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Item 1A. Risk Factors

2025-07-22 compared with 2024-07-30 · 673 added, 723 removed, 877 unchanged (61% of the section changed)

Investing in our common stock involves a high degree of risk.

You should carefully consider the risks described below, as well as the other information in this Annual Report, including our financial

statements and the related notes and the section of this Annual Report titled “Management’s Discussion and Analysis of Financial

Condition and Results of Operations,” before deciding whether to invest in our common stock.

The occurrence of any of the events

or developments described below could harm our business, financial condition, results of operations and growth prospects.

In such an event,

the market price of our common stock could decline and you may lose all or part of your investment.

Additional risks and uncertainties

not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to Our Company, Early Stage of Clinical Development

and Financial Condition

We need to obtain substantial

additional funding to complete the development and any commercialization of AL001 and ALZN002.

If we are unable to raise this capital

when needed, we may be forced to delay, reduce or eliminate our research and development programs and other operations.

We expect our expenses

to increase substantially during the next few years.

The development of biotechnology product candidates is capital intensive.

we conduct non-clinical research and clinical development of our product candidates, we will need substantial additional funds to maintain

and expand our capabilities in a variety of areas including discovery and non-clinical research, clinical development, regulatory affairs,

product development, product quality assurance, and pharmacovigilance.

In addition, if we obtain marketing approval for any of our product

candidates, we expect to incur significant commercialization expenses for marketing, sales, manufacturing and distribution.

Some of those

commercialization investments may be made at-risk in advance of receiving an approval.

of April 30, 2024, we had $376,000 in cash and cash equivalents.

In May 2024, subsequent to the end of our fiscal year, we entered into

a transaction with an investor that, if the investor bides by its commitments, should produce a temporarily significant dollar amount

of financing, subject to our ability to achieve certain milestones.

Based on our current operating plan, we believe that this funding

will be enable us to fund our operations for the next twelve months.

In particular, we need additional funds to allow us to fund Phase

II clinical trials for AL001 in Alzheimer’s, BD, MDD and PTSD and to complete the on-going Phase I/IIA clinical trial for ALZN002

to treat mild to moderate dementia of the Alzheimer’s type.

However, changing circumstances or inaccurate estimates by us may cause

us to use capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because

of circumstances beyond our control.

For example, our ongoing clinical trial for ALZN002 or our planned clinical trials for AL001 may

encounter technical, enrollment or other issues that could cause our development costs to increase more than we expect.

We will not have

sufficient funds to complete any of these planned or ongoing clinical trials or the clinical development of either AL001 or ALZN002 through

regulatory approval.

We will need to raise substantial additional capital to complete the development and commercialization of each of

those product candidates, which additional capital, if available on reasonable terms if at all, may be raised through the sale of our

common stock or other securities or through the entering into of alternative strategic transactions, or cause our stockholders to incur

substantial dilution.

Our future capital

requirements will depend on many factors, including:

Investing in our common stock involves a high

degree of risk.

You should carefully consider the risks described below, as well as the other information in this Annual Report, including

our financial statements and the related notes and the section of this Annual Report titled “Management’s Discussion and Analysis

of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock.

The occurrence of any

of the events or developments described below could harm our business, financial condition, results of operations and growth prospects.

In such an event, the market price of our common stock could decline and you may lose all or part of your investment.

Additional risks

and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to Our Company, Early Stage of

Clinical Development and Financial Condition

We need to obtain

substantial additional funding to complete the development and any commercialization of AL001 and ALZN002.

If we are unable to raise this

capital when needed, we may be forced to delay, reduce or eliminate our research and development programs and other operations.

expect our expenses to increase substantially during the next few years.

The development of biotechnology product candidates is capital

As we conduct non-clinical research and clinical development of our product candidates,

we will need substantial additional funds to maintain and expand our capabilities in a variety of areas including discovery and non-clinical

research, clinical development, regulatory affairs, product development, product quality assurance, and pharmacovigilance.

if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses for marketing,

sales, manufacturing and distribution.

Some of those commercialization investments may be made at-risk in advance of receiving an approval.

of April 30, 2025, we had $3.9 million in cash and cash equivalents.

In February 2025, we entered into a transaction with an investor

that resulted in raising an additional $4.0 million subsequent to year end.

Based on our current operating plan, we believe that this

funding will not be sufficient to fund our operations for the next twelve months.

In particular, we need additional funds to allow us

to fund Phase II clinical trials for AL001 in Alzheimer’s, BD, MDD and PTSD and to complete the on-going Phase I/IIA clinical trial

for ALZN002 to treat mild to moderate dementia of the Alzheimer’s type.

However, changing circumstances or inaccurate estimates

by us may cause us to use capital significantly faster than we currently anticipate, and we may need to spend more money than currently

expected because of circumstances beyond our control.

For example, our ongoing clinical trial for ALZN002 or our planned clinical trials

for AL001 may encounter technical, enrollment or other issues that could cause our development costs to increase more than we expect.

We will not have sufficient funds to complete any of these planned or ongoing clinical trials or the clinical development of either AL001

or ALZN002 through regulatory approval.

We will need to raise substantial additional capital to complete the development and commercialization

of each of those product candidates, which additional capital, if available on reasonable terms if at all, may be raised through the sale

of our common stock or other securities or through the entering into of alternative strategic transactions, or cause our stockholders

to incur substantial dilution.

future capital requirements will depend on many factors, including:

• the initiation, progress, timing, costs and results of our planned clinical trials for our product candidates;

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• the cost associated with commercializing our product candidates, if any are approved for commercial sale.

Our commercial revenues, if any, will be

derived from sales of products that we do not expect to be commercially available for sale for at least the next several years, if ever.

Our commercial revenues, if

any, will be derived from sales of products that we do not expect to be commercially available for sale for at least the next several

years, if ever.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

Adequate additional financing

may not be available to us on acceptable terms, or at all.

In addition, we may seek additional capital due to favorable market conditions

or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

If we are unable to

raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs

or other operations.

Our independent registered public accounting firm has

expressed substantial doubt about our ability to continue as a going concern.

additional financing may not be available to us on acceptable terms, or at all.

In addition, we may seek additional capital due to favorable

market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development

programs or other operations.

Our independent registered public accounting

firm has issued a going concern opinion on our financial statements for the year ended April 30, 2024, expressing substantial doubt that

we can continue as an ongoing business due to insufficient capital for us to fund our operations.

Our financial statements do not include

any adjustments that may result from the outcome of this uncertainty.

If we are unable to successfully raise additional capital, we will

need to create and implement alternate operational plans to continue as a going concern, and investors or other financing sources may

be unwilling to provide additional funding to us on commercially reasonable terms or at all.

We are at an early stage of clinical development and currently

have no source of near-term revenue and may never become profitable.

firm has expressed substantial doubt about our ability to continue as a going concern.

Our independent registered

public accounting firm has issued a going concern opinion on our financial statements for the year ended April 30, 2025, expressing substantial

doubt that we can continue as an ongoing business due to insufficient capital for us to fund our operations.

Our financial statements

do not include any adjustments that may result from the outcome of this uncertainty.

If we are unable to successfully raise additional

capital, we will need to create and implement alternate operational plans to continue as a going concern, and investors or other financing

sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.

We are at an early stage of clinical development

and currently have no source of near-term revenue and may never become profitable.

We are a clinical-stage biopharmaceutical

9 unchanged sentences

• market acceptance of AL001 and ALZN002.

We only have two product candidates, AL001

and ALZN002, which will require extensive clinical evaluation, regulatory review and approval, significant marketing efforts and substantial

investment before either or both of them, and any respective successors, will provide us with any revenue.

As a result, if we do not successfully

develop, achieve regulatory approval for and commercialize AL001 or ALZN002, we will be unable to generate any revenue for many years,

We do not anticipate that we will generate revenue for a few years, at the earliest, or that we will achieve profitability

for at least several years after generating material revenue, if at all.

If we are unable to generate revenue, we will not become

profitable, and we may be unable to continue our operations.

We have a limited operating history on which to judge

our business prospects and management.

We only have two product candidates,

AL001 and ALZN002, which will require extensive clinical evaluation, regulatory review and approval, significant marketing efforts and

substantial investment before either or both of them, and any respective successors, will provide us with any revenue.

As a result, if

we do not successfully develop, achieve regulatory approval for and commercialize AL001 or ALZN002, we will be unable to generate any

revenue for many years, if at all.

We do not anticipate that we will generate revenue for a least the next several years, if ever,

or that we will achieve profitability for at least several years thereafter, if at all.

If we are unable to generate revenue, we

will not become profitable, and we may be unable to continue our operations.

We have a limited operating history on which

to judge our business prospects and management.

We were incorporated in February 2016

4 unchanged sentences

Our prospects must be considered in light of the risks encountered by companies in the early stage of development,

particularly companies in new and rapidly evolving markets.

Future operating results will depend upon many factors, including our success

in attracting and retaining motivated and qualified personnel, our ability to establish short term credit lines or obtain financing from

other sources, our ability to develop and market new products or control costs, and general economic conditions.

We cannot assure you

that we will successfully address any of these contingencies.

particularly companies in new and rapidly evolving markets with long periods of time before they can ever generate revenue, and then subsequently

achieve profitability, if ever.

Future operating results will depend upon many factors, including our success in attracting and retaining

motivated and qualified personnel, our ability to establish short term credit lines or obtain financing from other sources, our ability

to develop and market new products or control costs, and general economic conditions.

We cannot assure you that we will successfully address

any of these contingencies.

Risks Related to Our Product Candidates

We have both operational and financial milestones that

must be met to maintain the licensing rights to our current technology and intellectual property from the Licensor.

There are certain license fees and milestone

payments required to be paid by us to the Licensor, pursuant to the terms of license agreements we have entered into with the Licensor.

The license agreements for ALZN002 require us to pay royalty payments of 4% on net sales of products developed from the licensed technology

for ALZN002 while the license agreements for AL001 require that we pay combined royalty payments of 4.5% on net sales of products developed

from the licensed technology for AL001.

We have already paid an initial license fee of $200,000 for ALZN002 and an initial license fee

of $200,000 for AL001.

As an additional licensing fee for the license of ALZN002, the Licensor received 24,012 shares of our common stock.

As an additional licensing fee for the license of the AL001 technologies, the Licensor received 14,853 shares of our common stock.

royalties for AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary

first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life of the

AL001 License Agreements.

