpoints. A total of 91 participants were enrolled between October 2019 and March 2020 and randomized to receive neflamapimod capsules at one of two doses (40mg6 BID or 40mg TID) or matching placebo capsules (randomized 1:1) for 16 weeks. In the primary analysis of the AscenD-LB Trial, which included all participants enrolled and evaluated for treatment effects, neflamapimod demonstrated improvement compared to placebo in dementia severity (assessed by CDR-SB, p=0.023 vs. placebo) and functional mobility (as assessed by the TUG test, p=0.044 vs. placebo). In additional analyses, at the higher dose (40mg TID), improvement on NTB was evident as compared to placebo (p=0.049). Encouraging positive trends on the ten-item Neuropsychiatric Inventory were also seen, particularly with respect to visual hallucinations. This primary analysis of the AscenD-LB Trial data showing neflamapimod significantly improved dementia severity and motor function was published in Nature Communications in September 2022.
With progress in laboratory testing techniques for blood biomarkers of neurodegeneration during and shortly following completion of the AscenD-LB Trial, additional pre-specified analyses of the AscenD-LB Trial data were conducted to evaluate the results specifically in DLB patients without AD co-pathology, as assessed by plasma ptau181. As shown in the table below, participants without evidence of AD co-pathology had an average higher treatment response (evaluated by Cohen’s d effect size) compared to the average response in the overall trial population, and demonstrated significant improvement in CDR-SB, cognitive tests of attention, the TUG test, and in a test of recognition memory (International Shopping List Test recognition index), with Cohen’s d treatment effect sizes indicating, in each case, clinical effects that are moderate-to-large in magnitude (> 0.7). By comparison, cholinesterase inhibitors – the current standard of care in DLB – have Cohen’s d effect size of approximately 0.3 in the treatment of both DLB and AD. Further, not only was the effect size with 40mg TID neflamapimod treatment comparatively larger, the effect demonstrated was on top of participant’s background therapies which, in many cases, included cholinesterase inhibitors.
RewinD-LB Trial: Our Phase 2b Trial in Dementia with Lewy Bodies
Trial Background and Design
Based on our successes and advances in Phase 2a, we designed our Phase 2b RewinD-LB Trial and, in January 2023, we were awarded a $21.0 million grant from the NIA, and an additional $0.3 million was awarded in August 2024, to fund the majority of the trial’s costs. The trial, subsequently initiated in mid-2023, evaluated neflamapimod in 159 participants with DLB and incorporated in its design several important things we learned from the AscenD-LB Trial and our other clinical evaluations of neflamapimod:
The RewinD-LB Trial included two distinct parts. The Randomized Phase was a double-blind, placebo-controlled evaluation of neflamapimod administered orally, 40mg TID, randomized with placebo on a one-to-one basis, with a primary analysis after 16 weeks of treatment. Each treatment group included approximately 80 participants diagnosed with DLB by consensus criteria (global CDR = 0.5 or 1.0). To enrich for patients without AD co-pathology, patients with significantly elevated plasma ptau181 at screening (≥ 27.2 pg/ml) were excluded. The second phase of the trial was a 32-week open-label treatment Extension Phase for participants completing the Randomized Phase. The failure of Batch A to achieve target drug concentrations and the pre-planned introduction of Batch B (which did) allowed us to amend the trial’s statistical analysis plan in February 2025 – prior to our analysis and announcement of 16-week Extension Phase results in March 2025 – to include a pre-specified analysis of Batch B versus Batch A after both 16- and 32-weeks of treatment during the Extension Phase. Further, although the Extension Phase was open-label, both participants and site personnel were unaware of which batch they were receiving, allowing a controlled comparison of an effective batch of neflamapimod (Batch B, which served as the active arm) against an ineffective batch (Batch A, which served as a control).
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The primary objective of the trial was to demonstrate that neflamapimod, compared with placebo or control, improved dementia severity, as assessed by mean change from baseline to Week 16 in CDR-SB. CDR-SB is designed to assess both cognition and function, and is obtained by clinicians rating the severity of symptoms across six domains – memory, orientation, judgment & problem solving, community affairs, home & hobbies, and personal care – after a semi-structured interview with the patient and a reliable informant (e.g., family member) on a 0–3 scale for each domain (total range 0-18, with a higher score indicating worse dementia). Secondary objectives included further evaluation of the safety and tolerability of neflamapimod and treatment effects on (1) global rating of treatment effect, assessed by the ADCS-CGIC, (2) motor function, as assessed by the TUG test, and (3) cognition, assessed by a DLB-specific cognitive test battery. Tertiary endpoints examined whether neflamapimod affects neuropsychiatric outcomes as assessed by the NPI-12, effect on fluctuations in cognition as assessed by the Dementia Cognitive Fluctuations Scale, impact on resting-state EEG (as well as alpha-reactivity evaluated by EEG) and in a sub-set of participants, basal forebrain atrophy assessed by structural MRI.
Randomized Phase Results
In December 2024, we announced topline results from the Randomized Phase of the RewinD-LB Trial. In the Randomized Phase, during which all participants received Batch A, no significant differences were observed between the neflamapimod and placebo treatment groups with respect to CDR-SB or any of the trial's secondary endpoint. However, average trough plasma drug concentrations with Batch A during the Randomized Phase were more than 20% lower than our target concentration level. As described further below under Alignment with FDA on Planned Phase 3 Trial – Pre-Phase 3 Manufacturing Improvements, we subsequently determined that the reduction was caused by an unknown, latent property of neflamapimod DS. We are implementing a manufacturing improvement that will address this issue ahead of our planned Phase 3 trial and going forward. However, particularly given the importance of achieving target drug concentrations to maximizing neflamapimod’s effectiveness described above, we believe this issue was a primary driver of our failure to see during the Randomized Phase the same positive results with saw with Batch B during the Extension Phase.
Extension Phase Results
Of the 159 participants randomized in the Randomized Phase, 152 completed the Randomized Phase and 149 entered the neflamapimod only Extension Phase. The chart below shows when the pre-planned introduction of Batch B to resupply the Extension Phase occurred for those 149 patients:
In March 2025, we announced that, in the first 16 weeks of the Extension Phase, treatment with Batch B – which, unlike Batch A, achieved target drug concentrations – demonstrated statistically significant improvement on CDR-SB, the trial’s primary outcome measure, and ADCS-CGIC, a key secondary outcome measure, in each case, compared to Batch A. In July 2025, we reported additional data from the Extension Phase showing significant, durable treatment effects out to 32 weeks, including a significant risk reduction in clinically significant worsening (≥ 1.5-point increase in CDR-SB) with Batch B neflamapimod treatment compared to control.
The final results of the RewinD-LB Trial were presented in December 2025 at the Clinical Trials in Alzheimer’s Disease (CTAD) conference. The key results included:
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Alignment with FDA on Planned Phase 3 Trial
In November 2025, we announced alignment with the FDA on key aspects of our planned Phase 3 clinical trial of neflamapimod for the treatment of DLB. Based on FDA feedback, we plan to initiate a single, global, randomized, double-blind, placebo-controlled Phase 3 clinical trial evaluating the efficacy and safety of neflamapimod in approximately 300 participants with DLB by consensus clinical criteria in the second half of 2026, subject to available funding. The trial will exclude patients who have historical evidence of AD co-pathology by brain imaging scan or cerebrospinal fluid sampling. In addition, the trial will be further enriched for participants who do not have AD co-pathology by excluding patients with plasma ptau181 ≥ 21.0 pg/mL at screening. Participants will be randomized 1:1 to receive either oral neflamapimod or placebo for 32 weeks, followed by a neflamapimod only extension for 48 weeks. Worsening of global cognition and function as measured by change CDR-SB – the same primary endpoint as in our RewinD-LB Trial – will be the primary endpoint for the planned Phase 3 trial. Secondary endpoints will include the percentage of participants who have a greater than 1.5-point increase in CDR-SB and other well-established measures of cognitive and motor function. The trial will also include assessments of key biomarkers of the neurodegenerative process, such as GFAP, to further support regulatory review and clinical interpretation. CervoMed expects feedback from other global regulators in the coming months and to announce additional details regarding the planned Phase 3 trial design in early 2026 following these interactions.
As we did between Phase 2a and Phase 2b, we will incorporate several important things we learned from the RewinD-LB Trial into the design of our planned Phase 3 trial, which we believe will further increase the trial’s probability of success.