Minimum royalties for ALZN002 are $20,000 on the first anniversary of the first commercial sale, $40,000 on

the second anniversary first commercial sale and $50,000 on the third anniversary of the first commercial sale and every year thereafter,

for the life of the ALZN002 License Agreement.

Minimum royalties for November AL001 License Agreements are $40,000 on the first anniversary

of the first commercial sale, $80,000 on the second anniversary first commercial sale and $100,000 on the third anniversary of the first

commercial sale and every year thereafter, for the life of the November AL001 License Agreements .Additionally, we are required to pay

milestone payments on the due dates to the Licensor for the license of the AL001 technologies and for the ALZN002 technology, as follows:

We have both operational and financial milestones

that must be met to maintain the licensing rights to our current technology and intellectual property from the Licensor.

There are certain license

fees and milestone payments required to be paid by us to the Licensor, pursuant to the terms of license agreements we have entered into

with the Licensor.

The license agreements for ALZN002 require us to pay royalty payments of 4% on net sales of products developed from

the licensed technology for ALZN002 while the license agreements for AL001 require that we pay combined royalty payments of 4.5% on net

sales of products developed from the licensed technology for AL001.

We have already paid an initial license fee of $200,000 for ALZN002

and an initial license fee of $200,000 for AL001.

As an additional licensing fee for the license of ALZN002, the Licensor received 24,012

shares of our common stock.

As an additional licensing fee for the license of the AL001 technologies, the Licensor received 14,853 shares

of our common stock.

Minimum royalties for AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale,

$80,000 on the second anniversary first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year

thereafter, for the life of the AL001 License Agreements.

Minimum royalties for ALZN002 are $20,000 on the first anniversary of the first

commercial sale, $40,000 on the second anniversary first commercial sale and $50,000 on the third anniversary of the first commercial

sale and every year thereafter, for the life of the ALZN002 License Agreement.

Minimum royalties for November AL001 License Agreements

are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary first commercial sale and $100,000

on the third anniversary of the first commercial sale and every year thereafter, for the life of the November AL001 License Agreements

.Additionally, we are required to pay milestone payments on the due dates to the Licensor for the license of the AL001 technologies and

for the ALZN002 technology, as follows:

Original AL001 Licenses:

Completed September 2019

Pre-IND meeting

Completed June 2021

IND application filing

Completed December 2021

Upon first dosing of patient in a clinical trial

Completed March 2022

Upon Completion of first clinical trial

Pre-IND Meeting - Completed September 2019

IND application filing - Completed June 2021

Upon first dosing of patient in a clinical trial - Completed December 2021

Upon completion of first clinical trial - Completed March 2022

Upon first patient treated in a Phase III clinical trial

8 years from the effective date of the agreement

Upon FDA NDA approval

* Milestone met and completed

If we fail to meet

a milestone payment by the specified date, the Licensor may terminate the respective license agreement.

If the Licensor were to terminate

either license agreement for whatever reason, it would materially and adversely affect our business, financial position and future prospects

and you would likely lose the entirety of your investment in us.

ALZN002 License:

Completed January 2022

Upon IND application - Completed January 2022

Upon first dosing of patient in first Phase I clinical trial

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Upon first patient treated in a Phase III clinical trial

August 1, 2029

First commercial sale

These AL001 License Agreements have an indefinite

term that continue until the later of the date no licensed patent under the applicable agreement remains a pending application or enforceable

patent, the end date of any period of market exclusivity granted by a governmental regulatory body, or the date on which the licensee’s

obligations to pay royalties expire under the applicable license agreement.

If we fail to comply with our obligations in the agreements

under which we license intellectual property and other rights from third parties or otherwise experience disruptions to our business relationships

with the Licensor, we could lose license rights that are important to our business.

We are a party to these license agreements

with the Licensor and expect to enter into additional license agreements in the future.

The existing license agreements impose, and we

expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us.

to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments

These AL001 License Agreements

have an indefinite term that continue until the later of the date no licensed patent under the applicable agreement remains a pending

application or enforceable patent, the end date of any period of market exclusivity granted by a governmental regulatory body, or the

date on which the licensee’s obligations to pay royalties expire under the applicable license agreement.

If we fail to comply with our obligations

in the agreements under which we license intellectual property and other rights from third parties or otherwise experience disruptions

to our business relationships with the Licensor, we could lose license rights that are important to our business.

We are a party to these license

agreements with the Licensor and expect to enter into additional license agreements in the future.

The existing license agreements impose,

and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us.

we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments

to the Licensor, we may lose the exclusivity of our license, or the Licensor may have the right to terminate the license, in which event

we would not be able to develop or market products covered by the license.

The Licensor or any future licensor may take any of these actions,

including terminating a license agreement.

Additionally, the milestone and other payments associated with these licenses will make it

less profitable for us to develop our product candidates.

If the Licensor were to terminate a license agreement for whatever reason, it

would materially and adversely affect our business, financial position and future prospects and you would likely lose the entirety of

your investment in us.

In some cases, patent prosecution of our

licensed technology is controlled solely by the Licensor.

If the Licensor fails to obtain and maintain patent or other protection for

the proprietary intellectual property we license, we could lose our rights to the intellectual property or our exclusivity with respect

we would not be able to develop or market products covered by the license and would be forced to wind down our operations.

or any future licensor may take any of these actions, including terminating a license agreement.

Additionally, the milestone and other

payments associated with these licenses will make it less profitable for us to develop our product candidates.

If the Licensor were to

terminate a license agreement for whatever reason, it would materially and adversely affect our business, financial position and future

prospects and you would likely lose the entirety of your investment in us.

In some cases, patent prosecution

of our licensed technology is controlled solely by the Licensor.

If the Licensor fails to obtain and maintain patent or other protection

for the proprietary intellectual property we license, we could lose our rights to the intellectual property or our exclusivity with respect

to those rights, and our competitors could market competing products using the intellectual property.

11 unchanged sentences

• the priority of invention of patented technology.

If disputes over intellectual property and

other rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we

may be unable to successfully develop and commercialize the affected product candidates.

We are substantially dependent on the success of our product

candidates, which may not receive regulatory approval or be successfully commercialized.

In the future, we plan to submit AL001 and

ALZN002 and, potentially, other product candidates for regulatory approval.

Currently, however, neither AL001 nor ALZN002 has been submitted

for regulatory approval, which would be required before we seek to initiate commercial distribution.

To date, we have invested nearly

all of our resources in establishing our company, acquiring the intellectual property of our product candidates, AL001 and ALZN002 and

conducting certain preclinical studies and clinical trials.

Our near-term prospects, including our ability to finance our company and

to enter into strategic collaborations and, ultimately, to generate revenue, are directly dependent upon the successful development, FDA

approval and commercialization of AL001 or ALZN002.

The development and commercial success of

our product will depend on a number of factors, including, without limitation, the following:

If disputes over intellectual

property and other rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable

terms, we may be unable to successfully develop and commercialize the affected product candidates.

We are substantially dependent on the success

of our product candidates, which may not receive regulatory approval or be successfully commercialized.

In the future, we plan to

submit AL001 and ALZN002 and, potentially, other product candidates for regulatory approval.

Currently, however, neither AL001 nor ALZN002

has been submitted for regulatory approval, which would be required before we seek to initiate commercial distribution.

To date, we have

invested nearly all of our resources in establishing our company, acquiring the intellectual property of our product candidates, AL001

and ALZN002 and conducting certain preclinical studies and clinical trials.

Our near-term prospects, including our ability to finance

our company and to enter into strategic collaborations and, ultimately, to generate revenue, are directly dependent upon the successful

development, FDA approval and commercialization of AL001 or ALZN002.

The development and commercial

success of our product will depend on a number of factors, including, without limitation, the following:

• our timely initiation and successful completion of preclinical studies and clinical trials for AL001 or

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• the acceptance of AL001 and ALZN002 by physicians, health care payers, patients and the medical community.

Many of these factors are beyond our control,

and we cannot assure you that we will ever be able to generate sufficient revenue, or any revenue at all, from the sale of AL001 or ALZN002.

Our failure in any of the above factors, or in successfully commercializing AL001 or ALZN002 on a timely basis, could have a material

adverse effect on our business, results of operations and financial condition, and the value of your investment could substantially decline.

AL001 and ALZN002 may not achieve market acceptance, which would significantly

limit our ability to generate revenue.

Even if we develop AL001 or ALZN002 and

gain regulatory approvals for either or both candidates, unless physicians and patients accept our product candidates, we may not be able

to sell them, whether directly or indirectly, and generate significant revenues.

We cannot assure you that AL001, ALZN002 or any other

potential product candidates we may eventually develop will achieve market acceptance and revenue if and when they obtain the requisite

regulatory approvals.

Market acceptance of any product candidate depends on a number of factors, including but not limited to:

Many of these factors are

beyond our control, and we cannot assure you that we will ever be able to generate sufficient revenue, or any revenue at all, from the

sale of AL001 or ALZN002.

Our failure in any of the above factors, or in successfully commercializing AL001 or ALZN002 on a timely basis,

could have a material adverse effect on our business, results of operations and financial condition, and the value of your investment

could substantially decline.

AL001 and ALZN002 may not achieve market acceptance, which would

significantly limit our ability to generate revenue.

Even if we develop AL001 or

ALZN002 and gain regulatory approvals for either or both candidates, unless physicians and patients accept our product candidates, we

may not be able to sell them, whether directly or indirectly, and generate significant revenues.

We cannot assure you that AL001, ALZN002

or any other potential product candidates we may eventually develop will achieve market acceptance and revenue if and when they obtain

the requisite regulatory approvals.

Market acceptance of any product candidate depends on a number of factors, including but not limited

• the indication and warnings approved by regulatory authorities in the product label;

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• the effectiveness of marketing and distribution support.

Any failure by AL001 or ALZN002 to achieve

market acceptance or commercial success could have a material adverse effect on our business, results of operations and financial condition.

Problems in the manufacturing process, failure to comply

with manufacturing regulations or unexpected increases in manufacturing costs could harm our business, results of operations and financial

We are responsible for the manufacture and

supply of AL001 and ALZN002 independently of each other.

The manufacturing of AL001 and ALZN002 necessitates compliance with applicable

regulatory requirements of the FDA and the European Union, as well as with international cGMP and other international regulatory requirements.

Any failure by AL001 or ALZN002

to achieve market acceptance or commercial success could have a material adverse effect on our business, results of operations and financial

Problems in the manufacturing process, failure

to comply with manufacturing regulations or unexpected increases in manufacturing costs could harm our business, results of operations

and financial condition.

We are responsible for the

manufacture and supply of AL001 and ALZN002 independently of each other.

The manufacturing of AL001 and ALZN002 necessitates compliance

with applicable regulatory requirements of the FDA and the European Union, as well as with international cGMP and other international

regulatory requirements.

As of the date of this Annual Report, we do not have our own manufacturing facilities.

We have contracted with a third-party manufacturer

for the clinical supply of AL001 using GMP manufacturing for our planned AL001 clinical trials and plan to contract with established third

parties for the long-term commercial production of AL001 and ALZN002.

The responsibility to obtain market authorization for AL001 and

ALZN002 remains with us.

As such, even if we could potentially have a claim against one or more third parties, we are legally liable for

any noncompliance related to AL001 and ALZN002 and we expect to retain legal responsibility for any future product candidates as well.

Additionally, we may have limited control

over the associated manufacturing costs and potential unexpected increases in those costs over time.

If costs increase, we may choose

to pass on such costs to our customers, which could reduce our ability to compete by increasing the prices of our products (which we expect

to be priced at a significant premium over competing generic products).

See “Risks Related to Our Business and Industry — We

expect to face substantial competition, with other entities possibly discovering, developing or commercializing products before, or more

successfully than, we do.” If we cannot pass on all such costs to our customers, then our profitability would be adversely affected.

If we are unable to manufacture, or contract

to manufacture, AL001 and ALZN002 in accordance with regulatory specifications, or if there are disruptions in the manufacturing process

due to damage, loss or failure to meet regulatory requirements (including passing inspections) of manufacturing facilities, we may not

be able to meet the demand for our products or supply sufficient product for use in clinical trials, and this may harm our ability to

commercialize AL001 and ALZN002 on a timely or cost-competitive basis, or preclude us from doing so at all, which could harm our business,

We have contracted with

a third-party manufacturer for the clinical supply of AL001 using GMP manufacturing for our planned AL001 clinical trials and plan to

contract with established third parties for the long-term commercial production of AL001 and ALZN002.

The responsibility to obtain market

authorization for AL001 and ALZN002 remains with us.

As such, even if we could potentially have a claim against one or more third parties,

we are legally liable for any noncompliance related to AL001 and ALZN002 and we expect to retain legal responsibility for any future product

candidates as well.

Additionally, we may have

limited control over the associated manufacturing costs and potential unexpected increases in those costs over time.

If costs increase,

we may choose to pass on such costs to our customers, which could reduce our ability to compete by increasing the prices of our products

(which we expect to be priced at a significant premium over competing generic products).

See “Risks Related to Our Business and

Industry — We expect to face substantial competition, with other entities possibly discovering, developing or commercializing

products before, or more successfully than, we do.” If we cannot pass on all such costs to our customers, then our profitability

would be adversely affected.

If we are unable to manufacture,

or contract to manufacture, AL001 and ALZN002 in accordance with regulatory specifications, or if there are disruptions in the manufacturing

process due to damage, loss or failure to meet regulatory requirements (including passing inspections) of manufacturing facilities, we

may not be able to meet the demand for our products or supply sufficient product for use in clinical trials, and this may harm our ability

to commercialize AL001 and ALZN002 on a timely or cost-competitive basis, or preclude us from doing so at all, which could harm our business,

results of operations and financial condition.

Before we or any future commercial partners

can begin commercial manufacture of AL001 and ALZN002 or any other product candidate that we may develop in the future, we must obtain

FDA regulatory approval for the product, which requires a successful FDA inspection of our manufacturing facilities (or those we contract

with) and the development of quality systems, among other requirements.

Even if we successfully pass an FDA Pre-Approval Inspection of

any manufacturing facilities we may establish or contract with, our pharmaceutical facilities would be subject to unannounced inspection

Before we or any future commercial

partners can begin commercial manufacture of AL001 and ALZN002 or any other product candidate that we may develop in the future, we must

obtain FDA regulatory approval for the product, which requires a successful FDA inspection of our manufacturing facilities (or those we

contract with) and the development of quality systems, among other requirements.

Even if we successfully pass an FDA Pre-Approval Inspection

of any manufacturing facilities we may establish or contract with, our pharmaceutical facilities would be subject to unannounced inspection

by the FDA and foreign regulatory authorities to ensure ongoing manufacturing compliance, even after product approval.

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and may prevent us or our future commercial partners from obtaining approvals for the commercialization of some or all of our product

Serious adverse events or other safety risks could require

us to abandon development and preclude, delay or limit approval of AL001 or ALZN002, or limit the scope of any approved label or market

If AL001, ALZN002 or any other product candidate

that we may develop in the future, prior to or after any approval for commercial sale, causes serious or unexpected side effects, or become

associated with other safety risks such as misuse, abuse or diversion, a number of potentially significant negative consequences could

result, including, without limitation, that:

Serious adverse events or other safety risks

could require us to abandon development and preclude, delay or limit approval of AL001 or ALZN002, or limit the scope of any approved

label or market acceptance.

If AL001, ALZN002 or any other

product candidate that we may develop in the future, prior to or after any approval for commercial sale, causes serious or unexpected

side effects, or become associated with other safety risks such as misuse, abuse or diversion, a number of potentially significant negative

consequences could result, including, without limitation, that:

• regulatory authorities may interrupt, delay or halt clinical trials;

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• our reputation may suffer.

We may voluntarily suspend or terminate

our clinical trials if at any time we believe that they present an unacceptable risk to participants or if preliminary data demonstrate

that either AL001 or ALZN002 is unlikely to receive regulatory approval or is unlikely to be successfully commercialized.

regulatory agencies, an Ethics Committee or Institutional Review Board (an “IRB”), or data safety monitoring boards may at

any time recommend the temporary or permanent discontinuation of our clinical trials or request that we cease using investigators in the

clinical trials if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements,

or that they present an unacceptable safety risk to participants.

If we elect or are forced to suspend or terminate a clinical trial of

AL001, ALZN002 or any other product candidate that we may in the future develop, the commercial prospects for that product will be harmed

and our ability to generate product revenue from that product may be delayed or eliminated.

Furthermore, any of these events could prevent

us or our partners from achieving or maintaining market acceptance of the affected product and could substantially increase the costs

of commercializing AL001 or ALZN002 and materially impair our ability to generate revenue from the commercialization of AL001 or ALZN002

either by us or by any future commercial partners with which we may develop a relationship, which and could have a material adverse effect

on our reputation, business, results of operations and financial condition.

If we fail to obtain and sustain an adequate level of

reimbursement for our products by third-party payers, sales and profitability will be adversely affected.

The course of medical treatment for human

patients is, and will continue to be, expensive.

We expect that most patients and their families will not be capable of paying for our

potential products themselves.

Accordingly, it is unlikely that there will

be a commercially viable market for AL001 or ALZN002, if approved, without reimbursement and coverage from third-party payers.

reimbursement approval and coverage from third-party payers is a time consuming and expensive process, and we cannot be certain that reimbursement

will be approved and coverage obtained for our current product candidates or any other product candidate we may develop.

Additionally,

even if there is some form of reimbursement and coverage from third-party payers, if the level of third-party reimbursement is insufficient

from the patient’s perspective or coverage is limited, our revenue and gross margins will be materially and adversely affected.

We may voluntarily suspend

or terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants or if preliminary data

demonstrate that either AL001 or ALZN002 is unlikely to receive regulatory approval or is unlikely to be successfully commercialized.

In addition, regulatory agencies, an Ethics Committee or an IRB, or data safety monitoring boards may at any time recommend the temporary

or permanent discontinuation of our clinical trials or request that we cease using investigators in the clinical trials if they believe

that the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present an unacceptable

safety risk to participants.

If we elect or are forced to suspend or terminate a clinical trial of AL001, ALZN002 or any other product

candidate that we may in the future develop, the commercial prospects for that product will be harmed and our ability to generate product

revenue from that product may be delayed or eliminated.

Furthermore, any of these events could prevent us or our partners from achieving

or maintaining market acceptance of the affected product and could substantially increase the costs of commercializing AL001 or ALZN002

and materially impair our ability to generate revenue from the commercialization of AL001 or ALZN002 either by us or by any future commercial

partners with which we may develop a relationship, which and could have a material adverse effect on our reputation, business, results

of operations and financial condition.

If we fail to obtain and sustain an adequate

level of reimbursement for our products by third-party payers, sales and profitability will be adversely affected.

The course of medical treatment

for human patients is, and will continue to be, expensive.

We expect that most patients and their families will not be capable of paying

for our potential products themselves.

Accordingly, it is unlikely

that there will be a commercially viable market for AL001 or ALZN002, if approved, without reimbursement and coverage from third-party

Obtaining reimbursement approval and coverage from third-party payers is a time consuming and expensive process, and we cannot

be certain that reimbursement will be approved and coverage obtained for our current product candidates or any other product candidate

we may develop.

Additionally, even if there is some form of reimbursement and coverage from third-party payers, if the level of third-party

reimbursement is insufficient from the patient’s perspective or coverage is limited, our revenue and gross margins will be materially

and adversely affected.

A current trend in the U.S.

industry, as well as in other countries around the world, is toward cost containment.

Large public and private payers, managed care organizations,

group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding the use of, and reimbursement

levels for, particular treatments.

Third-party payers, such as government programs, including Medicare in the United States, and private

health care insurers, carefully review and have increasingly been challenging the coverage of, and prices charged for, medical products

and services.

Many third-party payers limit coverage of or reimbursement for newly-approved health care products.

Reimbursement rates

and coverage from private health insurance companies vary depending on the company, the insurance plan and other factors.

initiatives could decrease the price we or our partners establish for products, which could result in lower product revenue and profitability.

Reimbursement systems in international markets

vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis.

health care industry, as well as in other countries around the world, is toward cost containment.

Large public and private payers, managed

care organizations, group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding

the use of, and reimbursement levels for, particular treatments.

Third-party payers, such as government programs, including Medicare in

the United States, and private health care insurers, carefully review and have increasingly been challenging the coverage of, and prices

charged for, medical products and services.

Many third-party payers limit coverage of or reimbursement for newly-approved health care

Reimbursement rates and coverage from private health insurance companies vary depending on the company, the insurance plan and

other factors.

Cost-control initiatives could decrease the price we or our partners establish for products, which could result in lower

product revenue and profitability.