Pre-Phase 3 Manufacturing Improvements
Despite the disparity in performance, Batch A and Batch B were manufactured using the same manufacturing process. While there was no evidence of chemical degradation in our customary release or stability testing prior to the trial's initiation, we conducted additional evaluations of Batch A and Batch B in late 2024 and early 2025 to determine the reason for Batch A's failure to achieve target plasma drug concentrations. Our investigations identified a previously undiscovered mixture of polymorphic forms of neflamapimod’s DS. These polymorphic forms have different physical chemistry properties, including solubility, potentially with a time-dependent change in relative amounts of the individual forms. The Batch A capsules were more than three years out from their manufacture date at the time of administration during the RewinD-LB Trial – much older than Batch B and the drug product utilized in our past clinical trials at their respective time of use. We believe this time-dependent change accounted for the reduced performance of Batch A in the RewinD-LB trial, as well as the difference in performance between the two batches despite using the same DS and DP manufacturing processes.
To mitigate the potential for this reduction in performance over time, we identified the most stable polymorphic form, as well as a controlled manufacturing process to reliably manufacture DS that contains only (or predominantly) this stable form. In March 2025, we announced bioavailability data from a Phase 1 trial evaluating this stable crystal form of neflamapimod manufactured using the new, controlled manufacturing process. Following our evaluation of the results, we selected 50mg TID of the stable crystal form of neflamapimod as the dose and dosing regimen for our planned Phase 3 study in patients with DLB. While the PK profiles of 40mg of Batch B and 40mg of the stable crystal form of neflamapimod are largely overlapping, the dose will be increased to 50mg with the intent of ensuring the dosing regimen achieves the plasma drug concentrations observed with Batch B.
Enhanced Patient Enrichment Strategy
At the time RewinD-LB Trial was initiated in mid-2023, 27.2 pg/ml was estimated to be the optimal ptau181 cutoff for excluding patients with AD co-pathology from the trial, based on the limited data set available at that time. However, pre-specified analyses of the Extension Phase data, conducted in March 2025 and presented at the Alzheimer’s Association International Conference in July 2025, indicated that lower cutoff points (e.g., 25.2 pg/mL, 23.0 pg/mL, 21.0 pg/mL) led to progressively greater treatment effect size for CDR-SB and ADSC-CGIC in the RewinD-LB Trial, with the greatest effect size at 21.0 pg/mL. This finding was confirmed in a large (N=1298), third-party validation study published in June 2025, indicating that a ptau181 cutoff of 21.0 pg/mL was the high sensitivity cutoff for identifying AD pathology in AD and non-AD dementia (including DLB) by CSF criteria. This means the RewinD-LB Trial was only partially enriched for patients without AD co-pathology, as patients with screening ptau181 between 21.0 pg/mL and 27.2 pg/mL were enrolled in the trial. Based on recent scientific literature, we estimate that between 60-65% of those enrolled in the RewinD-LB Trial using the 27.2 pg/mL cutoff were patients without AD co-pathology, while reducing that cutoff to 21 pg/mL would increase that enrichment rate to approximately 80-90% of the patients.
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Accordingly, our planned Phase 3 clinical trial in DLB will be further enriched for patients who do not have AD co-pathology by excluding patients with plasma ptau181 greater than 21.0 pg/mL at screening. In our pre-specified analysis of this cohort in the RewinD-LB Trial, effectively representing our target patient population in Phase 3, we observed even more pronounced clinical effects, including:
Other Ongoing DLB Trials
In August 2024, we initiated a Phase 2a trial in Strasbourg, France, to evaluate a twice daily regimen (80mg BID) of neflamapimod in 26 patients with DLB with MCI (MoCA score ≥ 18 during screening). Unlike our RewinD-LB Trial, the patient population in the Strasbourg trial was not enriched for patients without AD co-pathology. Rather, the primary objective of the trial is to obtain additional safety and PK data on a dosing regimen not previously evaluated in any of our clinical trials (80mg BID) that, among other things, may provide additional dosing flexibility in future trials. On an exploratory basis, we will also collect data on basal forebrain atrophy, as measured by MRI, and a broad range of clinical endpoints.
In the first quarter of 2025, all patients completed dosing in the trial and, based on the topline data, the primary objectives around safety and PK were achieved. Neflamapimod was well tolerated with no new safety signals being identified. The mean Ctrough, defined as 12-hour post last dose plasma drug concentrations, demonstrated a dose-proportionate increase. One participant discontinued early due to Grade 3 elevations in ALT and AST, but there was no observed increase in bilirubin levels, values normalized after treatment discontinuation, and concomitant medications known to affect liver enzymes were considered to have been a contributory factor. We plan to present clinical endpoint and brain MRI results from the trial at a future medical conference.
Neflamapimod’s Potential in Additional Indications
Frontotemporal Disorders// Primary Progressive Aphasia
FTDs are a category of neurodegenerative disorders characterized by progressive deterioration in behavior, personality, and language abilities, typically affecting individuals between the ages of 40 and 65 including an estimated tens of thousands of individuals in the US alone. Unlike AD, which primarily targets memory, FTD primarily affects the frontal and temporal lobes of the brain, leading to changes in social conduct, emotional regulation, and decision-making. There are several subtypes of FTD, including the behavioral variant FTD, the most common subtype (approximately half the patients with FTD) and PPA, each presenting with distinct symptom profiles. PPA, a subtype of FTD itself, has three main variants: nonfluent/agrammatic variant PPA, semantic variant PPA, and logopenic variant PPA, though the latter is not considered an FTD subtype. The prevalence of these PPA subtypes varies, with approximately 40% of PPA patients being nonfluent/agrammatic variant PPA, 40% being semantic variant PPA, and 20% being logopenic variant PPA. As the disease progresses, individuals with FTD may require increasing levels of care and support, with management focusing on alleviating symptoms and maximizing function.
The rationale for potentially evaluating neflamapimod as a treatment for FTD is based on the effects of p38α on axonal transport and tau pathologies, as well as atrophy of the BFC system being a driver of disease and the mechanisms that neflamapimod targets being operative in FTD. Additionally, when assessed by MRI, the volume of the basal forebrain is reduced, relative to age-matched healthy control, most prominently in patients who have “tauopathies” (i.e., patients at autopsy who have tau pathology, rather than TDP-43 pathology). Moreover, in March 2024, at the AD/PD 2024 scientific conference in Lisbon, Portugal, academic collaborators from University College London presented data that showed that p38 MAPK inhibitors generally, and neflamapimod specifically, enhanced axonal transport in a transgenic mouse model of FTD (rg4510 transgenic harboring P301L mutation). Based in part on these nonclinical results, in November 2024, the FDA granted neflamapimod Orphan Drug Designation for the treatment of frontotemporal dementia.
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To best align with the scientific rationale described above, we have chosen to evaluate neflamapimod in nfvPPA because more than 90% of patients with this subtype of FTD at autopsy have tau pathology, rather than TDP-43 pathology. In 2025, we initiated our Phase 2a trial evaluating neflamapimod in up to 25 participants with nfvPPA. Participants in the trial will receive six months of open label treatment with neflamapimod, followed by a three month blinded (randomized 1:1 placebo or continued neflamapimod) washout period. The primary objective is to evaluate the safety and tolerability of neflamapimod in this patient population. In addition, treatment effects on a range of clinical measures of aphasia and plasma neurodegeneration biomarkers, including GFAP and NfL, will be evaluated. We expect to report initial plasma biomarker from the trial in mid-2026, subject to available funding.
Acute Indication: Recovery after Ischemic Stroke
A treatment to improve recovery from stroke remains a significant unmet medical need. Every year, more than 795,000 people in the US suffer a stroke, and approximately 610,000 of these are first or new strokes. About 87% of all strokes are ischemic strokes, in which blood flow to the brain is blocked. During the last 10 years, the medical and scientific communities have gained a better understanding of the mechanisms underlying neuronal recovery following a stroke. The major translational opportunity for therapeutics that target recovery after stroke is the time window in which intervention must be initiated. Rather than just the first few hours after the stroke, the window for therapeutics that could improve recovery is days and even weeks after an acute stroke. From a drug development perspective, waiting to initiate therapy until 48 hours after the stroke allows inclusion of a homogenous patient population as the diagnosis and extent of the stroke can be definitively established by that time in most patients. As a result, a POC study in stroke recovery is in the range 50-100 patients per treatment arm, compared to 500+ per treatment arm in neuroprotection trials.
We believe the therapeutic benefit of targeting neuroinflammation-induced synaptic dysfunction is not limited to chronic neurodegenerative diseases. A drug that improves synaptic function could also be considered for evaluation of the potential to improve brain function after acute neurological injury. The scientific rationale for evaluating neflamapimod to promote recovery after stroke is that the BFC system plays a critical role in recovery after ischemic stroke, particularly motor function recovery. The BFC system is suppressed by residual inflammation in the weeks and months after the acute stroke event. Neflamapimod, through the same mechanisms operating in DLB, would be expected to reverse the suppression of BFC function, leading to improved recovery of motor function. Supporting that concept is our nonclinical data with neflamapimod demonstrating significant improvement in neurological recovery vs. vehicle treatment, and TUG results from the AscenD-LB clinical trial where positive effects of neflamapimod on basal forebrain mediated control of movement were observed in the clinic.
In a nonclinical study of neflamapimod that evaluated effects on recovery after stroke, which has been published in a peer-reviewed scientific journal, transient ischemia of sufficient duration was induced in rats such that significant neurologic disability developed without mortality, and the neurologic disability did not substantially reverse during follow-up without therapy. These rats were then treated with either vehicle or one of two different doses of neflamapimod. The three groups in the study were: vehicle control (n =18), 1.5 mg/kg neflamapimod (n = 21) and 4.5 mg/kg neflamapimod (n = 21). Six weeks of neflamapimod treatment, starting at 48-hours after stroke, led to substantial improvement on multiple parameters of neurologic function compared to vehicle controls (p<0.001 for each of global neurologic scores; motor and sensory specific tests).
Based upon these data and hypotheses, we initiated our ongoing RESTORE Trial, a Phase 2 placebo-controlled trial evaluating neflamapimod in up to 90 participants recovering from a moderate to moderately-severe anterior circulation ischemic stroke, in the second quarter of 2025. Patients will be enrolled between 3 and 7 days after the onset of their qualifying stroke event, and randomized 1:1 to placebo or neflamapimod for 12 weeks. The primary objective of the study is to evaluate effects of neflamapimod on recovery of motor function. The major outcome measures include change from baseline to week 12 in the Fugl-Meyer Assessment of Motor Recovery after Stroke (FMMS), Timed Up and Go (TUG) test and the National Institutes of Health Stroke Scale (NIHSS) motor score. We anticipate completing enrollment at the end of the second quarter of 2026 and expect to report topline data in the second half of 2026, subject to available funding.
Amyotrophic Lateral Sclerosis (ALS)
ALS is a progressive neurodegenerative disease that affects nerve cells in the brain and spinal cord that control voluntary muscle movement and breathing. Over the course of the disease, people lose the ability to move, sometimes also to speak, and eventually, to breathe. There are no approved therapies that stop or reverse the progression of ALS. Approximately 168,000 people worldwide live with ALS, with an estimated 90-95% of cases occurring without a family history of the condition.
In ALS, p38α is aberrantly activated and plays a key role in impairing axonal transport—a fundamental physiologic defect in the disease. Restoring axonal transport through p38α inhibition has been demonstrated both in vitro and in vivo, including in the SOD1 transgenic mouse model. More recently, independent nonclinical studies have further validated p38α as a disease-relevant, convergent target in ALS and, we believe, demonstrated the potential of neflamapimod. For example, recent third-party research related to both TDP-43 pathology and C9ORF72-associated ribotoxic stress response have independently concluded that p38α inhibitors may find important applications in ALS.
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In February 2026, we announced that neflamapimod has been selected for inclusion in EXPERTS-ALS, a platform that facilitates rapid testing of potential ALS to identify promising drug candidates and potentially accelerate their path to regulatory approval. Funded by the United Kingdom National Institute for Health and Care Research and leading motor neuron disease charities and sponsored by Sheffield Teaching Hospitals NHS Foundation Trust, EXPERTS-ALS assesses potential therapies through a randomized, multicenter, open-label, multi-arm trial that evaluates investigational medicines through the measurement of the blood biomarker NfL. NfL levels are significantly elevated in ALS patients due to accelerated neuroaxonal damage and correlate with the rate of disability progression and survival. Neflamapimod will be initially evaluated in approximately 35 participants with ALS for 18-24 weeks to determine its impact on NfL levels, with the potential for further evaluation in up to a total of 80 patients. Secondary and exploratory endpoints include several clinical and survival measures. We anticipate the first patient will be dosed with neflamapimod in EXPERTS-ALS trial in the fourth quarter of 2026, subject to available funding.
Additional Neflamapimod Development Background
Toxicology
A full chronic repeated dose toxicology program has been completed in rodents (rats) and non-rodents (dogs). In the rodent species, in the six-month chronic toxicology study, no human relevant findings were evident at dose levels that provided plasma neflamapimod drug concentration levels approximately ten-fold higher than those achieved in the CNS disease clinical trials. In shorter-term studies, the primary target organ was the liver, with findings commencing at plasma drug concentration levels 20-fold higher than the CNS clinical trial exposures. In the non-rodent species, in 9- and 12-month toxicology studies, dose dependent findings were evident beginning at plasma neflamapimod drug concentrations more than ten-fold higher than achieved with the doses utilized in our ongoing and anticipated clinical trials. The CNS findings indicated potential damage to axons, or nerve fibers, primarily in the spinal cord. p38α and p38β have been reported to have a role in transport of proteins in axons, and therefore we believe these toxicity findings are related to the inhibition of both p38α and p38β at the very high doses administered in the non-rodent studies. The plasma drug concentrations associated with doses we are using in our clinical trials in the US are at least ten-fold lower than the no adverse effect level for these effects.
Regulatory Status
We submitted an IND application to the FDA in February 2015. The FDA cleared our application in March 2015, and the IND remains open and active. In addition, the FDA granted neflamapimod Fast Track Designation for the treatment of DLB in October 2019 and Orphan Drug Designation for the treatment of frontotemporal dementia in November 2024.
Following a review of the long-term animal toxicology studies discussed above, the FDA placed a partial clinical hold on our first Phase 2a Trial in mild AD (Study 303) in August 2015, limiting administration of neflamapimod to doses that lead to plasma drug levels which provide at least a 10-fold safety margin to the plasma drug levels in animals to the no adverse effect level in long-term animal toxicity studies . At the present time, based on agreements with the FDA and on our current understanding of plasma drug levels achieved with neflamapimod in humans, this partial clinical hold effectively limits our clinical dosing in the US in patients with a weight of greater than or equal to 50kg (110 pounds) to the plasma drug concentrations associated with doses we are using in our ongoing and anticipated clinical trials.
In Europe, clinical trial applications in support of our clinical trials have been reviewed and approved in each of the Netherlands, United Kingdom, Czech Republic and Denmark. In addition, the Agence Nationale de Sécurité du Médicament et des Produits de Santé (the French national regulatory authority) has reviewed and approved a clinical trial application for an investigator-initiated study of neflamapimod in Toulouse, France. Our ongoing Phase 2a trial in Strasbourg, France, which is not subject to the FDA’s partial clinical hold, is evaluating an 80mg BID dosing regimen in participants with mild-to-moderate DLB.
Clinical Safety Results
Neflamapimod’s safety and tolerability profile has been extensively evaluated and is well understood. Specifically, long-term toxicology studies of neflamapimod have been completed and the drug has been administered to over 550 participants to date, including over 350 participants in Phase 2 clinical trials in CNS disorders. We also have several ongoing and planned clinical trials to further evaluate the safety, tolerability and PK profile of neflamapimod, including doses higher than the 40mg TID dose evaluated in our recent RewinD-LB Trial.
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In the RewinD-LB Trial, adverse events were similar to the safety profile seen in all other trials and are shown in the table below:
Overview of Treatment-emergent Adverse Events (TEAEs) (≥5%) During the Randomized Phase (Safety Set) in Phase 2b RewinD-LB Study EIP21-NFD-504
Urinary tract infection 5 (6.3) 6 (7.5)
Confusional state 4 (5.1) 1 (1.3)
Alanine aminotransferase increased 4 (5.1) 1 (1.3)
In the Extension Phase of the RewinD-LB Trial, the profile remained similar with the following events reported by more than 5% of participants: fall, UTI, COVID-19, hallucination and diarrhea. In our previously completed clinical trials, the most commonly reported non-serious TEAEs included were headache, respiratory infection, diarrhea, fall, and somnolence all mild to moderate in severity. Headache, diarrhea, and somnolence appear to have the strongest association with neflamapimod treatment.
As of November 11, 2025, in clinical trials evaluating neflamapimod in patients with AD and DLB, there have been 44 SAEs reported in 273 participants treated with neflamapimod. The events of cerebral hemorrhage, syncope, pneumothorax, subcutaneous emphysema, and rib fracture were considered possibly related to neflamapimod by the trials’ investigator(s).