Reimbursement systems in international

markets vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis.

partners may elect to reduce the price of our products in order to increase the likelihood of obtaining reimbursement approvals.

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adversely affect our sales and profitability and could materially and adversely affect our business, results of operations and financial

Risks Related to Development and Regulatory Approval of Our

Drug Candidates

The regulatory approval process is uncertain, requires

us to utilize significant resources, and may prevent us or our future commercial partners from obtaining approvals for the commercialization

Risks Related to Development and Regulatory

Approval of Our Drug Candidates

The regulatory approval process is uncertain,

requires us to utilize significant resources, and may prevent us or our future commercial partners from obtaining approvals for the commercialization

of AL001 or ALZN002.

The research, testing, manufacturing, labeling,

approval, sale, marketing and testing of AL001 and ALZN002 are and will be subject to extensive regulation by regulatory authorities in

the United States, Europe and elsewhere, and regulatory requirements applicable to our product differ from country to country.

The research, testing, manufacturing,

labeling, approval, sale, marketing and testing of AL001 and ALZN002 are and will be subject to extensive regulation by regulatory authorities

in the United States, Europe and elsewhere, and regulatory requirements applicable to our product differ from country to country.

we nor any commercial partner will be permitted to market any of our current or future product candidates in the United States until we

receive approval from the FDA of either a NDA or BLA for AL001 and ALZN002, respectively.

Obtaining approval of an NDA or a BLA is an

uncertain process that requires us to utilize significant resources.

receive approval from the FDA of either an NDA or a BLA for AL001 and ALZN002, respectively.

Obtaining approval of an NDA or a BLA is

an uncertain process that requires us to utilize significant resources.

Furthermore, regulatory authorities possess broad discretion regarding

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approved applications.

Even if we fully comply with all applicable

laws and regulations, the FDA may still determine that our clinical data are insufficient for final approval of an NDA or BLA.

required by the FDA and most foreign regulatory authorities before human health care pharmaceuticals may be marketed generally involves

nonclinical laboratory and, in some cases, animal tests;

submission of an IND, which must become effective before clinical trials may

adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use

Even if we fully comply with

all applicable laws and regulations, the FDA may still determine that our clinical data are insufficient for final approval of an NDA

The process required by the FDA and most foreign regulatory authorities before human health care pharmaceuticals may be marketed

generally involves nonclinical laboratory and, in some cases, animal tests;

submission of an IND, which must become effective before clinical

trials may begin;

adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its

intended use or uses;

pre-approval inspection of manufacturing facilities and clinical trial sites;

and FDA approval of an NDA or BLA, which must occur

before a drug can be marketed or sold.

Regulatory approval of an NDA or BLA, or

any supplement thereof, is not guaranteed, and the approval process requires us to utilize significant resources, could take several years,

and is subject to the substantial discretion of the FDA.

Despite the time and expense exerted, failure can occur at any stage, and we

could encounter problems that cause us to abandon or have to repeat or perform additional studies.

If our product or any of our future

product candidates fails to demonstrate safety and efficacy in our studies, or for any other reason does not gain regulatory approval,

our business and results of operations will be materially and adversely harmed.

In addition, separate regulatory approvals

are required in order to market any product in many jurisdictions, including the United States, the United Kingdom, European Economic

Area, which consists of the 27 Member States (known as the “EU Member States”) of the European Union plus Norway, Iceland

and Liechtenstein, and others.

Approval procedures vary among countries and can involve additional studies and testing, and the time required

to obtain approval may differ from that required to obtain FDA approval.

Studies conducted in one country may not be accepted by regulatory

authorities in other countries.

Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval

by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the

However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process

and FDA approval of an NDA or BLA,

which must occur before a drug can be marketed or sold.

Regulatory approval of an

NDA or a BLA, or any supplement thereof, is not guaranteed, and the approval process requires us to utilize significant resources, could

take several years, and is subject to the substantial discretion of the FDA.

Despite the time and expense exerted, failure can occur

at any stage, and we could encounter problems that cause us to abandon or have to repeat or perform additional studies.

If our product

or any of our future product candidates fails to demonstrate safety and efficacy in our studies, or for any other reason does not gain

regulatory approval, our business and results of operations will be materially and adversely harmed.

In addition, separate regulatory

approvals are required in order to market any product in many jurisdictions, including the United States, the United Kingdom, European

Economic Area, which consists of the 27 Member States (known as the “EU Member States”) of the European Union plus Norway,

Iceland and Liechtenstein, and others.

Approval procedures vary among countries and can involve additional studies and testing, and the

time required to obtain approval may differ from that required to obtain FDA approval.

Studies conducted in one country may not be accepted

by regulatory authorities in other countries.

Approval by the FDA does not ensure approval by regulatory authorities in other countries,

and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries

or by the FDA.

However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory

process in others.

The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval.

We may be unable

to file for regulatory approvals or do so on a timely basis and, even if we are able to, we may not receive necessary approvals to commercialize

our products in any market.

Any of these results could have a material adverse effect on our business, results of operations and financial

There is a high rate of failure for drug candidates proceeding

through clinical trials.

Generally speaking, there is a high rate

of failure for drug candidates proceeding through clinical trials.

We may suffer significant setbacks in our clinical trials similar to

the experience of a number of other companies in the pharmaceutical and biotechnology industries, even after receiving promising results

in earlier trials.

Further, even if we view the results of a clinical trial to be positive, the FDA or other regulatory authorities may

disagree with our interpretation of the data.

be unable to file for regulatory approvals or do so on a timely basis and, even if we are able to, we may not receive necessary approvals

to commercialize our products in any market.

Any of these results could have a material adverse effect on our business, results of operations

and financial condition.

There is a high rate of failure for drug

candidates proceeding through clinical trials.

Generally speaking, there

is a high rate of failure for drug candidates proceeding through clinical trials.

We may suffer significant setbacks in our clinical trials

similar to the experience of a number of other companies in the pharmaceutical and biotechnology industries, even after receiving promising

results in earlier trials.

Further, even if we view the results of a clinical trial to be positive, the FDA or other regulatory authorities

may disagree with our interpretation of the data.

For instance, any such differing interpretation could cause the FDA to require additional

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• the price of our common stock would likely decrease significantly.

Any of these results could materially and

adversely affect our business, results of operations or financial condition.

Most attempts at drug approval

for Alzheimer’s have failed.

Despite billions

of dollars invested by the NIH and the biopharmaceutical industry in research programs to develop novel therapeutics for Alzheimer’s,

Any of these results could

materially and adversely affect our business, results of operations or financial condition.

Most attempts at

drug approval for Alzheimer’s have failed.

billions of dollars invested by the NIH and the biopharmaceutical industry in research programs to develop novel therapeutics for Alzheimer’s,

the FDA has only approved three new drugs for Alzheimer’s since 2003;

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to above, virtually all of these scientific programs have failed in clinical testing.

Clinical trials for AL001 or ALZN002 can be expensive,

time consuming, uncertain and susceptible to change, delay or termination.

Clinical trials are expensive, time consuming

and difficult to design and implement.

The result of a clinical trial may be undesirable and can result in a clinical trial cancellation

or the need for re-evaluation and supplementation.

Even if the results of our clinical trials are favorable, the clinical trials for AL001

or ALZN002 are expected to continue for a few years and may even take significantly longer to complete.

In addition, we, the FDA,

an IRB, or other regulatory authority, whether in the United States, European Union or elsewhere, may suspend, delay or terminate our

clinical trials at any time, for various reasons, including, without limitation:

Clinical trials for AL001 or ALZN002 can

be expensive, time consuming, uncertain and susceptible to change, delay or termination.

Clinical trials are expensive,

time consuming and difficult to design and implement.

The result of a clinical trial may be undesirable and can result in a clinical trial

cancellation or the need for re-evaluation and supplementation.

Even if the results of our clinical trials are favorable, the clinical

trials for AL001 or ALZN002 are expected to continue for a few years and may even take significantly longer to complete.

we, the FDA, an IRB, or other regulatory authority, whether in the United States, European Union or elsewhere, may suspend, delay or terminate

our clinical trials at any time, for various reasons, including, without limitation:

• lack of effectiveness of AL001 or ALZN002 during clinical trials;

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• regulatory concerns with pharmaceutical products generally and the potential for abuse.

The occurrence of any of the foregoing could

have a material adverse effect on our business, results of operations and financial condition.

See the risk factor “There is a high

rate of failure for drug candidates proceeding through clinical trials” above.

If our products do not receive breakthrough therapy designation,

it could potentially increase the FDA’s review time and adversely impact our development timeline.

Even if the FDA grants breakthrough

therapy designation, it does not guarantee faster product development or FDA review and does not necessarily increase the likelihood of

the product candidates receiving approval from the FDA.

Breakthrough therapy designation is reserved

for drug or biologic products that are intended to treat serious conditions and for which preliminary clinical evidence indicates that

the candidate may demonstrate a substantial improvement on one or more clinically significant endpoints over currently available therapies.

The benefits of receiving the designation include additional guidance from FDA throughout the development process, assistance with designing

clinical trials, and coordination with FDA senior managers and experienced review staff.

We plan to seek breakthrough therapy designation

for both AL001 and ALZN002.

However, we have neither received breakthrough therapy designation nor have we qualified for expedited

development, and no assurance can be given that we will.

Even if we qualify for breakthrough therapy designation or expedited development,

it may not actually lead to faster development or expedited regulatory review and approval or necessarily increase the likelihood that

we will receive FDA approval.

Even if we believe that our products are

strong candidates for breakthrough therapy designation, it is possible that the FDA may determine that our preliminary clinical evidence

is insufficient to justify breakthrough therapy designation.

Without this designation, we would not be able to benefit from the increased

FDA guidance and assistance throughout the development process, and it is possible that our development timeline could be extended.

The breakthrough therapy designation, while

at times advantageous for the development process for the reasons identified above, may nevertheless have little or no positive impact

on our development process.

The occurrence of any of the

foregoing could have a material adverse effect on our business, results of operations and financial condition.

See the risk factor “There

is a high rate of failure for drug candidates proceeding through clinical trials” above.

If our products do not receive breakthrough

therapy designation, it could potentially increase the FDA’s review time and adversely impact our development timeline.

the FDA grants breakthrough therapy designation, it does not guarantee faster product development or FDA review and does not necessarily

increase the likelihood of the product candidates receiving approval from the FDA.

Breakthrough therapy designation

is reserved for drug or biologic products that are intended to treat serious conditions and for which preliminary clinical evidence indicates

that the candidate may demonstrate a substantial improvement on one or more clinically significant endpoints over currently available

The benefits of receiving the designation include additional guidance from FDA throughout the development process, assistance

with designing clinical trials, and coordination with FDA senior managers and experienced review staff.

We plan to seek breakthrough therapy

designation for both AL001 and ALZN002.

However, we have neither received breakthrough therapy designation nor have we qualified

for expedited development, and no assurance can be given that we will.

Even if we qualify for breakthrough therapy designation or expedited

development, it may not actually lead to faster development or expedited regulatory review and approval or necessarily increase the likelihood

that we will receive FDA approval.

Even if we believe that our

products are strong candidates for breakthrough therapy designation, it is possible that the FDA may determine that our preliminary clinical

evidence is insufficient to justify breakthrough therapy designation.

Without this designation, we would not be able to benefit from the

increased FDA guidance and assistance throughout the development process, and it is possible that our development timeline could be extended.

The breakthrough therapy designation,

while at times advantageous for the development process for the reasons identified above, may nevertheless have little or no positive

impact on our development process.

There is no guarantee that, even with the FDA’s assistance through the breakthrough therapy designation,

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candidates will ultimately receive approval from the FDA.

In summary, we cannot guarantee that our

product candidates will receive breakthrough therapy designations and, even if one does, we cannot guarantee that such designations will

have any bearing on the FDA’s review or approval of our product candidates.

Even if we receive regulatory approval for any of our

future product candidates, we will be subject to ongoing FDA and other regulatory body obligations and continued regulatory review, which

may result in significant additional expense.

Additionally, our product candidates, if approved, will be subject to labeling and manufacturing

requirements and could be subject to other restrictions.

Failure to comply with these regulatory requirements or the occurrence of unanticipated

problems with our products could result in significant penalties.

Any regulatory approvals that we or any

of our collaborators receive for AL001, ALZN002 or any future product candidate may be subject to conditions of approval or limitations

on the approved indicated uses for which the product may be marketed or may contain requirements for potentially costly surveillance to

monitor the safety and efficacy of the product candidate.

In addition, AL001, ALZN002 and any of our future product candidates, if approved

by the FDA or other regulatory bodies, will be subject to extensive and ongoing regulatory requirements regarding the manufacturing processes,

labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping.

These requirements will

include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP,

Good Laboratory Practice and Good Clinical Practice, the three types of audits related to the progressive stages needed to bring a pharmaceutical

product to market, for any studies that we conduct post-approval.

Later discovery of previously unknown problems with a product, including

adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to

comply with regulatory requirements, may result in, among other things:

In summary, we cannot guarantee

that our product candidates will receive breakthrough therapy designations and, even if one does, we cannot guarantee that such designations

will have any bearing on the FDA’s review or approval of our product candidates.

Even if we receive regulatory approval for

any of our future product candidates, we will be subject to ongoing FDA and other regulatory body obligations and continued regulatory

review, which may result in significant additional expense.

Additionally, our product candidates, if approved, will be subject to labeling

and manufacturing requirements and could be subject to other restrictions.

Failure to comply with these regulatory requirements or the

occurrence of unanticipated problems with our products could result in significant penalties.

Any regulatory approvals that

we or any of our collaborators receive for AL001, ALZN002 or any future product candidate may be subject to conditions of approval or

limitations on the approved indicated uses for which the product may be marketed or may contain requirements for potentially costly surveillance

to monitor the safety and efficacy of the product candidate.

In addition, AL001, ALZN002 and any of our future product candidates, if

approved by the FDA or other regulatory bodies, will be subject to extensive and ongoing regulatory requirements regarding the manufacturing

processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping.

These requirements

will include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with

cGMP, Good Laboratory Practice and Good Clinical Practice, the three types of audits related to the progressive stages needed to bring

a pharmaceutical product to market, for any studies that we conduct post-approval.

Later discovery of previously unknown problems with

a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes,

or failure to comply with regulatory requirements, may result in, among other things:

• restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market,

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• injunctions or the imposition of civil or criminal penalties.

The policies of the FDA and other regulatory

bodies may change, and additional government regulations may be promulgated that could prevent, limit or delay regulatory approval of

AL001 or ALZN002.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or

administrative action, either in the United States or elsewhere.

The policies of the FDA and

other regulatory bodies may change, and additional government regulations may be promulgated that could prevent, limit or delay regulatory

approval of AL001 or ALZN002.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation

or administrative action, either in the United States or elsewhere.

If we are slow or unable to adapt to changes in existing requirements

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results of operations and financial condition.

AL001 or ALZN002 and any of our future product candidates,

if approved, may cause or contribute to adverse medical events that we are required to report to the FDA and regulatory authorities in

other countries and, if we fail to do so, we could be subject to sanctions that would materially harm our business.

AL001 or ALZN002 and any of our future product

candidates, if approved, may cause or contribute to adverse medical events that we are required to report to the FDA and regulatory authorities

in other countries and, if we fail to do so, we could be subject to sanctions that would materially harm our business.

If we are successful in commercializing

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our business, results of operations and financial condition.

Legislative or regulatory reforms with respect to products

may make it more difficult and costly for us to obtain regulatory clearance or approval of AL001, ALZN002 or any of our future product

candidates and to produce, market, and distribute our products after clearance or approval is obtained.

From time to time, legislation is drafted

and introduced in the U.S.

Congress and lawmaking bodies in other countries that could significantly change the statutory provisions governing

the testing, regulatory clearance or approval, manufacture, and marketing of regulated products.

In addition, FDA regulations and guidance

are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products.

Similar changes in

regulations can occur in other countries.

Any new regulations or revisions or reinterpretations of existing regulations in the United

States or in other countries may impose additional costs or lengthen review times of AL001, ALZN002 and any of our future product candidates.

We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or

adopted may have on our business in the future.

Legislative or regulatory reforms with respect

to products may make it more difficult and costly for us to obtain regulatory clearance or approval of AL001, ALZN002 or any of our future

product candidates and to produce, market, and distribute our products after clearance or approval is obtained.

From time to time, legislation

is drafted and introduced in the U.S.

Congress and lawmaking bodies in states and other countries that could significantly change the

statutory provisions governing the testing, regulatory clearance or approval, manufacture, and marketing of regulated products.

FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our

Similar changes in regulations can occur in other countries.

Any new regulations or revisions or reinterpretations of existing

regulations in the United States or in other countries may impose additional costs or lengthen review times of AL001, ALZN002 and any

of our future product candidates.

We cannot determine what effect changes in regulations, statutes, legal interpretation or policies,

when and if promulgated, enacted or adopted may have on our business in the future.

Such changes could, among other things, require:

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• additional record keeping.

Each of these would likely entail substantial

time and cost and could have a material adverse effect on our ability to obtain regulatory approval for our product candidates.

delays in receipt of or failure to receive regulatory clearances or approvals for any future products could materially and adversely affect

our business, results of operations and financial condition.

Our ability to market AL001, ALZN002 and any future product

candidates in the United States, if approved, will be limited to use for the treatment of the indications for which they are approved,

and if we want to expand the indications for which we may market AL001, ALZN002 and any future product candidates, we will need to obtain

additional FDA approvals, which may not be granted.

We plan to seek full FDA approval in the

United States for AL001 and ALZN002 to treat neurodegenerative diseases and psychiatric disorders, including Alzheimer’s, BD, MDD

Each of these would likely

entail substantial time and cost and could have a material adverse effect on our ability to obtain regulatory approval for our product

In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products could materially

and adversely affect our business, results of operations and financial condition.

Our ability to market AL001, ALZN002 and

any future product candidates in the United States, if approved, will be limited to use for the treatment of the indications for which

they are approved, and if we want to expand the indications for which we may market AL001, ALZN002 and any future product candidates,

we will need to obtain additional FDA approvals, which may not be granted.

We plan to seek full FDA approval

in the United States for AL001 and ALZN002 to treat neurodegenerative diseases and psychiatric disorders, including Alzheimer’s,

BD, MDD and PTSD.

If AL001 or ALZN002 is approved, the FDA will restrict our ability to market or advertise it for the treatment of indications

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could materially and adversely affect our business, results of operations and financial condition.

The anticipated development of a REMS for AL001 or ALZN002

could cause delays in the approval process and would add additional layers of regulatory requirements that could impact our ability to

commercialize AL001 and ALZN002 in the United States and reduce their market potential.

As a condition of approval of an NDA or

a BLA, the FDA may require a REMS to ensure that the benefits of the drug outweigh the potential risks.

REMS elements can include medication

guides, communication plans for health care professionals, and elements to assure safe use (“ETASU”).

ETASU’s can include,

but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances,

The anticipated development of a REMS for

AL001 or ALZN002 could cause delays in the approval process and would add additional layers of regulatory requirements that could impact

our ability to commercialize AL001 and ALZN002 in the United States and reduce their market potential.

As a condition of approval

of an NDA or a BLA, the FDA may require a REMS to ensure that the benefits of the drug outweigh the potential risks.

REMS elements can

include medication guides, communication plans for health care professionals, and elements to assure safe use (“ETASU”).

can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances,

special monitoring, and the use of patient registries.

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results of operations and financial condition.

If we are found in violation of “fraud and abuse”

laws, we may be subject to criminal and civil penalties and/or be suspended or excluded from participation in government-run health care

programs, which may adversely affect our business, financial condition and results of operations.

If we are successful in obtaining marketing

approval for our products in the United States and elsewhere, we will be subject to various health care “fraud and abuse”

If we are found in violation of “fraud

and abuse” laws, we may be subject to criminal and civil penalties and/or be suspended or excluded from participation in government-run

health care programs, which may adversely affect our business, financial condition and results of operations.

If we are successful in obtaining

marketing approval for our products in the United States and elsewhere, we will be subject to various health care “fraud and abuse”

laws, including anti-kickback laws, false claims laws and other laws intended to reduce fraud and abuse in government-run health care

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Accordingly, it is possible that our practices may be challenged under the Anti-Kickback Statute and similar laws in other jurisdictions.

Further, false claims laws prohibit anyone

from knowingly and willfully presenting or causing to be presented for payment to third-party payers, including government payers, reimbursement

claims for drugs or services that are false or fraudulent, claims for items or services that were not provided as claimed, or claims for

medically unnecessary items or services.

Cases have been brought under false claims laws alleging that off-label promotion of pharmaceutical

products or the payment of kickbacks by pharmaceutical providers has resulted in the submission of false claims to governmental health

care programs.