P38 MAPK inhibitors as a class have been associated liver enzyme elevations including transient, asymptomatic liver enzyme (transaminase) elevations without signs otherwise of hepatotoxicity (e.g., no elevation in bilirubin). ALT and AST and other liver function tests are routinely monitored in participants in neflamapimod clinical studies. Across the neflamapimod clinical development program, liver function testing elevations have been observed, primarily involving asymptomatic increases in ALT and AST. Most events were mild to moderate in severity, transient, and reversible upon dose interruption or discontinuation. No cases consistent with Hy’s Law were identified. Overall, the hepatic safety profile of neflamapimod supports continued clinical development with appropriate monitoring.
Among approximately 350 participants exposed to neflamapimod across the most recent clinical trials in AD, HD, DLB, recovery after stroke, and PPA, ALT or AST elevations >3× ULN were reported in 2 % of subjects. Elevations >5× ULN occurred in 0.2%, and elevations >10× ULN were uncommon (<1%). Increases in total bilirubin were infrequent and generally not temporally associated with transaminase elevations. In the RewinD-LB Trial, one of 80 (1.3%) participants treated with neflamapimod discontinued because of liver enzyme elevation during the Randomized Phase but the event was determined to be reversible and not associated with bilirubin elevation. During the trial's Extension Phase, none of the 149 neflamapimod recipients discontinued for liver enzyme elevation.
Nonclinical Studies
Ts2 Transgenic Mice
Nearly all individuals who have Down Syndrome, characterized by trisomic chromosome 21, develop AD by their fourth decade of life, and have typical AD pathology when autopsied at death. This may be explained by chromosome 21 containing the gene for amyloid-precursor-protein, which is the gene linked to familial or genetic EOAD in humans. The Ts2 transgenic mouse model of Down Syndrome utilizes mice that are partially trisomic at chromosome 16, which is the mouse equivalent of chromosome 21. Along with developmental behavioral abnormalities, Ts2 mice develop typical early onset dementia pathology, including endosomal abnormalities and cholinergic neurodegeneration in the BFC system. Accordingly, Ts2 mice provide an ideal opportunity to evaluate the effects of drug treatment on BFC dysfunction and degeneration.
In a nonclinical study, wild-type mice, referred to as either wild-type or 2N, and Ts2 mice were treated over 28 days with either control or neflamapimod. Treatment was initiated at 6-7 months of age, representing a time point at which endosomal pathology and cholinergic neuronal loss is developing. To assess for effects on cholinergic neurodegeneration, ChAT+ neurons were quantitated in the region of the forebrain that is enriched for cholinergic neurons, which is known as the MSN.
At the end of treatment, consistent with current scientific literature, the number of cholinergic neurons in the MSN region was significantly decreased in control-treated TS2 mice compared to control-treated wild-type mice (p<0.001). This effect was reversed with neflamapimod treatment, with the number cholinergic neurons in the MSN increased in neflamapimod-treated Ts2 mice compared to vehicle-treated Ts2 mice, such that the number of ChAT+ neurons were similar to those seen in wild-type mice (p<0.001). Neflamapimod treatment also normalized Rab5 activity and phosphorylated (i.e., activated) p38 MAP kinase and its downstream substrates.
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Neflamapimod restored numbers of cholinergic neurons in basal forebrain (i.e., reversed disease progression) in Ts2 transgenic mouse.
Cholinergic neurons, as assessed by staining positive for ChAT+ neurons in the MSN of the basal forebrain, in wild-type treated with vehicle or Ts2 transgenic mice after treatment for four weeks with either vehicle or neflamapimod.
The finding of reversal of disease progression is consistent with studies in the scientific literature that suggest that “loss” of cholinergic neurons in the BFC system is not due to cell death. Rather, the “degeneration” and loss of such BFC neurons appears to be due to a loss of cholinergic phenotype and functional properties, and neuronal shrinkage. In animal studies, all of this disease progression can be reversed, evidenced by the increased number of cholinergic neurons. This is not a regenerative effect, however. Rather, we believe it reflects that treatment with neflamapimod is restoring the function of diseased neurons, allowing them to express ChAT. There is also evidence from studies in early AD, that cholinergic phenotype loss, rather than frank neuronal death and loss, occurs in the basal forebrain of humans as well. We believe this is consistent with the results obtained from the MRI evaluation of neflamapimod-treated patients with AD discussed above in whom an increase in the volume of BFC neurons was observed in the NbM.
Aged Rat Model
To obtain nonclinical proof-of-principle and confirm the role of p38α in the development of synaptic dysfunction, we tested neflamapimod in a rat model of age-related cognitive decline. When evaluated in the Morris-Water-Maze test of spatial learning, rats show cognitive deficits starting at 20 to 22 months of age, which is equivalent to approximately 60 years of age in humans. Of note, because the deficits in Morris-Water-Maze performance can be fully reversed by implanting healthy cholinergic neurons in the basal forebrain, those deficits are believed to be due to BFC dysfunction and degeneration.
The results of these nonclinical studies showed that treatment with neflamapimod fully reversed the learning deficits in the Morris-Water-Maze test in 20- to 22-month-old rats. Specifically, the performance of aged rats on the last day of testing (day 17) showed that animals treated with neflamapimod at the optimal dose performed significantly better than control–treated aged rats (p=0.007 for latency; p=0.01 for distance). Further, the performance of neflamapimod-treated aged rats was similar to that of young rats (i.e., cognitive deficits were fully reversed).
Vertex Agreement
In August 2012, we entered into the Vertex Agreement, which granted us an option to acquire an exclusive worldwide license to develop and commercialize neflamapimod for the diagnosis, treatment and prevention of AD and other neurodegenerative diseases. This decision was made, in part, based on our team’s previous direct experience with this compound, our understanding of its profile, and emerging science around p38α in the brain. In August 2014, we exercised that option to acquire the license to neflamapimod.
The Vertex Agreement sets forth certain milestone events and the related payments we would be obligated to make to Vertex if and when such events occur. Each milestone payment is payable only once for each distinct licensed product, upon the first occurrence of the applicable milestone event. The first expected milestone events concern the filing of an NDA with the FDA for marketing approval of neflamapimod in the US and/or a similar filing for a non-US major market. The Vertex Agreement also provides that we will make royalty payments to Vertex in the event aggregate net sales for a commercialized licensed product meet specified thresholds. Such royalties will be on a sliding scale of percentages of net sales in the low- to mid-teens, depending on the amount of net sales in the applicable years. We are also obligated to make a one-time milestone payment to Vertex upon net sales reaching a certain specified amount in any 12-month period. The Vertex Agreement states that royalties will be reduced by 50% during any portion of the royalty term when there is no valid claim of an issued patent within specified patent rights covering the licensed product. We also have the right to deduct, on a country by country basis, from royalties otherwise payable to Vertex under the terms of the Vertex Agreement, 50% of all royalties, upfront fees, milestones and other payments paid by us or any of our affiliates or sublicensees to third parties under licenses that are necessary for the development, manufacture, sale or use of a licensed product, provided that in no event will the royalty payable to Vertex be reduced to less than 50% of the rates specified in the Vertex Agreement, subject to certain adjustments specified therein. In the aggregate, our potential milestone payment obligations, all of which relate to development milestones, under the Vertex Agreement are up to $117.0 million. To date, we have made an aggregate of $100,000 in payments to Vertex. In connection with our obligations under the Vertex Agreement, there is no minimum annual expenditure requirement. Our diligence obligations under the Vertex Agreement have included the making of annual expenditures in connection with the development of neflamapimod, completion of multiple Phase 2 clinical trials of neflamapimod, and our ongoing development efforts.
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The Vertex Agreement provides that we may sublicense the rights granted to us by Vertex, in whole or in part, to a third party (through multiple levels of sublicensing) (i) who is providing services to us in connection with the manufacture or development of the licensed product, solely for the purpose of providing such services, or (ii) with the prior written consent of Vertex, which shall not be unreasonably withheld.
The license term under the Vertex Agreement is deemed to have commenced on August 21, 2014, and continues until the expiration of the royalty term, unless sooner terminated in accordance with the terms of the Vertex Agreement. The royalty term commences on the first commercial sale of a licensed product and ends upon the later of (i) the date of expiration, unenforceability or invalidation of the last valid claim of certain specified underlying patent rights, or (ii) ten years after the date of such first commercial sale. Upon the expiration of the royalty term, the license will convert to a perpetual, fully paid-up non-royalty bearing license with the same scope.
The Vertex Agreement may be terminated by us for any reason upon 90 days’ prior written notice to Vertex if such termination occurs before receipt of the first marketing approval of a licensed product, and otherwise upon twelve months’ prior written notice to Vertex. Either party may terminate the Vertex Agreement if the other party is in material breach of its obligations thereunder, following a 60-day notice and cure period, or if the other party files for bankruptcy, reorganization, liquidation, receivership, or an assignment of a substantial portion of assets to creditors. The Vertex Agreement also provides that in the event we materially breach any of certain specified diligence obligations as to a specific major market, Vertex’s sole remedy for such breach, following the applicable notice and cure period, will be to terminate the license as to such specific major market country.
EIP200 – Novel Co-Crystal of Neflamapimod
We have an issued patent in the US, expiring in 2038, for novel co-crystals of neflamapimod with identified, specific, Generally Recognized as Safe compounds that have the potential to improve the solubility and other physical properties of neflamapimod. The development of one of these co-crystals as a product would be supported by composition of matter protection afforded by this patent, providing additional patent protection if we developed such a co-crystal product ourselves, the opportunity to license such a product to another pharmaceutical company while retaining the rights to neflamapimod and other potential benefits. The ability to develop one or more of these co-crystal products requires a fuller evaluation of the potential manufacturing processes than has been performed to date.
However, we believe these novel co-crystals of neflamapimod may provide additional optionality to multiple aspects of our development strategy, including related the partnering and/or commercialization of neflamapimod across the multiple indications in which it has demonstrated potential.
Sales and Marketing
We do not currently have any infrastructure for the sales, marketing, or distribution of an approved DP. In order to market and successfully commercialize neflamapimod or any other future product candidate, to the extent it or they are approved, we must either develop these capabilities internally or make arrangements with third parties to perform these services. We may also collaborate with global or regional strategic partners that have experience in these fields. There are significant expenses and risks involved in establishing our own sales, marketing and distribution functions, including our ability to hire, retain and appropriately incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Alternatively, to the extent that we depend on third parties for such services, any revenues we receive will depend upon the efforts of those third parties, and there can be no assurance that such efforts will be successful.
Manufacturing
We do not own or operate manufacturing facilities, nor do we have plans to develop our own manufacturing operations in the foreseeable future. Our lead product candidate, neflamapimod, is a small molecule drug that is manufactured using commercially available technologies.
Our DS is manufactured at established commercial CMOs that are approved for and manufactures DS both for investigational use and marketed products. We have used the same manufacturer for our neflamapimod DS in all our clinical trials prior to 2026 but have recently begun working with a second DS CMO to, in part, diversify our prior sole supplier risk. We anticipate utilizing these or similar CMOs for the manufacture of DS to be used in future clinical trials, as well as potentially for commercial use if neflamapimod is approved. However, supplies of our neflamapimod DS could be interrupted from time to time, and we cannot be certain that alternative supplies could be obtained within a reasonable timeframe, at an acceptable cost, or at all.
We also currently rely on a third-party CMO (different than those for DS) for the manufacture of our neflamapimod DP. We have used the same manufacturer for our neflamapimod DP in all our clinical trials to date but have recently begun working with a second DP CMO to, in part, diversify our prior sole supplier risk. If neflamapimod is ultimately approved for commercial sale, we expect to continue to rely on third-party contractors for manufacturing the DP. Although we may do so prior to any commercial launch, we have not yet entered into long-term agreements for the commercial supply of either drug substance or DP with our current manufacturing providers, or with any alternate manufacturers.
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For a further description of our planned pre-Phase 3 manufacturing improvements and certain risks related to our manufacturing, see “Alignment with FDA on Planned Phase 3 Trial – Pre-Phase 3 Manufacturing Improvements,” “Item 1A. Risk Factors – Risks Related to Our Product Development and Regulatory Approval – Our reliance on third parties for the production of neflamapimod may result in delays in our clinical trials or regulatory approvals and may impair the development and ultimate commercialization of neflamapimod, which would adversely impact our business and financial position,” and “Item 1A. Risk Factors – Risks Related to Our Product Development and Regulatory Approval – Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.”
Competition
Given the potential market opportunity for the treatment of DLB and other neurodegenerative diseases, an increasing number of established pharmaceutical firms and smaller biotechnology/biopharmaceutical companies are pursuing a range of potential therapies for these diseases in various stages of clinical development.
While there are numerous companies pursuing AD disease modifying approaches, we believe there are a limited number of companies in later-stage development for DLB. With regard to public biopharmaceutical companies that we would consider competitive with our approach, and actively evaluating treatments in DLB, we are aware of Cognition Therapeutics, Inc., although their lead indication remains AD and, in March 2026, they announced plans to advance zervimesine as a symptomatic treatment for DLB-related psychosis, rather than as a treatment for the underlying disease process. In addition, we are also aware of a recent NIA-supported, Phase 2 clinical trial of nilotinib, an FDA-approved leukemia drug, is evaluating its potential to break down abnormal alpha-synuclein proteins in DLB. However, we are not aware of any other companies developing a treatment specifically targeting DLB patients without AD co-pathology, the target patient population of our planned Phase 3 trial, or utilizing our mechanism of action.
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We face potential competition from many different sources, including pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. Any product candidates that we successfully develop and commercialize, including neflamapimod, may compete with existing therapies and new therapies that may become available in the future.
Our competitors may have significantly greater financial resources, an established presence in the market, and significantly greater expertise in research and development, manufacturing, nonclinical and clinical testing, obtaining regulatory approvals and reimbursement and marketing approved products than we do. These competitors also compete with us in recruiting and retaining qualified scientific, sales, marketing and management personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
The key competitive factors affecting the success of neflamapimod, and any other product candidates that we develop to address DLB and other CNS diseases, if approved, are likely to be their efficacy, safety, convenience, price, the level of competition, and the availability of reimbursement from government and other third-party payors. Our potential commercial opportunity could also be reduced or eliminated if our competitors develop and commercialize products that are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.
Intellectual Property
We strive to protect and enhance the proprietary technologies, inventions and improvements that we believe are important to our business, including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties. Our policy is to seek to protect our proprietary position by, among other methods, pursuing and obtaining patent protection in the US and in jurisdictions outside of the US related to our proprietary technology, inventions, improvements and our product candidates that are important to the development and implementation of our business.
We have made a number of discoveries related to our lead product candidate, neflamapimod, which are reflected in ten main patent families, each of which we wholly own (dates below are without consideration of potential patent term extension, see section titled “—Patent Term Restoration” below):
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Pursuant to the terms and conditions of the Vertex Agreement, Vertex has granted us an exclusive license under specified Vertex patent rights, including US patent No. 5,945,418, which relates to the composition of matter for neflamapimod. This patent expired in 2017.
Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, patents issued for regularly filed applications in the US are granted a term of 20 years from the earliest effective non-provisional filing date. In addition, in certain instances, a patent term can be extended to recapture a portion of the USPTO delay in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period. However, as to the FDA component, the restoration period cannot be longer than five years and the total patent term including the restoration period must not exceed 14 years following FDA approval. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date. However, the actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.
We also rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements and invention assignment agreements with our collaborators, employees and consultants, as we determine necessary. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with a third party. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses from third parties or cease certain activities.
From time to time, we may find it necessary or prudent to obtain licenses from third-party patent owners. Where licenses are available at reasonable cost, such licenses are considered a normal cost of doing business. In other instances, we may use the results of freedom-to-operate studies to guide our early-stage research away from areas where we are likely to encounter obstacles in the form of third-party intellectual property. We strive to identify potential third-party intellectual property issues in the early stages of research in our programs in order to minimize the cost and disruption of resolving such issues.
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Our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future drugs may have an adverse impact on us.
For more information, please see “Item 1A. Risk Factors—Risks Related to Our Intellectual Property.”
Government Regulation
The FDA and comparable regulatory authorities in other countries impose requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing. These requirements can, in some instances, be substantial and burdensome. These agencies and other federal, state and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of pharmaceutical products. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.
US Government Regulation of Drug Products
In the US, the FDA regulates drugs under the FDCA and its implementing regulations. Failure to comply with the applicable US requirements at any time during the product development and approval process or after approval may subject an applicant to a variety of administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve a pending NDA, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters or other notices of violation, product recalls or market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on our business and results of operations.
The process required by the FDA before a drug may be marketed in the US generally involves the following:
● Submission to the FDA of an NDA seeking marketing approval;
Nonclinical Studies and IND
Nonclinical studies generally include laboratory evaluation of product chemistry, toxicity and formulation, as well as in vitro and animal studies to assess the potential for adverse events and in some cases to establish a rationale for the investigational product’s therapeutic use. In December 2022, Congress amended the FDCA to specify that nonclinical testing for drugs may, but is not required to, include in vivo animal testing. According to the amended language, a sponsor may fulfill nonclinical testing requirements by completing various in vitro assays (e.g., cell-based assays, organ chips, or microphysiological systems), in silico studies (i.e., computer modeling), other human or non-human biology-based tests (e.g., bioprinting), or in vivo animal tests. The conduct of nonclinical studies is subject to federal regulations and requirements, including GLP regulations.
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An IND sponsor must submit the results of preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational new drug to humans, and it must become effective before human clinical trials may begin. Some long-term nonclinical testing may continue even after the IND is submitted and clinical trials have been initiated. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA issues a notice expressly authorizing the proposed trial to proceed or raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. If the agency imposes a hold, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to initiate. Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns or non-compliance. A separate submission to an existing IND must also be made for each successive clinical trial conducted during product development.
Clinical Trials
Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators (generally physicians not employed by or under the trial sponsor’s control) in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial, as well as review and approval of the trial by an IRB for each participating site. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the trial procedures, subject selection and exclusion criteria, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB acting on behalf of each institution participating in the clinical trial must review and approve the trial plan, informed consent forms, and communications to trial subjects before the trial commences at that institution. An IRB considers, among other things, whether the risks to individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits, and whether the planned human subject protections are adequate. The IRB must continue to oversee the clinical trial while it is being conducted and must operate in compliance with FDA regulations.
Sponsors of certain clinical trials generally must register such trials and disclose certain trial information within specific timeframes to the NIH for public dissemination on the ClinicalTrials.gov data registry. Information related to the investigational product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Sponsors are also obligated to disclose the results of their clinical trials after completion, but such disclosures may be delayed in some cases for up to two years after the date of completion of the trial. Failure to timely register a covered clinical trial or to submit study results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government. Both the NIH and the FDA have brought enforcement actions against non-compliant clinical trial sponsors. Competitors may use the publicly available information about clinical trials to gain knowledge regarding the progress of development programs. Sponsors or distributors of investigational products for the diagnosis, monitoring, or treatment of one or more serious diseases or conditions must also have a publicly available policy on evaluating and responding to requests for expanded access requests.
Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:
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Reports detailing the progress of and safety data from the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the investigational drug, findings from animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. It is possible that Phase 1, Phase 2 or Phase 3 trials may not be completed successfully within any specified period, or at all. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. Sponsors may also choose to discontinue clinical trials as a result of risks to subjects, a lack of favorable results, or changing business priorities. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether a trial may move forward at designated checkpoints based on access to certain data from the trial.
Congress amended the FDCA in December 2022 to require each sponsor of a Phase 3 clinical trial, or other “pivotal study” of a new drug to support MA, to design and submit a diversity action plan for such clinical trial. The action plan must include the sponsor’s diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them. A sponsor must submit a diversity action plan to the FDA by the time the sponsor submits the relevant clinical trial protocol to the agency for review. The FDA may grant a waiver for some or all of the requirements for a diversity action plan. If the FDA objects to a sponsor’s diversity action plan or otherwise requires significant changes to be made, it could delay initiation of the relevant clinical trial.
Concurrent with clinical trials, companies may perform additional nonclinical studies and develop additional information about a drug candidate’s physiochemical characteristics as well as finalize a process for its manufacturing in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final DP. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that a drug candidate does not undergo unacceptable deterioration over its proposed labeled shelf life. For a further description of our planned pre-Phase 3 manufacturing improvements to address the stability issues identified during our RewinD-LB Trial, see “Alignment with FDA on Planned Phase 3 Trial – Pre-Phase 3 Manufacturing Improvements” and “Item 1A. Risk Factors – Risks Related to Our Product Development and Regulatory Approval.”
Marketing Application Submission, Review by the FDA, and Marketing Approval
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications. The NDA must contain proof of the product candidate’s safety and substantial evidence of effectiveness for its proposed indication or indications in the form of relevant data available from pertinent nonclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things. In particular, a marketing application must demonstrate that the manufacturing methods and quality controls used to produce the DP are adequate to preserve the drug’s identity, strength, quality, and purity. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of the product, or from a number of alternative sources, including studies initiated by investigators. FDA approval of an NDA must be obtained before the corresponding drug may be marketed in the US.
Under PDUFA, each NDA submission is subject to a substantial application user fee, and the sponsor of an approved NDA is also subject to an annual program fee. The FDA adjusts the PDUFA user fees on an annual basis. The application user fee must be paid at the time of the first submission of the application, even if the application is being submitted on a rolling basis. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for products with Orphan Drug designation or for the first application filed by a small business.
The FDA reviews all NDAs submitted to determine if they are substantially complete before it accepts them for filing and may request additional information rather than accepting a submission for filing. The FDA must make a decision on accepting an NDA for filing within 60 days of receipt and must inform the sponsor by the 74th day after the FDA’s receipt of the submission whether the application is sufficiently complete to permit substantive review. The FDA may refuse to file any submission that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the marketing application must be resubmitted with the additional information requested by the agency. The resubmitted application is also subject to review before the FDA accepts it for filing.
Once an NDA is accepted for filing, the FDA’s goal is to review the application within 10 months after it accepts the application for filing, or, if the application meets the criteria for “priority review,” within six months after the FDA accepts the application for filing. The review process is often significantly extended by FDA requests for additional information or clarification after the NDA has been accepted for filing. The review process may be extended by the FDA for three additional months to consider new information or in the case of a clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission.
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During the review process, the FDA reviews the NDA to determine, among other things, whether the product is safe and effective and whether the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued strength, quality, and purity. The FDA may refer any NDA, including applications for novel drug candidates which present difficult questions of safety or efficacy to an advisory committee to provide clinical insight on application review questions. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations carefully when making final decisions on approval.
Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent manufacture of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical trial sites to assure compliance with GCP. If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies as part of the review process and often will request additional testing or information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
Under the PREA, amendments to the FDCA, an NDA or supplement to an NDA must contain data that are adequate to assess the safety and efficacy of the product candidate for the claimed indications in all relevant pediatric populations and to support dosing and administration for each pediatric population for which the product is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial waivers. The PREA requires a sponsor that is planning to submit a marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration to submit an initial Pediatric Study Plan, or PSP, within sixty days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 clinical trial. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including trial objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A sponsor can submit amendments to an agreed upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from pre-clinical studies, early-phase clinical trials or other clinical development programs.
The testing and approval process requires substantial time, effort and financial resources, and each may take several years to complete. The FDA may not grant approval on a timely basis, or at all, and we may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing its products. After the FDA evaluates an NDA and conducts inspections of the manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a CRL. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete and the application will not be approved in its present form. A CRL generally outlines the deficiencies in the submission and may require substantial additional testing, information or clarification for the FDA to reconsider the application. The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product. If a CRL is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application. In September 2025, the FDA began publishing CRLs, with trade secret and confidential commercial information redacted, soon after issuing them to the respective sponsors, breaking with long-standing agency tradition of publishing CRLs with approval documentation after the product is approved. If and when the deficiencies cited in the CRL have been addressed to the FDA’s satisfaction in a resubmission of the marketing application, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in response to an issued CRL in either two or six months depending on the type of information included. Even if such data and information are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.
If regulatory approval of a product is granted, such approval is limited to the conditions of use (e.g., patient population, indication) described in the application and may entail further limitations on the indicated uses for which such product may be marketed. For example, the FDA may approve the NDA with a REMS plan to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis. If the FDA concludes a REMS plan is needed, the sponsor of the NDA must submit a proposed REMS to obtain approval for the product. The FDA also may condition approval on, among other things, changes to proposed labeling (e.g., adding contraindications, warnings or precautions) or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing regulatory standards is not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies. Some types of changes to an approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and separate FDA review and approval. In addition, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.
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Fast Track, Breakthrough Therapy, Priority Review Designations, and CNPV
A sponsor may seek approval of its product candidate under programs designed to accelerate FDA’s review and approval of new drugs that meet certain criteria. Specifically, new drugs are eligible for fast track Designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast track Designation provides increased opportunities for sponsor interactions with the FDA during preclinical and clinical development, in addition to the potential for rolling review once a marketing application is filed, meaning that the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept the sections and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. A fast track Designated product candidate may also qualify for Accelerated Approval (described below) or Priority Review, under which the FDA sets the target date for FDA action on the NDA or biologics license application at six months after the FDA accepts the application for filing.
Priority Review is granted when there is evidence that the proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious condition. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation. If criteria are not met for Priority Review, the application is subject to the standard FDA review period of 10 months after FDA accepts the application for filing.
In addition, a sponsor may seek FDA designation of its product candidate as a Breakthrough Therapy if the product candidate is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough Therapy Designation provides all the features of fast track Designation in addition to intensive guidance on an efficient development program beginning as early as Phase 1, and FDA organizational commitment to expedited development, including involvement of senior managers and experienced review and regulatory staff in a proactive, collaborative, cross-disciplinary review, where appropriate. A drug designated as a Breakthrough Therapy is also eligible for Accelerated Approval if the relevant criteria are met.
In 2025, the FDA created a new pilot program called the CNPV with the goal of radically expediting the drug and biological product review and approval process. The agency may award a CNPV to a company or a specific product candidate that demonstrates alignment with certain national health priorities. The FDA aims to take action on a marketing application for which a CNPV is used within one to two months after the filing date.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. None of these programs change the scientific or medical standards for approval or the quality of evidence necessary to support approval but may expedite the development or approval process.
Accelerated Approval
In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval from the FDA and may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant Accelerated Approval for such a drug or biologic when it has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform post-marketing clinical trials to verify and describe the predicted effect on IMM or other clinical endpoint, and the product may be subject to expedited withdrawal procedures. Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.
For the purposes of Accelerated Approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug or biologic, such as an effect on IMM. The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval when the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate long-term clinical benefit of a drug.
The Accelerated Approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. For example, Accelerated Approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large clinical trials to demonstrate a clinical or survival benefit.
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The Accelerated Approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the product candidate’s clinical benefit. As a result, a product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to confirm the predicted clinical benefit of the product during post-marketing studies, would allow the FDA to withdraw approval of the product. Congress amended the FDCA in December 2022 to provide the FDA additional statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs or biologics previously being considered for accelerated approval. Under the act’s amendments to the FDCA, the FDA may require the sponsor of a product granted accelerated approval to have a confirmatory trial underway prior to approval. The sponsor must also submit progress reports on a confirmatory trial every six months until the trial is complete, and such reports are published on the FDA’s website. The amendments also give the FDA the option of using expedited procedures to withdraw product approval if the sponsor’s confirmatory trial fails to verify the claimed clinical benefits of the product.
All promotional materials for product candidates being considered and approved under the Accelerated Approval program are subject to prior review by the FDA.
Orphan Drugs
Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation to a drug intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the US, or a patient population greater than 200,000 individuals in the US and when there is no reasonable expectation that the cost of developing and making available the drug in the US will be recovered from sales in the US for that drug. Orphan Drug Designation must be requested before submitting an NDA. After the FDA grants Orphan Drug Designation, the generic identity of the therapeutic agent and its potential orphan indication are disclosed publicly by the FDA.
If a drug product that has Orphan Drug Designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan product exclusivity or if the FDA finds that the holder of the orphan product exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan product to meet the needs of patients with the disease or condition for which the drug was designated. Orphan product exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of Orphan Drug Designation are tax credits for certain research and a waiver of the NDA application user fee.
A drug with Orphan Drug Designation may not receive orphan product exclusivity if it is approved for a use that is broader than the indication for which it received Orphan Drug Designation. In addition, orphan product exclusive marketing rights in the US may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
We have obtained Orphan Drug Designation in the US for neflamapimod in frontotemporal dementia.
Patent Term Restoration
Depending upon the timing, duration and specifics of FDA approval of our product candidates, some of our US patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product candidate’s approval date. The patent term restoration period is generally one half of the time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of the NDA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved product candidate is eligible for the extension and the application for extension must be made prior to expiration of the patent. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we intend to apply for restorations of patent term for some of our currently owned or licensed patents to add patent life beyond their current expiration date, depending on the expected length of clinical trials and other factors involved in the submission of the relevant NDA.
Pediatric Exclusivity
Pediatric exclusivity is a type of non-patent marketing exclusivity available in the US and, if granted, it provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity or listed patents. This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application. The issuance of a written request does not require the sponsor to undertake the described studies.
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Hatch-Waxman Exclusivity
In 1984, with passage of the Hatch-Waxman Act, which established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs based on an innovator or “reference” product, Congress also enacted Section 505(b)(2) of the FDCA, which provides a hybrid pathway combining features of a traditional NDA and a generic drug application. To obtain approval of a generic drug, an applicant must submit an ANDA to the agency. In support of such applications, a generic manufacturer may rely on the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the RLD.
Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug. At the same time, the FDA must also determine that the generic drug is “bioequivalent” to the innovator drug. Under the statute, a generic drug is bioequivalent to an RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.”
Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication Approved Drug Products with Therapeutic Equivalence Evaluations, also referred to as the Orange Book. Clinicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD. In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the prescribing clinicians or patient.
In contrast, Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2) NDAs may provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products; for example, an applicant may be seeking approval to market a previously approved drug for new indications or for a new patient population that would require new clinical data to demonstrate safety or effectiveness. A Section 505(b)(2) applicant may eliminate the need to conduct certain preclinical or clinical studies, if it can establish that reliance on studies conducted for a previously-approved product is scientifically appropriate. Unlike the ANDA pathway used by developers of bioequivalent versions of innovator drugs, which does not allow applicants to submit new clinical data other than bioavailability or bioequivalence data, the 505(b)(2) regulatory pathway does not preclude the possibility that a follow-on applicant would need to conduct additional clinical trials or nonclinical studies. The FDA may then approve the new product for all or some of the label indications for which the RLD has been approved, or for any new indication sought by the Section 505(b)(2) applicant, as applicable.
Under the Hatch-Waxman Amendments, the FDA may not approve an ANDA or 505(b)(2) NDA until any applicable period of non-patent exclusivity for the RLD has expired. These market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing an NCE. For the purposes of this provision, an NCE, is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA. An active moiety is the molecule or ion responsible for the physiological or pharmacological action of the drug substance. In cases where such NCE exclusivity has been granted, an ANDA or 505(b)(2) NDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification (described below), in which case the applicant may submit its application four years following the original product approval.
The FDCA also provides for a period of three years of exclusivity for an NDA, 505(b)(2) NDA or supplement thereto if one or more new clinical investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the applicant are deemed by the FDA to be essential to the approval of the application. This three-year exclusivity period often protects changes to a previously approved drug product, such as a new dosage form, route of administration, combination or indication. The three-year exclusivity covers only the conditions of use associated with the new clinical investigations and does not prohibit the FDA from approving follow-on applications for drugs containing the original active agent. Five-year and three-year exclusivity also will not delay the submission or approval of a traditional NDA filed under Section 505(b)(1) of the FDCA. However, an applicant submitting a traditional NDA would be required to either conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Hatch-Waxman Patent Certification and the 30-Month Stay
Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or an approved method of using the product. Each of the patents listed by the NDA sponsor is published in the Orange Book. When an ANDA applicant files its application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval. To the extent that the Section 505(b)(2) NDA applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.
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Specifically, the applicant must certify with respect to each patent that:
● the required patent information has not been filed by the original applicant;
● the listed patent has expired;
If a Paragraph I or II certification is filed, the FDA may make approval of the application effective immediately upon completion of its review. If a Paragraph III certification is filed, the approval may be made effective on the patent expiration date specified in the application, although a tentative approval may be issued before that time. If an application contains a Paragraph IV certification, a series of events will be triggered, the outcome of which will determine the effective date of approval of the ANDA or 505(b)(2) application.
If the follow-on applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the follow-on application in question has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier of 30 months after the receipt of the Paragraph IV notice, expiration of the patent, or a decision in the infringement case that is favorable to the ANDA or 505(b)(2) applicant. Alternatively, if the listed patent holder does not file a patent infringement lawsuit within the required 45-day period, the follow-on applicant’s ANDA or 505(b)(2) NDA will not be subject to the 30-month stay.
Post-Approval Requirements
Following approval of a new product, the manufacturer and the approved product are subject to pervasive and continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting of adverse experiences with the product, product sampling and distribution restrictions, complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (i.e., “off-label use”) and limitations on industry-sponsored scientific and educational activities. The manufacturer and its products are also subject to similar post-approval requirements by regulatory authorities comparable to FDA in jurisdictions outside of the US where the products are approved. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. If there are any modifications to the product, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA or a supplement to an NDA, which may require the applicant to develop additional data or conduct additional nonclinical studies and clinical trials. The FDA may also place other conditions on approvals including the requirement for a REMS to assure the safe use of the product. A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following initial marketing.
FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMPs. The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and DP containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products. The manufacturing facilities for our product candidates must meet applicable cGMP requirements to the FDA's or comparable foreign regulatory authorities' satisfaction before any product is approved and our commercial products can be manufactured. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. These manufacturers must comply with cGMP regulations that require, among other things, quality control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic prescheduled or unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Future inspections by the FDA and other regulatory agencies may identify compliance issues at the facilities of our CMOs that may disrupt production or distribution or require substantial resources to correct. In addition, the discovery of conditions that violate these rules, including failure to conform to cGMPs, could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved NDA, including voluntary recall and regulatory sanctions as described below.
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Once an approval or clearance of a drug is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Other potential consequences include, among other things:
● Injunctions or the imposition of civil or criminal penalties;
In addition, the distribution of prescription pharmaceutical products is subject to the PDMA, which regulates the distribution of drugs and drug samples at the federal level and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. Most recently, the DSCSA was enacted with the aim of building an electronic system to identify and trace certain prescription drugs distributed in the US The DSCSA mandates resource-intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers. The DSCSA also replaced certain provisions from the PDMA pertaining to wholesale distribution of prescription drugs with a more comprehensive statutory scheme, requiring uniform national standards for wholesale distribution and, for the first time, for third-party logistics providers. From time to time, new legislation and regulations may be implemented that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. It is impossible to predict whether further legislative or regulatory changes will be enacted, whether FDA regulations, guidance or interpretations will be changed or what the impact of such changes, if any, may be.
Other US Health Care Laws and Regulations
If our product candidates are approved in the US, we will have to comply with various US federal and state laws, rules and regulations pertaining to health care fraud and abuse, including anti-kickback laws and physician self-referral laws, rules and regulations. Violations of the fraud and abuse laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation in federal and state health care programs, including Medicare and Medicaid. These laws include:
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The majority of states also have statutes or regulations similar to the aforementioned federal laws, some of which are broader in scope and apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines, or the relevant compliance guidance promulgated by the federal government, in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures to the extent that those laws impose requirements that are more stringent than the Physician Payments Sunshine Act. State and foreign laws also govern the privacy and security of personal data, including health information in some circumstances, and many such laws differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Due to the breadth of these laws and the narrowness of their exceptions and safe harbors, it is possible that business activities can be subject to challenge under one or more of such laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.
Ensuring that business arrangements with third parties comply with applicable healthcare laws and regulations is costly and time consuming. If business operations are found to be in violation of any of the laws described above or any other applicable governmental regulations a pharmaceutical manufacturer may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and curtailment or restructuring of operations, any of which could adversely affect a pharmaceutical manufacturer’s ability to operate its business and the results of its operations.
Pharmaceutical Coverage, Pricing, and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities. Sales of our products, when and if approved for marketing in the US, will depend, in part, on the extent to which our products will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations. The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the product once coverage is approved. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the approved products for a particular indication. In addition, these third-party payors are increasingly reducing reimbursements for medical products, drugs and services. Furthermore, the US government, state legislatures and foreign governments have continued implementing cost containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Limited third-party reimbursement for our product candidates or a decision by a third-party payor not to cover our product candidates could reduce physician usage of our products once approved and have a material adverse effect on our sales, results of operations and financial condition.
Healthcare Reform
In the US and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product and therapeutic candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell product and therapeutic candidates that obtain marketing approval. The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product and therapeutic candidates. In addition, future legislative and regulatory proposals may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated. We cannot be sure whether additional legislative changes will be enacted, or whether any of the FDA’s regulations, guidances or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be. For example, negotiations on the next FDA user fee reauthorization package began in mid-2025 and the resulting agreement is expected to be sent to Congress in early 2027 for purposes of initiating the legislative process. Reauthorization of the prescription drug user fee program must be finalized by Congress by the end of September 2027 in order to avoid a disruption in FDA’s review goals for NDAs and other activities supported by user fees assessed against industry. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
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As previously mentioned, the primary trend in the US healthcare industry and elsewhere is cost containment. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical products and services, implementing reductions in Medicare and other healthcare funding and applying new payment methodologies. The US Congress has considered reductions in Medicare reimbursement levels for medicines administered by physicians. CMS, the agency that administers the Medicare and Medicaid programs, also has authority to revise reimbursement rates and to implement coverage restrictions for most drugs and biologics. Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any approved products we may market in the future. While Medicare regulations apply only to pharmaceutical benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payors.
In recent years, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for DPs. Notably, the CREATES Act was enacted to address concerns articulated by both the FDA and others in the industry that some brand manufacturers have improperly restricted the distribution of their products, including by invoking the existence of a REMS for certain products, to deny generic and biosimilar product developers access to samples of brand products. Because generic and biosimilar product developers need samples of an RLD to conduct certain comparative testing required by the FDA, some attributed the inability to timely obtain such samples as a cause of delay in the entry of generic and biosimilar products. To remedy this concern, the CREATES Act establishes a private cause of action that permits a generic or biosimilar product developer to sue the brand manufacturer to compel it to furnish the necessary samples on “commercially reasonable, market-based terms.” Although lawsuits have been filed under the CREATES Act since its enactment, those lawsuits have settled privately; therefore, to date no federal court has reviewed or opined on the statutory language and there continues to be uncertainty regarding the scope and application of the law.
In August 2022, the IRA was signed into law. Among other things, the IRA has multiple provisions that may impact the prices of DPs that are both sold into the Medicare program and throughout the US For example, a manufacturer of a drug or biological product covered by Medicare Parts B or D must pay a rebate to the federal government if the DP’s price increases faster than the rate of inflation. This calculation is made on a DP by DP basis and the amount of the rebate owed to the federal government is directly dependent on the volume of a DP that is paid for by Medicare Parts B or D. Additionally, CMS will negotiate drug prices annually for a select number of single-source Part D drugs without generic or biosimilar competition. CMS will also negotiate drug prices for a select number of Part B drugs starting for payment year 2028. If a DP is selected by CMS for negotiation, it is expected that the revenue generated from such drug will decrease. CMS has begun to implement these new authorities announcing the first round of negotiated “maximum fair” prices for the first ten drug products in August 2024, which will become applicable for payment year 2026. The second round of negotiated priced for 15 drug products was announced in November 2025, and CMS published the next group of drug products selected for negotiation in January 2026. However, the IRA’s impact on the pharmaceutical industry in the US remains uncertain, in part because multiple large pharmaceutical companies and other stakeholders (e.g., the US Chamber of Commerce) have initiated federal lawsuits against CMS arguing the program is unconstitutional for a variety of reasons, among other complaints. Those lawsuits are currently ongoing.
Separately, the Trump Administration announced the creation of a government website called TrumpRx, which will allow consumers to purchase certain drugs at reduced prices as negotiated between the drug manufacturers and the administration. As of December 2025, the Trump Administration secured deals with five major drug manufacturers to offer certain drugs at most-favored-nation prices. In addition, recent US federal actions include initiatives incorporating most-favored-nation (international reference pricing) concepts for certain prescription drugs, as well as agency testing of new payment models that could tie Medicare reimbursement or manufacturer rebates to prices in specified reference countries.
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. For example, in recent years, several states have formed PDABs. Much like the IRA’s drug price negotiation program, these PDABs have attempted to implement UPLs on drugs sold in their respective states in both public and commercial health plans. For example, in August 2023, Colorado’s PDAB announced a list of five prescription drugs that would undergo an affordability review. The effects of these efforts remain uncertain pending the outcomes of several federal lawsuits challenging state authority to regulate prescription drug payment limits. We expect that federal, state and local governments in the US will continue to consider legislation directed at lowering the total cost of healthcare. Furthermore, in December 2020, the US Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate PBMs and other members of the healthcare and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area.
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The FTC in mid-2022 launched sweeping investigations into the practices of the PBM industry, and published interim reports with its findings in mid-2024 and January 2025, that appear to be contributing to additional federal and state legislative and regulatory proposals, as well as enforcement action and private litigation, targeting PBM operations, pharmacy networks, and financial arrangements. In February 2026, President Trump signed into law several PBM regulatory reforms as part of a federal budget package, including but not limited to requirements for PBMs to pass back 100% of rebates and fees to commercial health plan sponsors; to provide extensive informational disclosures related to patients’ coverage and benefits; and to accept only bona fide service fees from drug companies when providing services under Medicare Part D. The Department of Labor also issued a proposed rule in January 2026 that would mandate specific PBM fee disclosures to self-insured plan fiduciaries under ERISA. If finalized as proposed, the Department of Labor rule would also allow plan fiduciaries to audit those PBM disclosures to confirm accuracy. Additional proposals and legislative changes aimed at PBMs and their business practices are likely to continue to be introduced and considered in Congress and by executive agencies. Significant efforts to change the PBM industry as it currently exists in the US may affect the entire pharmaceutical supply chain and the business of other stakeholders, including pharmaceutical developers like us. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the US or abroad. We expect that additional federal, state, and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.
Regulation Outside the United States
For countries outside of the US, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, clinical trials must be conducted in accordance with GCP and the other applicable regulatory requirements. To the extent that any of our product candidates, once approved, are sold in a foreign country, we and our collaborators will be subject to applicable foreign laws and regulations, which may include, for instance, post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or other transfers of value to healthcare professionals. If we or our collaborators fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.