Under laws such as the Health Insurance Portability and Accountability Act of 1996 in the United States, we are prohibited

from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payers, or knowingly and

willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in

connection with the delivery of or payment for health care benefits, items or services.

Violations of fraud and abuse laws may be punishable

by criminal and/or civil sanctions, including fines and/or exclusion or suspension from government-run health care programs such as Medicare

and Medicaid and debarment from contracting with the U.S.

Further, false claims laws

prohibit anyone from knowingly and willfully presenting or causing to be presented for payment to third-party payers, including government

payers, reimbursement claims for drugs or services that are false or fraudulent, claims for items or services that were not provided as

claimed, or claims for medically unnecessary items or services.

Cases have been brought under false claims laws alleging that off-label

promotion of pharmaceutical products or the payment of kickbacks by pharmaceutical providers has resulted in the submission of false claims

to governmental health care programs.

Under laws such as the Health Insurance Portability and Accountability Act of 1996 in the United

States, we are prohibited from knowingly and willfully executing a scheme to defraud any health care benefit program, including private

payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or

fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.

Violations of fraud and

abuse laws may be punishable by criminal and/or civil sanctions, including fines and/or exclusion or suspension from government-run health

care programs such as Medicare and Medicaid and debarment from contracting with the U.S.

and other governments.

In addition, in the United States, individuals have the

ability to bring actions on behalf of the government and potentially share in the recovery under the federal False Claims Act as well

as under state false claims laws.

Many states in the United States have adopted

fraud and abuse laws similar to their federal counterparts, including laws similar to the Anti-Kickback Statute, some of which apply to

the referral of patients for health care services reimbursed by any source, not just governmental payers.

In addition, California and

some other states in the United States have passed laws that require pharmaceutical companies to comply with the April 2003 Office

of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers

In addition, in the United

States, individuals have the ability to bring actions on behalf of the government and potentially share in the recovery under the federal

False Claims Act as well as under state false claims laws.

Many states in the United

States have adopted fraud and abuse laws similar to their federal counterparts, including laws similar to the Anti-Kickback Statute, some

of which apply to the referral of patients for health care services reimbursed by any source, not just governmental payers.

California and some other states in the United States have passed laws that require pharmaceutical companies to comply with the April 2003

Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers

of America Code on Interactions with Health Care Professionals.

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these state requirements and if we fail to comply with an applicable state law requirement, we could be subject to penalties.

We have yet to receive definitive guidance

on the application of fraud and abuse laws to our business.

Law enforcement authorities are increasingly focused on enforcing these laws,

and it is possible that some of our future practices may be challenged under these laws.

While we believe we will be able to structure

our business arrangements to comply with these laws, it is possible that the government could in the future allege violations of, or convict

us of violating, these laws.

If we are found in violation of one of these laws, we could be required to pay a penalty and could be suspended

or excluded from participation in certain government-run health care programs, and our business, results of operations and financial condition

may be materially and adversely affected.

We have yet to receive definitive

guidance on the application of fraud and abuse laws to our business.

Law enforcement authorities are increasingly focused on enforcing

these laws, and it is possible that some of our future practices may be challenged under these laws.

While we believe we will be able

to structure our business arrangements to comply with these laws, it is possible that the government could in the future allege violations

of, or convict us of violating, these laws.

If we are found in violation of one of these laws, we could be required to pay a penalty and

could be suspended or excluded from participation in certain government-run health care programs, and our business, results of operations

and financial condition may be materially and adversely affected.

Risks Related to Our Business and Industry

If we fail to attract and keep senior management and key

scientific personnel, we may be unable to successfully develop AL001, ALZN002 or any future product candidates, conduct our in-licensing

If we fail to attract and keep senior management

and key scientific personnel, we may be unable to successfully develop AL001, ALZN002 or any future product candidates, conduct our in-licensing

and development efforts or commercialize AL001, ALZN002 or any of our future product candidates.

Our future growth and success depend in

part on our continued ability to attract, retain and motivate highly qualified management and scientific personnel.

We are highly dependent

upon our senior management, particularly Stephan Jackman, our Chief Executive Officer, David J.

Katzoff, our Chief Financial Officer,

Our future growth and success

depend in part on our continued ability to attract, retain and motivate highly qualified management and scientific personnel.

We are highly

dependent upon our senior management, particularly Stephan Jackman, our Chief Executive Officer, David J.

Katzoff, our Chief Financial

Officer, Kenneth S.

Cragun, our Senior Vice President of Finance and Henry Nisser, our Executive Vice President and General Counsel.

services of any of these individuals could delay or prevent the successful development of our current or future product pipeline, completion

of our planned development efforts or the commercialization of AL001 or ALZN002.

It is possible that current or former employees of ours

could put forward claims for an alleged right to our patents and demand compensation therefor.

If one or more of the key personnel were

to leave us and engage in competing operations, our business, results of operations and financial condition could be materially and adversely

We expect to face substantial competition, with other

entities possibly discovering, developing or commercializing products before, or more successfully than, we do.

The development, FDA approval and commercialization

of new therapy and vaccine products is highly competitive.

We will face competition with respect to AL001, ALZN002 and any other product

candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies

and biotechnology companies worldwide.

In addition to existing therapeutic treatments for the indications we are targeting with AL001

and ALZN002, we also face potential competition from other drug candidates in development by other companies.

Our potential competitors

include, without limitation, large health care companies, such as Biogen Inc., Eisai Co., Ltd., Takeda Pharmaceuticals, Bristol Myers

Squibb, Pfizer Inc., Merck & Co., Inc., Sanofi S.A., Eli Lilly and Company, Bayer AG, Novartis AG, Johnson and Johnson and Boehringer

Ingelheim GmbH.

We also know of several smaller early-stage companies that are developing products for use in our segment

of the market.

Some of the potential competitive compounds referred to above are being developed by large, well-financed and established

pharmaceutical and biotechnology companies or have been partnered with such companies, which may give them development, regulatory and

marketing advantages over our products.

Our commercial opportunity could be reduced

or eliminated if our competitors develop and commercialize products that are safer, 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, which could result in our competitors establishing a strong

market position before we are able to enter the market.

In addition, our ability to compete may be affected in many cases by insurers

or other third-party payers seeking to encourage the use of generic products.

If AL001 or ALZN002 achieves marketing approval, we expect

that it will be priced at a significant premium over competing generic products.

Some of the companies against which we are

competing or against which we may compete in the future have significantly greater financial, physical and human resources and expertise

in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing

approved products than we do.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources

being concentrated among a smaller number of our competitors.

Smaller and other early-stage companies may also prove to be significant

competitors, particularly through collaborative arrangements with large and established companies.

These third parties compete with us

in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration

for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

If we are unable to compete successfully,

we may be unable to grow and sustain our revenue, which could materially and adversely affect our business, results of operations and

financial condition.

Changes in funding for the FDA

and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent our

product candidates from being developed or commercialized in a timely manner, which could negatively impact our business.

We rely on the

FDA to assist with the development of our product candidates.

The ability of the FDA to review and approve new drug products can be affected

by a variety of factors outside of our control, including government budget and funding levels, ability to hire and retain key personnel

and accept the payment of user fees, and statutory, regulatory, and policy changes.

Average review times at the agency have fluctuated

in recent years as a result.

In addition, government funding of other government agencies that fund research and development activities

is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at

the FDA and other agencies may also slow the time necessary for our product candidates to be reviewed and/or potentially approved by necessary

government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days beginning

on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough

critical FDA employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly impact the ability

of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

timing of FDA’s review and approval of new products is delayed, the estimated timing of our drug development program may be delayed

which would materially increase costs of drug development and harm our operations or business.

loss of services of any of these individuals could delay or prevent the successful development of our current or future product pipeline,

completion of our planned development efforts or the commercialization of AL001 or ALZN002.

It is possible that current or former employees

of ours could put forward claims for an alleged right to our patents and demand compensation therefor.

If one or more of the key personnel

were to leave us and engage in competing operations, our business, results of operations and financial condition could be materially and

adversely affected.

We expect to face substantial competition,

with other entities possibly discovering, developing or commercializing products before, or more successfully than, we do.

The development, FDA approval

and commercialization of new therapy and vaccine products is highly competitive.

We will face competition with respect to AL001, ALZN002

and any other product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty

pharmaceutical companies and biotechnology companies worldwide.

In addition to existing therapeutic treatments for the indications we

are targeting with AL001 and ALZN002, we also face potential competition from other drug candidates in development by other companies.

Our potential competitors include, without limitation, large health care companies, such as AbbVie, Biogen Inc., Eisai Co., Ltd., Takeda

Pharmaceuticals, Bristol Myers Squibb, Pfizer Inc., Merck & Co., Inc., Sanofi S.A., Eli Lilly and Company, Bayer AG, Novartis AG,

Johnson and Johnson and Boehringer Ingelheim GmbH.

We also know of several smaller early-stage companies that are developing

products for use in our segment of the market.

Some of the potential competitive compounds referred to above are being developed by large,

well-financed and established pharmaceutical and biotechnology companies or have been partnered with such companies, which may give them

development, regulatory and marketing advantages over our products.

Our commercial opportunity

could be reduced or eliminated if our competitors develop and commercialize products that are safer, 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, which could result in our competitors

establishing a strong market position before we are able to enter the market.

In addition, our ability to compete may be affected in many

cases by insurers or other third-party payers seeking to encourage the use of generic products.

If AL001 or ALZN002 achieves marketing

approval, we expect that it will be priced at a significant premium over competing generic products.

Some of the companies against

which we are competing or against which we may compete in the future have significantly greater financial, physical and human resources

and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals

and marketing approved products than we do.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in

even more resources being concentrated among a smaller number of our competitors.

Smaller and other early-stage companies may also prove

to be significant competitors, particularly through collaborative arrangements with large and established companies.

These third parties

compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient

registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

If we are unable to compete

successfully, we may be unable to grow and sustain our revenue, which could materially and adversely affect our business, results of operations

and financial condition.

Changes in funding

for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise

prevent our product candidates from being developed or commercialized in a timely manner, which could negatively impact our business.

rely on the FDA to assist with the development of our product candidates.

The ability of the FDA to review and approve new drug products

can be affected by a variety of factors outside of our control, including government budget and funding levels, ability to hire and retain

key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes.

Average review times at the agency have

fluctuated in recent years as a result.

In addition, government funding of other government agencies that fund research and development

activities is subject to the political process, which is inherently fluid and unpredictable.

at the FDA and other agencies may also slow the time necessary for our product candidates to be reviewed and/or potentially approved by

necessary government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days

beginning on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA, have

had to furlough critical FDA employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly

impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our

If the timing of FDA’s review and approval of new products is delayed, the estimated timing of our drug development program

may be delayed, which would materially increase costs of drug development and harm our operations or business.

Risks Related to Our Intellectual Property

We may be forced to litigate to enforce or defend our

intellectual property rights, or the intellectual property rights of our licensors.

We may be forced to litigate to enforce

or defend our intellectual property rights against infringement and unauthorized use by competitors.

In so doing, we may place our intellectual

property at risk of being invalidated, held unenforceable, or narrowed in scope.

Further, an adverse result in any litigation or defense

proceedings may place pending applications at risk of non-issuance.

In addition, if any licensor fails to enforce or defend its intellectual

property rights, this may adversely affect our ability to develop and commercialize AL001 or ALZN002 as well as our ability to prevent

competitors from making, using, and selling competing products.

Any such litigation could be very costly and could distract our management

from focusing on operating our business.

The existence or outcome of any such litigation could harm our business, results of operations

and financial condition.

Furthermore, because of the substantial

amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential and proprietary

information could be compromised by disclosure during this type of litigation.

In addition, there could be public announcements of the

results of hearings, motions or other interim proceedings or developments.

or defend our intellectual property rights, or the intellectual property rights of our licensors.

We may be forced to litigate

to enforce or defend our intellectual property rights against infringement and unauthorized use by competitors.

In so doing, we may place

our intellectual property at risk of being invalidated, held unenforceable, or narrowed in scope.

Further, an adverse result in any litigation

or defense proceedings may place pending applications at risk of non-issuance.

In addition, if any licensor fails to enforce or defend

its intellectual property rights, this may adversely affect our ability to develop and commercialize AL001 or ALZN002 as well as our ability

to prevent competitors from making, using, and selling competing products.

Any such litigation could be very costly and could distract

our management from focusing on operating our business.

The existence or outcome of any such litigation could harm our business, results

of operations and financial condition.

Furthermore, because of the

substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential

and proprietary information could be compromised by disclosure during this type of litigation.

In addition, there could be public announcements

of the results of hearings, motions or other interim proceedings or developments.

If securities analysts or investors perceive these results

to be negative, it could have a material adverse effect on the price of our common stock.

We may be unable to adequately prevent disclosure of trade

secrets and other proprietary information.

We rely on trade secrets to protect our

proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable.

trade secrets are difficult to protect.

We rely in part on confidentiality agreements with our employees, consultants, outside scientific

collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information.

These agreements

may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized

We may be unable to adequately prevent disclosure

of trade secrets and other proprietary information.

We rely on trade secrets to

protect our proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable.

However, trade secrets are difficult to protect.

We rely in part on confidentiality agreements with our employees, consultants, outside

scientific collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information.

agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized

disclosure of confidential information.

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effects upon our business, results of operations and financial condition.

The transfer of technology and knowledge

to contract manufacturers pursuant to the production of our products also creates a risk of uncontrolled distribution and copying of concepts,

methods and processes relating to our products.

Such uncontrolled distribution and copying could have a material adverse effect on the

value of our products if used for the production of competing drugs or otherwise used commercially without our obtaining financial compensation.

We may become subject to third parties’ claims alleging

infringement of patents and proprietary rights or seeking to invalidate our patents or proprietary rights, which would be costly, time-consuming

and, if successfully asserted against us, delay or prevent the development and commercialization of AL001 or ALZN002.

There has been substantial litigation and

other proceedings regarding patent and other intellectual property rights in the pharmaceutical industry, as well as patent challenge

proceedings, including interference and administrative law proceedings before the USPTO and the European Patent Office (“EPO”),

The transfer of technology

and knowledge to contract manufacturers pursuant to the production of our products also creates a risk of uncontrolled distribution and

copying of concepts, methods and processes relating to our products.

Such uncontrolled distribution and copying could have a material

adverse effect on the value of our products if used for the production of competing drugs or otherwise used commercially without our obtaining

financial compensation.

We may become subject to third parties’

claims alleging infringement of patents and proprietary rights or seeking to invalidate our patents or proprietary rights, which would

be costly, time-consuming and, if successfully asserted against us, delay or prevent the development and commercialization of AL001 or

There has been substantial

litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical industry, as well as patent

challenge proceedings, including interference and administrative law proceedings before the USPTO and the European Patent Office (“EPO”),

and oppositions and other comparable proceedings in other jurisdictions.

4 unchanged sentences

regarding the outcome of challenges to our patents in the future.

We cannot assure you that AL001, ALZN002

or any of our future product candidates will not infringe existing or future patents.

We may be unaware of patents that have already been

issued that a third party might assert are infringed by AL001, ALZN002 or one of our future product candidates.

Because patent applications

can take many years to issue and may be confidential for 18 months or more after filing, there may be applications now pending

of which we are unaware of and which may later result in issued patents that we may infringe by commercializing AL001, ALZN002 or any

of our future product candidates.

In addition, third parties may obtain patents in the future and claim that use of our technologies infringes

upon these patents.

Moreover, we may face claims from non-practicing entities (commonly referred to as patent trolls), which have no relevant

product revenue and against whom our own patent portfolio may thus have no deterrent effect.

We may be subject to third-party claims

in the future against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause

us to pay substantial damages, including treble damages and attorney’s fees if we are found to be willfully infringing a third party’s

If a patent infringement suit were brought against us or our collaborators, we or our collaborators could be forced to stop or

delay research, development, manufacturing or sales of AL001 or ALZN002.

As a result of patent infringement claims, or in order to avoid

potential claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party and would most likely

be required to pay license fees or royalties or both.

These licenses may not be available on acceptable terms, or at all.

Even if we or

our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual

Ultimately, we could be prevented from commercializing a product, or forced to redesign it, or to cease some aspect of our business

operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses

on acceptable terms.

Even if we are successful in defending such claims, infringement and other intellectual property litigation can be

expensive and time-consuming to litigate and divert management’s attention from our core business.

Any of these events could harm

our business significantly.

In addition to infringement claims against

us, if third parties have prepared and filed patent applications in the U.S.

that also claim technology to which we have rights, we may

have to participate in interference proceedings in the USPTO to determine the priority of invention.

Third parties may also attempt to

initiate reexamination, post grant review or inter partes review of our patents in the USPTO.

We may also become involved in similar opposition

proceedings in the EPO or comparable offices in other jurisdictions regarding our intellectual property rights with respect to our products

and technology.

Any of these claims could have a material adverse effect on our business, results of operations and financial condition.

If our efforts to protect the proprietary nature of the

intellectual property related to AL001, ALZN002 or any of our potential future product candidates are not adequate, we may not be able

to compete effectively in our market.

We expect to rely upon a combination of

patents, trade secret protection as well as confidentiality and license agreements to protect the intellectual property related to our

product and our current product candidates and our development programs.

We cannot assure you that

AL001, ALZN002 or any of our future product candidates will not infringe existing or future patents.

We may be unaware of patents that

have already been issued that a third party might assert are infringed by AL001, ALZN002 or one of our future product candidates.

patent applications can take many years to issue and may be confidential for 18 months or more after filing, there may be applications

pending of which we are unaware of and which may later result in issued patents that we may infringe by commercializing AL001, ALZN002

or any of our future product candidates.

In addition, third parties may obtain patents in the future and claim that use of our technologies

infringes upon these patents.

Moreover, we may face claims from non-practicing entities (commonly referred to as patent trolls), which

have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect.

We may be subject to third-party

claims in the future against us or our collaborators that would cause us to incur substantial expenses and, if successful against us,

could cause us to pay substantial damages, including treble damages and attorneys’ fees if we are found to be willfully infringing

a third party’s patents.

If a patent infringement suit were brought against us or our collaborators, we or our collaborators could

be forced to stop or delay research, development, manufacturing or sales of AL001 or ALZN002.

As a result of patent infringement claims,

or in order to avoid potential claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party

and would most likely be required to pay license fees or royalties or both.

These licenses may not be available on acceptable terms, or

Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors

access to the same intellectual property.

Ultimately, we could be prevented from commercializing a product, or forced to redesign it,

or to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators

are unable to enter into licenses on acceptable terms.

Even if we are successful in defending such claims, infringement and other intellectual

property litigation can be expensive and time-consuming to litigate and divert management’s attention from our core business.

of these events could harm our business significantly.

In addition to infringement

claims against us, if third parties have prepared and filed patent applications in the U.S.

that also claim technology to which we have

rights, we may have to participate in interference proceedings in the USPTO to determine the priority of invention.

Third parties may

also attempt to initiate reexamination, post grant review or inter partes review of our patents in the USPTO.

We may also become involved

in similar opposition proceedings in the EPO or comparable offices in other jurisdictions regarding our intellectual property rights with

respect to our products and technology.

Any of these claims could have a material adverse effect on our business, results of operations

and financial condition.

If our efforts to protect the proprietary

nature of our intellectual property related to AL001, ALZN002 or any of our potential future product candidates are not adequate, we may

not be able to compete effectively in our market.

We expect to rely upon a combination

of patents, trade secret protection as well as confidentiality and license agreements to protect the intellectual property related to

our product and our current product candidates and our development programs.

Composition-of-matter patents

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Even if the patents are successfully issued, third parties

may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.

may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated or held unenforceable.

Furthermore, even if they are unchallenged, any of our future patents and patent applications may not adequately protect our intellectual

12 unchanged sentences

Moreover, any actions we may bring to enforce our intellectual property against our competitors

could provoke them to bring counterclaims against us, and some of our competitors have substantially greater intellectual property portfolios

than we have.

could lead them to bring counterclaims against us, and many of our competitors have substantially greater intellectual property portfolios

We will also rely on trade

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and Relationships

Insiders currently have substantial influence

over us, which could limit your ability to affect the outcome of key transactions, including a change of control.

In the aggregate,

beneficial ownership of the shares of our common stock by our directors and executive officers and their respective affiliated

parties represents approximately 60.5% of the outstanding shares of our common stock.

As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters

requiring stockholder approval, including the election of directors and approval of significant corporate transactions.

concentration of ownership may have the effect of delaying or preventing a change in control of our company and might affect the

market price of our common stock.

Members of the Board of Directors and executive

officers of our company and AULT, contain some of the same individuals, which may present potential conflicts of interest.

(Todd) Ault III, our Founder,

and Vice Chairman, has significant influence over our Company, directly and indirectly through his controlling equity interest in Ault

& Company, Inc.

officers of our company and Hyperscale Data, Inc.

(“HDI”), contain some of the same individuals, which may present potential

conflicts of interest.

(Todd) Ault III,

our Founder, and Vice Chairman, has significant influence over our Company, directly and indirectly through his controlling equity interest

in Ault & Company, Inc.

(“Ault & Co.”), the parent of Ault Life Sciences, Inc.

(“ALSI”) and Ault Life Sciences

Fund, LLC (“ALSF”).

Ault is also the Executive Chairman and single largest stockholder (through his control of Ault

& Co.) of AULT, a publicly traded diversified holding company focused primarily on digital mining of Bitcoin and its crane services,

defense/aerospace, industrial, automotive, medical/biopharma, hotel operations and textiles.

The Board of Directors (“Board”)

and executive officers of our company and the board of directors and executive officers of AULT contain some of the same individuals,

all of whom devote a portion of their business and professional time and efforts to the respective businesses of our company as well as

(“ALSI”) and Ault Life

Sciences Fund, LLC (“ALSF”).

Ault is also the Executive Chairman and single largest stockholder (through his control

of Ault & Co.) of HDI, a publicly traded diversified holding company that owns and operates a data center at which it mines digital

assets and offers colocation and hosting services for the emerging AI ecosystems and other industries and through wholly and majority-owned

subsidiaries and strategic investments, support a diverse range of industries, including an artificial intelligence software platform,

social gaming platform, equipment rental services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations.

The Board of Directors (“Board”) and executive officers of our company and the board of directors and executive officers of

HDI contain some of the same individuals, all of whom devote a portion of their business and professional time and efforts to the respective

businesses of our company as well as HDI.

In addition to Mr.

Ault, William B.

Horne, the Chairman of the Board, is the Chief Executive Officer and a director of AULT, Henry

Nisser, our Executive Vice President, General Counsel and a director of our company, is the President, General Counsel and a director

of AULT and Kenneth S.

Cragun, our Senior Vice President of Finance is the Chief Financial Officer of AULT.

Horne, the Chairman of the Board, is the Chief Executive

Officer and a director of HDI, Henry Nisser, our Executive Vice President, General Counsel and a director of our company, is the President,

General Counsel and a director of HDI and Kenneth S.

Cragun, our Senior Vice President of Finance is the Chief Financial Officer of HDI.

While we believe that our

business and technologies are distinguishable from those of AULT and that we do not compete in the markets in which AULT compete, Mr.

business and technologies are distinguishable from those of HDI and that we do not compete in the markets in which HDI competes, Mr.

and the other named individuals may have potential conflicts of interest with respect to, among other things, potential corporate opportunities,

business combinations, joint ventures and/or other business opportunities that may become available to them, our company or AULT.

business combinations, joint ventures and/or other business opportunities that may become available to them, our company or HDI.

Ault and the other named individuals have agreed to devote a portion of their business and professional time and efforts

to our company, potential conflicts of interest also include the amount of time and effort devoted by each of them to the affairs of AULT.

to our company, potential conflicts of interest also include the amount of time and effort devoted by each of them to the affairs of HDI.

We may be materially adversely affected if Mr.

Ault and/or the other named individuals choose to place the interests of AULT before

Ault and/or the other named individuals choose to place the interests of HDI before

those of our company.

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of our company, even if the change in control could benefit our stockholders and may adversely affect the future market price of our common

stock should a trading market therefor develop.

Risks Relating to Ownership of Our Common Stock

We are not in compliance with the Nasdaq continued listing

requirements.

If we are unable to comply with the continued listing requirements of The Nasdaq Capital Market, our Common Stock could

be delisted, which would adversely affect our Common Stock’s market price and liquidity and reduce our ability to raise capital.

September 26, 2023, we were notified by the staff of The Nasdaq Stock Market LLC (“Nasdaq”)

that for the previous 30 consecutive trading days, the minimum Market Value of

Listed Securities (“MVLS”) for our c ommon stock was below the $35 million

minimum MVLS requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”).

accordance with Listing Rule 5810(c)(3)(C), we were provided 180 calendar days, or until March 25, 2024, to regain compliance with the

March 26, 2024, we were notified by Nasdaq that we had not regained compliance with the MVLS Rule.

As a result, unless we requested an

appeal of this determination, Nasdaq determined that our common stock would be scheduled for delisting from The Nasdaq Capital Market

and would be suspended at the opening of business on April 4, 2024 and a Form 25-NSE would be filed with the SEC.

On April 2, 2024, we

requested a hearing before a Hearings Panel (the “Panel”) to appeal the determination.

The Panel heard our appeal at a hearing on May 9, 2024.

On May 21, 2024, we received notice

from the Panel that it granted our request to continue our listing on Nasdaq, subject to us demonstrating compliance, on or before September

23, 2024, with Listing Rule 5550(b)(1), which requires stockholder equity of at least $2.5 million (or an alternative listing standard),

and satisfying all applicable requirements for continued listing on Nasdaq.

There can be no assurance as to our ability to

demonstrate compliance on or before September 23, 2024.

In addition, on February 1,

2024, we received a notice in the form of a letter from Nasdaq stating that we were not in compliance with Nasdaq Listing Rule 5550(a)(2)

because the bid price for our common stock had closed below $1.00 per share for the previous 30 consecutive business days.

In accordance with Nasdaq

Listing Rule 5810(c)(3)(A), we have 180 calendar days, or until July 30, 2024, to regain compliance with the Nasdaq Listing Rule 5550(a)(2).

The deficiency letter states that to regain compliance, the bid price for our common stock must close at $1.00 per share or more for a

minimum of 10 consecutive business days (the “Minimum Bid Price”) during the compliance period ending July 30, 2024.

event that we do not regain compliance within this 180-day period, we may be eligible to seek an additional compliance period of 180 calendar

days if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for

The Nasdaq Capital Market, with the exception of the Minimum Bid Price, and provide written notice to Nasdaq of our intent to cure the

deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq

staff that we will not be able to cure the deficiency, or if we are otherwise ineligible, Nasdaq will provide us with notice that our

common stock will be subject to delisting.

At that time, we may appeal any such delisting determination to a Nasdaq hearings panel.

deficiency letter has no immediate effect on the listing of our common stock, and our common stock will continue to trade on The Nasdaq

Capital Market under the symbol “ALZN.”

Effective July 16, 2024, we

effected a one-for-ten reverse stock split of our common stock, with the intent to achieve compliance with the Minimum Bid Price requirement.

While we are exercising diligent efforts to maintain the listing of our common stock on Nasdaq, there can be no assurance that we will

be able to regain compliance with the Minimum Bid Price or maintain compliance with the other Nasdaq listing standards.

If our common stock is delisted,

it could be more difficult to buy or sell our common stock and to obtain accurate quotations, and the price of our common stock could

suffer a material decline.

Delisting could also impair the liquidity of our common stock and could harm our ability to raise capital through

alternative financing sources on terms acceptable to us, or at all, and may result in potential loss of confidence by investors, employees,

and fewer business development opportunities.

If we are unable to comply with the continued

listing requirements of The Nasdaq Capital Market, our common stock could be delisted, which would adversely affect our common stock

market price and liquidity and reduce our ability to raise capital.

The listing of our common

stock on the Nasdaq Capital Market is contingent on our compliance with the Nasdaq Capital Market’s conditions for continued listing.

While we are currently in compliance with Nasdaq listing requirements, we have not been in compliance in the past year.

If we were to fail to meet

a Nasdaq Capital Market listing requirement, we may be subject to delisting by the Nasdaq Capital Market.

In the event our common stock

is no longer listed for trading on the Nasdaq Capital Market, our trading volume and share price may decrease and we may experience further

difficulties in raising capital which could materially affect our operations and financial results.

Further, delisting from the Nasdaq

Capital Market could also have other negative effects, including potential loss of confidence by investors, employees, and fewer business

development opportunities.

Finally, delisting could make it harder for us to raise capital and sell securities.

We do not know whether an active market

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material weaknesses in our internal control over financial reporting.

A material weakness is a deficiency, or combination

of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement

of our financial statements will not be prevented or detected on a timely basis.

The material weaknesses related to a lack of sufficient

number of qualified personnel within our accounting function to adequately segregate duties, to perform sufficient reviews and approval

of manual journal entries posted to the general ledger and to consistently execute review procedures over general ledger account reconciliations,

financial statement preparation and accounting for non-routine transactions and, we have not designed and implemented effective Information

Technology General Controls (“ITGC”) related to access controls to payment and financial accounting systems.

We are implementing measures

designed to improve our internal control over financial reporting to remediate this material weakness, including the following:

• We are formalizing our internal control documentation and strengthening supervisory reviews by our management;

• We are in the process of adding additional accounting personnel and segregating duties amongst accounting

• We are in the process of strengthening ITGC access controls related to our payment and financial accounting

We cannot assure you that

the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the material weakness we have identified

or avoid potential future material weaknesses.

If the steps we take do not correct the material weakness in a timely manner, we will be

unable to conclude that we maintain effective internal control over financial reporting.

Accordingly, there could continue to be a reasonable

possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis.

A material weakness is a deficiency, or combination of deficiencies,

in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial

statements will not be prevented or detected on a timely basis.

The material weaknesses related to a lack of sufficient number of qualified

personnel within our accounting function to adequately segregate duties, to perform sufficient reviews and approval of manual journal

entries posted to the general ledger and to consistently execute review procedures over general ledger account reconciliations, financial

statement preparation and accounting for non-routine transactions and, we have not designed and implemented effective Information Technology

General Controls (“ITGC”) related to access controls to payment and financial accounting systems.

Due to the size of our company

and our limited financial resources, we will need to increase our accounting department in the future to fully remediate our current weakness.

The material weakness will not be considered to be remediated until the applicable remediated controls are operating for a sufficient

period of time and management has concluded, through testing, that these controls are operating effectively.

If the steps we take do not correct the material

weakness in a timely manner, we will be unable to conclude that we maintain effective internal control over financial reporting.

there could continue to be a reasonable possibility that a material misstatement of our financial statements would not be prevented or

detected on a timely basis.

As a public company, we are

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors