What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-28 compared with 2026-02-09 · 496 added, 789 removed, 100 unchanged (93% of the section changed)

12 unchanged sentences

without limitation, statements regarding:

volatility in our stock price and in the markets in general;

our plans to prioritize the advancement of our lead compound ANAVEX®2-73 (blarcamesine) in our clinical programs for the treatment of mild cognitive impairment (“MCI”) due to Alzheimer’s disease (“AD”) and mild AD (collectively known as “early AD”), and for Rett syndrome and Fragile X syndrome;

our plans to prioritize engagement with the United States (“U.S.”) Food and Drug Administration (“FDA”) to align on a clear, data-driven regulatory and clinical development strategy;

our ability to successfully conduct preclinical studies and clinical trials for our product candidates;

our ability to raise additional capital on favorable terms and the impact of such activities on our stockholders and stock price;

our ability to generate any revenue or to continue as a going concern;

our ability to execute our research and development plan on time and on budget;

our product candidates’ ability to demonstrate efficacy or an acceptable safety profile;

our ability to secure regulatory approval of our product candidates and commercialize such product candidates;

our ability to obtain the support of qualified scientific collaborators;

our ability to execute our research and development plans for our product candidates on time and on budget;

our product candidates’ ability to demonstrate efficacy and an acceptable safety profile;

our ability, whether alone or with commercial partners, to successfully commercialize any of our product candidates that may be approved for sale;

our ability to identify and obtain additional product candidates;

our reliance on third parties in non-clinical studies and clinical trials;

our ability to defend against product liability claims;

our ability to safeguard against security breaches;

our ability to obtain and maintain sufficient intellectual property protection for our product candidates;

our ability to comply with our intellectual property licensing agreements;

our ability to defend against claims of intellectual property infringement;

our ability to compete in the highly competitive biotechnology and pharmaceutical industries;

the anticipated start dates, durations and completion dates of our ongoing and future clinical trials;

the anticipated designs of our future clinical trials;

our ability to attract and retain qualified employees;

the impact of Fast Track designation on receipt of actual U.S.

Food and Drug Administration (“FDA”) approval;

our anticipated future regulatory submissions and our ability to receive regulatory approvals to develop and market our product candidates, including any orphan drug or Fast Track designations;

the timing and likelihood of the accomplishment of various scientific, clinical, regulatory filings and approvals and other product development objectives, including the timing of a decision by the European Medicines Agency(“EMA”), regarding whether to approve the Marketing Authorization Application (“MAA”), for blarcamesine for the treatment of Alzheimer’s disease;

the timing and likelihood of the accomplishment of various scientific, clinical, regulatory filings and approvals and other product development objectives;

our anticipated future cash position and ability to obtain funding for our operations.

We have based these forward-looking statements largely

on our current expectations and projections about future events, including the responses we expect from the FDA, EMA and other regulatory

authorities and financial trends that we believe may affect our financial condition, results of operations, business strategy, preclinical

studies and clinical trials, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and

assumptions including without limitation the risks described in “Risk Factors” in Part I, Item 1A of our Annual Report on

Form 10-K filed with the Securities and Exchange Commission on November 25, 2025.

on our current expectations and projections about future events, including the responses we expect from the FDA, the European Medicines

Agency (“EMA”) and other regulatory authorities and financial trends that we believe may affect our financial condition, results

of operations, business strategy, preclinical studies and clinical trials, and financial needs.

These forward-looking statements are subject

to a number of risks, uncertainties and assumptions including without limitation:

management’s evaluation that disclosure controls and procedures were not effective and that deficiencies in our internal controls over financial reporting constituted a material weakness as of September 30, 2025, December 31, 2025, March 31, 2026 and June 30, 2026;

our ability to regain, and maintain compliance, with The Nasdaq Stock Market LLC’s (“Nasdaq”) continued listing requirements;

risks related to previously being delinquent in our Securities and Exchange Commission (“SEC”) reporting obligations and our ability to timely satisfy our SEC reporting obligations in the future;

the duration and outcome of any current or future litigation related to the termination of our former Chief Executive Officer (“CEO”) and any related matters;

volatility in our stock price and in the capital markets in general;

our ability to raise additional capital on favorable terms and the impact of such activities on our stockholders and stock price;

our ability to generate any revenue in the future;

challenges seeking, and ultimately obtaining, regulatory approval for our product candidates;

the ability of Fast Track designation or breakthrough therapy designation to lead to a faster FDA review and approval process;

our ability to maintain any benefits associated with Orphan Drug Designation, including market exclusivity;

the impact of any undesirable side effects caused by our product candidates, which could impact our ability to receive regulatory approval of or commercialize such product candidates;

our ability to successfully attract and retain highly qualified personnel needed to successfully implement our business strategy;

our reliance on third parties in non-clinical studies and clinical trials;

our ability to safeguard against cyber security incidents;

our ability to obtain and maintain sufficient intellectual property protection for our product candidates;

our ability to comply with our intellectual property licensing agreements;

our ability to compete in the highly competitive biotechnology and pharmaceutical industries;

the risks described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on November 25, 2025;

the risks described in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

These risks are not exhaustive.

Other sections of this

Quarterly Report on Form 10-Q include additional factors which could adversely impact our business and financial performance.

Other sections of

this Quarterly Report on Form 10-Q include additional factors which could adversely impact our business and financial performance.

we operate in a very competitive and rapidly changing environment.

5 unchanged sentences

in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking

Except as required by applicable laws including the securities laws of the United States, we assume no obligation to update

or supplement forward-looking statements.

Except as required by applicable laws including the securities laws of the U.S., we assume no obligation to update or supplement

forward-looking statements.

As used in this Quarterly Report on Form 10-Q, the

2 unchanged sentences

Overview and Strategy

Anavex Life Sciences Corp.

is a clinical stage biopharmaceutical

company engaged in the development of differentiated therapeutics by applying precision medicine to central nervous system (“CNS”)

diseases with high unmet need.

We analyze genomic data from clinical trials to identify biomarkers, which we use in the analysis of our

clinical trials.

The Company’s focus is on developing innovative

treatments for Alzheimer’s disease, Parkinson’s disease, schizophrenia, neurodevelopmental, neurodegenerative, and rare diseases,

including Rett syndrome, and other central nervous system (CNS) disorders.

Our research and development pipeline includes ANAVEX ® 2-73

currently in three different clinical trial indications, and ANAVEX ® 3-71 currently in one clinical trial and several other

compounds in different stages of clinical and pre-clinical development.

The following table summarizes key information about our programs:

* = Orphan Drug Designation by the FDA

Anavex has a portfolio of compounds varying in sigma-1

receptor (SIGMAR1) binding activities.

Sigma receptors may be targets for therapeutics to combat many human diseases, both of neurodegenerative

nature, including Alzheimer’s disease, as well as of neurodevelopmental nature, like Rett syndrome.

When bound by the appropriate

ligands, sigma receptors influence the functioning of multiple biochemical signals that are involved in the pathogenesis (origin or development)

Multiple viruses including SARS-CoV-2 (COVID-19) induce cellular stress by intrinsic mitochondrial apoptosis and other related

cellular processes, in order to ensure survival and replication.

Hence, it is possible that SIGMAR1 could also play a role in modulating

the cellular response to viral infection and ameliorate pathogenesis.

The SIGMAR1 gene encodes the SIGMAR1 protein, which

is an intracellular chaperone protein with important roles in cellular communication.

SIGMAR1 is also involved in transcriptional regulation

at the nuclear envelope and restores homeostasis and stimulates recovery of cell function when activated.

In order to validate the ability

of our compounds to activate quantitatively the SIGMAR1, we performed, in collaboration with Stanford University, a quantitative Positron

Emission Tomography (PET) imaging scan in mice, which demonstrated a dose-dependent ANAVEX ® 2-73 (blarcamesine) target engagement

or receptor occupancy with SIGMAR1 in the brain.

Reyes S et al., Sci Rep.

Cellular Homeostasis

Many diseases are possibly directly caused by chronic

homeostatic imbalances or cellular stress of brain cells.

In pediatric diseases, such as Rett syndrome or infantile spasms, chronic cellular

stress is possibly caused by the presence of a constant genetic mutation.

In neurodegenerative diseases, such as Alzheimer’s and

Parkinson’s diseases, chronic cellular stress is possibly caused by age-correlated buildup of cellular insult and hence chronic

cellular stress.

Specifically, defects in homeostasis of protein or ribonucleic acid (“RNA”) lead to the death of neurons

and dysfunction of the nervous system.

The spreading of protein aggregates resulting in a proteinopathy, a characteristic found in Alzheimer’s

and Parkinson’s diseases that results from disorders of protein synthesis, trafficking, folding, processing or degradation in cells.

The clearance of macromolecules in the brain is particularly susceptible to imbalances that result in aggregation and degeneration in

For example, Alzheimer’s disease pathology is characterized by the presence of amyloid plaques, and neurofibrillary

tangles, which are aggregates of hyperphosphorylated Tau protein that are a marker of other diseases known as tauopathies as well as inflammation

of microglia.

With the SIGMAR1 activation through SIGMAR1 agonists like ANAVEX ® 2-73 (blarcamesine), our approach is to

restore cellular balance (i.e.

homeostasis).

Therapies that correct defects in cellular homeostasis might have the potential to halt or

delay neurodevelopmental and neurodegenerative disease progression.

Clinical Program Overview

We are a clinical stage biopharmaceutical company

engaged in the development of novel therapeutics for the treatment of central nervous system (“CNS”) diseases with high unmet

medical needs.

Our primary focus is on advancing our lead compound ANAVEX 2-73 (blarcamesine) for the treatment of mild cognitive impairment

(“MCI”) due to Alzheimer’s disease (“AD”) and mild AD (collectively known as “early AD”), and

for Rett syndrome and Fragile X syndrome, both of which are neurodevelopmental rare diseases.

Under new leadership, we are currently prioritizing

engagement with the U.S.

FDA to align on a clear, data-driven regulatory and clinical development strategy for ANAVEX 2-73 for the above

We do not have any products approved for commercial

sale and have not generated any revenue to date.

We have a portfolio of compounds in various stages of development targeting different

sigma-1 receptor (“SIGMAR1”) binding activities.

The SIGMAR1 gene encodes the SIGMAR1 protein, which is an intracellular chaperone

protein with important roles in cellular communication.

SIGMAR1 is also involved in transcriptional regulation at the nuclear envelope

and restores homeostasis and stimulates recovery of cell function when activated.

SIGMAR1 may be a target for therapeutics to combat many

human diseases, both of a neurodegenerative nature, including AD, as well as of a neurodevelopmental nature, like Rett syndrome and Fragile

When bound by the appropriate ligands, we believe SIGMAR1 influences the functioning of multiple biochemical signals that

are involved in the pathogenesis (origin or development) of disease.

Clinical Development Pipeline

Our lead compound is ANAVEX 2-73 (blarcamesine).

is our clinical development pipeline for ANAVEX 2-73 (blarcamesine) across CNS indications:

Progress bars show the most advanced phase per

indication for ANAVEX 2-73 (blarcamesine), an investigational oral SIGMA-1 receptor agonist.

Regulatory goals are planned and are subject

to change, including as a result of ongoing and future discussions with the FDA.

Following a review of our clinical development strategy

under new leadership, we have de-prioritized our other assets, including ANAVEX ® 3-71, currently in the clinical stage,

and ANAVEX ® 1-41 and ANAVEX ® 1066, currently in preclinical development.

Development work on these de-prioritized

assets has been paused, and future development work will be contingent on additional funding for such assets or the signing of a strategic

partnership for such assets.

It is also possible that we may license or sell one or more of our assets.

Following the previously disclosed termination of

our former CEO in April 2026, management has determined that our disclosure controls and procedures and our internal controls over financial

reporting were not effective as of September 30, 2025, December 31, 2025, March 31, 2026 and June 30, 2026, which is further described

in Part II, Item 4 of this Quarterly Report on Form 10-Q.

As we align with the FDA on a clear, data-driven regulatory and clinical development

strategy for ANAVEX 2-73 for early AD, Rett syndrome and Fragile X syndrome, we will obtain guidance from the FDA on the extent to which

the efficacy data from our past clinical trials can be applied to our clinical development strategy, and, to the extent such guidance

is relevant to our ongoing development plans, we expect to provide information on how this efficacy data is viewed by the FDA.

of the foregoing, investors should rely only on the descriptions of our clinical trials, including for our de-prioritized assets, contained

in this Quarterly Report on Form 10-Q (including the description below of the CHMP’s Withdrawal Assessment Report on our submission

to the EMA relating to ANAVEX 2-73 as an add-on therapy for early Alzheimer’s disease) and on any future updated information.

We will seek to identify potential strategic and commercial

partners to most effectively advance our programs and increase shareholder value.

Further, we may acquire or develop new intellectual

property and assign, license, or otherwise transfer our intellectual property to further our business strategy.

ANAVEX 2-73 (blarcamesine)

We believe ANAVEX ® 2-73 may offer a

disease-modifying approach in neurodegenerative and neurodevelopmental diseases by activation of SIGMAR1.

ANAVEX ® 2-73 is

being developed as well as an oral once-daily capsule formulation for diseases such as Alzheimer’s disease and Parkinson’s

disease, and in an oral liquid once-daily formulation for rare diseases such as Rett syndrome and Fragile X.

Alzheimer’s Disease

In November 2016, we completed a Phase 2a clinical

trial, consisting of Part A and Part B, which lasted a total of 57 weeks, for ANAVEX ® 2-73 in mild-to-moderate Alzheimer’s

This open-label randomized trial in Australia met both primary and secondary endpoints and was designed to assess the safety

and exploratory efficacy of ANAVEX ® 2-73 in 32 patients.

ANAVEX ® 2-73 targets sigma-1 and muscarinic receptors,

which have been shown in preclinical studies to reduce stress levels in the brain believed to restore cellular homeostasis and to reverse

the pathological hallmarks observed in Alzheimer’s disease.

In October 2017, we presented positive pharmacokinetic (“PK”)

and pharmacodynamic (“PD”) data from the Phase 2a clinical trial, which established a concentration-effect relationship between

ANAVEX ® 2-73 and trial measurements.

These measures obtained from all patients who participated in the entire 57 weeks include

exploratory cognitive and functional scores as well as biomarker signals of brain activity.

Additionally, the clinical trial appeared

to show that ANAVEX ® 2-73 activity was enhanced by its active metabolite (ANAVEX19-144), which also targets the SIGMAR1

receptor and has a half-life approximately twice as long as the parent molecule.

Two consecutive trial extensions for the Phase 2a

trial have allowed participants who completed the 52-week Part B of the trial to continue taking ANAVEX ® 2-73, providing

an opportunity to gather extended safety data for a cumulative period of five years.

In August 2020, patients completing these Phase 2a

trial extensions were granted continued access to treatment with ANAVEX ® 2-73 through the Australian Government Department

of Health – Therapeutic Goods Administration’s compassionate use Special Access Scheme.

In July 2018, we presented

the results of a genomic DNA and RNA evaluation of the participants in the Phase 2a clinical trial.

More than 33,000 genes were analyzed

using unbiased, data driven, machine learning, artificial intelligence (“AI”) system for analyzing DNA and RNA data in patients

treated with ANAVEX ® 2-73.

The analysis identified genetic variants that impacted response to ANAVEX ® 2-73,

among them variants related to the SIGMAR1, the target for ANAVEX ® 2-73.

Results showed that trial participants with the

common SIGMAR1 wild type gene variant, which is estimated to be about 80% of the population worldwide, demonstrated improved cognitive

(MMSE) and functional (ADCS-ADL) scores.

The results from this evaluation supported the continued evaluation of genomic information in

subsequent clinical trials, since these signatures can now be applied to neurological indications tested in future clinical trials with

ANAVEX ® 2-73 including Alzheimer’s disease, Parkinson’s disease dementia and Rett syndrome.

ANAVEX ® 2-73

data met prerequisite information in order to progress into a Phase 2b/3 placebo-controlled trial.

This larger Phase 2b/3 double-blind,

placebo-controlled trial of ANAVEX ® 2-73 in early Alzheimer’s disease commenced in August 2018.

The trial enrolled

508 patients, which were treated with a convenient once-daily oral formulation of ANAVEX ® 2-73 for 48 weeks, randomized

1:1:1 to two different ANAVEX ® 2-73 doses or placebo.

The trial took place at 52 sites across North America, Europe and

Primary and secondary endpoints to assess safety and both cognitive and functional efficacy, were measured through the Alzheimer’s

Disease Assessment Scale – Cognitive Subscale test (“ADAS-Cog”), Alzheimer’s Disease Cooperative Study –

Activities of Daily Living (“ADCS-ADL”) and Clinical Dementia Rating – Sum of Boxes for cognition and function (“CDR-SB”).

In addition to these endpoints, the ANAVEX ® 2-73 Phase 2b/3 trial design incorporated pre-specified statistical analyses

related to potential genomic precision medicine biomarkers previously identified in the ANAVEX ® 2-73 Phase 2a clinical trial.

The trial was completed in mid-2022 and, in December 2022, the Company presented topline results from the Phase 2b/3 clinical trial.

statistical analyses were performed by outside consultancy companies.

Furthermore, all pre-specified clinical endpoints

were analyzed using a mixed model for repeated measures (MMRM).

Under the multiplicity control rule, a trial is successful in meeting

the co-primary endpoints if the significance of each endpoint is P < 0.05, or if the significance of only one co-primary endpoint is

If only one primary endpoint is significant at an α level of 0.025, then the secondary endpoint will be evaluated

at the same level of 0.025.

The trial was successful, the differences in the least-squares mean (LSM) change from baseline to 48 weeks

between the ANAVEX ® 2-73 and placebo groups for ADAS-Cog13 was significant at a level of P < 0.025 and for CDR-SB was

significant at a level of P < 0.025, in the patients with early Alzheimer’s disease.

The comparison of individual dose groups vs placebo

also supports blarcamesine’s efficacy.

For the primary endpoint ADAS-Cog13, blarcamesine is significantly better than placebo (−2.027;

P = 0.0079) as well as for both the 50 mg (−2.149;

P = 0.021) and the 30 mg (−1.934;

P = 0.026) blarcamesine dosage groups

at Week 48, representing that blarcamesine slowed clinical progression at 48 weeks by 36.3% and by 38.5% and 34.6% in 50 mg and 30 mg

placebo, respectively.

The functional co-primary endpoint, ADCS-ADL,

was trending in a positive direction but did not reach

significance at Week 48.

The key secondary endpoint CDR-SB was significantly improved vs.

placebo (−0.483, P = 0.0104) as well as

in both 50 mg (−0.465;

P = 0.045) and 30 mg (−0.502;

P = 0.020) groups at Week 48.

Clinical Global Impression – Improvement

(“CGI-I”) was also significantly improved vs.

placebo (−0.278, P = 0.004) as well as in both the 50 mg (−0.314;

P = 0.008) and the 30 mg (−0.248;

P = 0.024) groups at Week 48.

The findings are supported by biomarkers, including plasma Aβ42/40-ratio

and reduction of brain atrophy.

Blarcamesine significantly slowed brain atrophy in key regions of interest, including the whole brain

by 37.6%, total grey matter by 63.5%, and lateral ventricles by 25.1%.

In the respective safety population, common treatment-emergent

adverse events included dizziness, which was transient and mostly mild to moderate in severity, and occurred in 120 participants (35.8%)

during titration and in 76 participants (25.2%) during maintenance with ANAVEX ® 2-73 and 10 (6.0%) during titration and

9 (5.6%) during maintenance with placebo.

We believe ANAVEX 2-73 may offer a disease-modifying

approach in neurodegenerative and neurodevelopmental diseases by activation of SIGMAR1.

ANAVEX 2-73 is being developed as an oral once-daily

capsule formulation for early AD, and in an oral liquid formulation for Rett syndrome and Fragile X syndrome.

We plan to prioritize the advancement of our ANAVEX

2-73 clinical development pipeline in early AD, Rett syndrome and Fragile X syndrome in the U.S.

In November 2024, we announced the submission of a

Marketing Authorisation Application (“MAA”) to the European Medicines Agency (“EMA”), under the centralized procedure,

for ANAVEX ® 2-73 for the treatment of Alzheimer’s disease and, in December 2024, the EMA accepted the submission for

scientific review.

The MAA, if approved, would allow direct market access throughout the European Union for oral ANAVEX ® 2-73

(blarcamesine) for the treatment of Alzheimer’s disease.

A company seeking to market a new pharmaceutical product through the centralized

procedure must file safety data and efficacy data as part of the MAA.

After the EMA evaluates the MAA, it provides a recommendation to

the European Commission (“EC”) and the EC then approves or denies the MAA.

On December 12, 2025, we announced that the Committee

for Medicinal Products for Human Use (“CHMP”) of the EMA rendered a negative trend-vote following an oral examination of our

On December 18, 2025 we announced that we have requested a re-examination of the MAA.

The re-examination procedure is led by a different

rapporteur and co-rapporteur, who will conduct a new evaluation of our MAA for blarcamesine.

We have also requested that the EMA consult

a Scientific Advisory Group as part of this process to provide an independent recommendation.

A long-term open label extension study of ANAVEX ® 2-73,

referred to as the ATTENTION-AD trial, was initiated for patients who completed the 48-week Phase 2b/3 placebo-controlled trial referenced

This trial extension for a duration of up to 96/144 additional weeks was completed in June 2024.

The trial extension demonstrated

that blarcamesine-treated patients continued to accrue benefit through up to 192 weeks, as measured by the clinical endpoints ADAS-Cog13

P = 0.0165) and ADCS-ADL (+4.30, P = 0.0206).

No new safety findings were observed with continued blarcamesine treatment

over three years, confirming good comparative safety profile and no associated neuroimaging adverse events.

Delayed-start analysis

of treatment with oral blarcamesine was significant, reflecting the importance of early treatment initiation.

Additional precision medicine population 48-week data

demonstrates cognitive stabilization in early Alzheimer’s disease.

Cognitive outcomes observed in the oral blarcamesine 30 mg precision

medicine cohort move toward normal aging profiles across validated clinical scales.

For ADAS-Cog13, blarcamesine showed a 48-week change

from baseline of 0.853 compared to ~1 point typical annual decline in prodromal (pre-dementia) aging adults.

For CDR-SB, blarcamesine

demonstrated a change from baseline of 0.465, aligning with the 0-0.5 point annual range seen in prodromal aging.

These data are similar

to referenced barely detectable prodromal Alzheimer’s disease decline, in spite of the more advanced stage of Alzheimer’s

disease impairment at baseline of the blarcamesine population.

Further posthoc analysis demonstrates continued long-term

benefit from oral blarcamesine compared to decline observed in the Alzheimer’s Disease Neuroimaging Initiative (ADNI) control group.

Externally matched control participants from the ADNI database were compared with participants over the 144-week period of ANAVEX Ò 2-73-AD-004

and its ATTENTION-AD (ANAVEX Ò 2-73-AD-EP-004) open-label extension (OLE) Phase

IIb/III trial.

[1] For ADAS-Cog13, total score ranges from 0

to 85 with higher scores indicating increased cognitive impairment.

In the intent-to-treat (ITT) population, significantly

less cognitive decline was observed for the blarcamesine participants compared to the ADNI control group at 48 weeks with a significant,

and clinically meaningful difference in mean change from baseline ADAS-Cog13 total score of −2.68 points ( p < 0.0001).

raw data was used.

Scheduled visits were [OLE Week 0 = Combined Week 48], [OLE Week 48 = Combined Week 96], [OLE Week 96 = Combined Week

Combined = DB (double-blind) + OLE (open-label-extension) trials.

Up to 144 weeks ADNI control group data was available.

[2] ADAS-Cog13 scores LS mean difference between the treatment

groups being larger than 2 points are considered clinically meaningful improvements:

Muir RT, Hill MD, Black SE, Smith EE.

Minimal clinically

important difference in Alzheimer's disease:

Rapid review.

Alzheimers Dement.

2024;20(5):3352-3363.

Over the course of the open-label extension study

at time point 96 weeks, these two groups diverged sharply, with statistically significant differences in mean change in ADAS-Cog13 total

score at 96 weeks of −6.41 points ( p < 0.0001).

The difference between groups continues to increase at 144 weeks (ADAS-Cog13

total score difference of −12.78 points;

The results provide evidence of the significant beneficial

therapeutic effect of blarcamesine, which positively separates from the ADNI control group with duration of treatment.

Parkinson’s Disease

In September 2016, we presented positive preclinical

data for ANAVEX ® 2-73 in an animal model of Parkinson’s disease, which demonstrated significant improvements on behavioral,

histopathological, and neuroinflammatory endpoints.

The study was funded by the Michael J.

Fox Foundation.

Additional data announced in

October 2017 indicated that ANAVEX ® 2-73 induced robust neurorestoration in experimental Parkinsonism.

We believe the encouraging

results we have gathered in this preclinical model, coupled with the favorable profile of this product candidate in the Alzheimer’s

disease trial, support the notion that ANAVEX ® 2-73 has the potential to treat Parkinson’s disease dementia.

In October 2020, we completed a double-blind, randomized,

placebo-controlled proof-of-concept Phase 2 trial with ANAVEX ® 2-73 in Parkinson’s disease dementia in Spain and Australia,

to study the effect of the compound on both the cognitive and motor impairment of Parkinson’s disease.

The trial enrolled approximately

132 patients for 14 weeks, randomized 1:1:1 to two different ANAVEX ® 2-73 doses, 30 mg and 50 mg, or placebo.

The ANAVEX ® 2-73

Phase 2 Parkinson’s disease dementia trial design incorporated genomic precision medicine biomarkers identified in the ANAVEX ® 2-73

Phase 2a Alzheimer’s disease trial.

The trial demonstrated that ANAVEX ® 2-73

was safe and well tolerated in oral doses up to 50 mg once daily.

The results showed clinically meaningful, dose-dependent, and statistically

significant improvements in the Cognitive Drug Research (“CDR”) computerized assessment system analysis.

Treatment with ANAVEX ® 2-73

also resulted in clinically meaningful improvements as measured by the global composite score of Parkinson’s disease symptom severity,

MDS-Unified Parkinson’s Disease Rating Scale (“MDS-UPDRS”) total score on top of standard of care including dopaminergic

therapy, levodopa and other anti-PD medications after 14 weeks of treatment, suggesting ANAVEX ® 2-73’s potential capability

of slowing and reversing symptoms that progress in Parkinson’s disease.

In addition, the trial confirmed the precision medicine

approach of targeting SIGMAR1 as a genetic biomarker in response to ANAVEX ® 2-73 may result in improved clinical outcomes.

A 48-week OLE ANAVEX2-73-PDD-EP-001 Phase 2 trial

was offered to participants after completion of the double-blind placebo-controlled ANAVEX2-73-PDD-001 Phase 2 trial discussed above.

The OLE trial assessed safety, tolerability and efficacy, measuring among others, MDS-Unified Parkinson’s Disease Rating Scale Parts

I, II, III, REM Sleep Behavior Disorder Screening Questionnaire (RBDSQ), CGI-I, as well as cognitive efficacy endpoint Montreal Cognitive

Assessment (MoCA) over a 48-week period.

In March 2023, we reported the preliminary ANAVEX2-73-PDD-EP-001

OLE trial data, which demonstrated longitudinal beneficial effects of ANAVEX ® 2-73 on the pre-specified primary and secondary

Preliminary analysis reveals that ANAVEX ® 2-73 was found to be generally safe and well tolerated, and safety

findings in this trial were consistent with the known safety profile of ANAVEX ® 2-73.

In respect to efficacy, across all

efficacy endpoints, patients performed better while on ANAVEX ® 2-73.

While all patients were on drug holiday due to COVID-19

between the DB EOT and the OLE Baseline, the respective efficacy endpoints, including the MDS-UPDRS Part II + III and CGI-I, measured

at the end of trial of the double-blind study (DB EOT) and the OLE Baseline, were worsening, as expected in a progressive disease like

However, when patients resumed daily oral ANAVEX ® 2-73 treatment, a consistent improvement was observed

during the extension phase from OLE Baseline through OLE Week 24, and OLE Week 48, respectively.

These results are consistent with the

pattern observed for all efficacy measures in the extension phase.

We anticipate conducting further clinical trials of

ANAVEX ® 2-73 in Parkinson’s disease dementia after submitting the results of the trial to regulatory authorities to

obtain regulatory guidance.

Also with respect to Parkinson’s disease, in

January 2021, we were awarded a research grant of $1.0 million from The Michael J.

Fox Foundation for Parkinson’s Research to

explore utilization of PET imaging biomarkers to enable measurement of target engagement and pathway activation of the SIGMAR1 with clinically

relevant doses including in people with Parkinson’s disease.

This study is currently in the planning stage.

Rett Syndrome

In February 2016, we presented positive preclinical

data for ANAVEX ® 2-73 in Rett syndrome, a rare neurodevelopmental disease.

The data demonstrated dose related significant

improvements in an array of behavioral and gait paradigms in a mouse model with an MECP2-null mutation that causes neurological symptoms

that mimic Rett syndrome.

The study was funded by the International Rett Syndrome Foundation.

Our Rett syndrome program includes several clinical

trials that were conducted in a range of patient age demographics and geographic regions, utilizing an oral liquid once-daily formulation

of ANAVEX ® 2-73.

The FDA has granted Orphan Drug Designation and the Rare Pediatric Disease (RPD) designation for the treatment

of Rett syndrome.

The RPD designation is intended to encourage the development of treatments for rare pediatric diseases.

Additionally,

the FDA has granted Fast Track designation for the ANAVEX ® 2-73 clinical development program for the treatment of Rett syndrome.

The FDA Fast Track program is designed to facilitate and expedite the development and review of new drugs to address unmet medical needs

in the treatment of serious and life-threatening conditions.

An earlier application for a proposed Rett syndrome study in the United States

resulted in the FDA requesting additional information.

The resulting clinical hold and subsequent partial clinical hold have since been

removed after the Company satisfactorily provided the additional information requested.

The following is a summary of clinical trials

conducted by the Company in Rett syndrome.

The first Phase 2 trial, (ANAVEX ® 2-73-RS-001), took place in the United States,

and was completed in December 2020.

This trial was a randomized double-blind, placebo-controlled safety, tolerability, PK and efficacy

trial of oral liquid ANAVEX ® 2-73 formulation in 25 adult female patients with Rett syndrome over a 7-week treatment period

including ANAVEX ® 2-73-specific genomic precision medicine biomarkers.

The primary endpoint of the trial was safety.

dosing of 5 mg ANAVEX ® 2-73 was well-tolerated and demonstrated dose-proportional PK.

All secondary efficacy endpoints of

the trial showed statistically significant and clinically meaningful response in the Rett Syndrome Behaviour Questionnaire (“RSBQ”)

response, when compared to placebo, in the intent to treat (“ITT”) cohort (all participants, p = 0.011).

66.7% of ANAVEX ® 2-73

treated subjects showed a statistically significant improvement in RSBQ response as compared to 10% of the subjects on placebo in the

ITT cohort (all participants, p = 0.011).

ANAVEX ® 2-73 treatment resulted in a sustained improvement in CGI-I response throughout

the 7-week clinical trial, when compared to placebo in the ITT cohort (all participants, p = 0.014).

Consistent with previous ANAVEX ® 2-73

clinical trials, patients carrying the common form of the SIGMAR1 gene treated with ANAVEX ® 2-73 experienced stronger improvements

in the prespecified efficacy endpoints.

This clinical trial was funded, in part, by a financial

grant from the International Rett Syndrome Foundation of $0.6 million.

No other clinical trials with ANAVEX ® 2-73 related

to Rett syndrome have been conducted in the United States.

second, international trial of ANAVEX ® 2-73 for the treatment of Rett syndrome, called the AVATAR trial, commenced in June

This trial took place in Australia and the United Kingdom using a higher dose than the U.S.

based Phase 2 trial for Rett

The trial was a Phase 3 randomized, double-blind, placebo-controlled trial to evaluate the safety and efficacy of ANAVEX ® 2-73

in 33 adult patients over a 7-week treatment period including ANAVEX ® 2-73 specific precision medicine biomarkers.

upon the input from the successful U.S.

Phase 2 Rett syndrome trial (ANAVEX ® 2-73-RS-001), we updated the endpoints for

the AVATAR trial (ANAVEX ® 2-73-RS-002) to appropriately assess the clinically meaningful outcome following International

Conference on Harmonization (ICH) guidelines.

These updates were approved by the respective regulatory authorities in the U.K.

Australia, respectively, where the AVATAR trial was conducted.

The data from the AVATAR trial was released in February

The clinical trial met all primary and secondary efficacy and safety endpoints, with consistent improvements in primary efficacy

endpoint, RSBQ response (p = 0.037), and secondary efficacy endpoints, Anxiety, Depression, and Mood Scale (ADAMS) (p = 0.010) and CGI-I

(p = 0.037) response.

Efficacy endpoints demonstrated statistically significant and clinically meaningful reductions in Rett syndrome

Convenient once daily oral liquid doses of up to 30 mg of ANAVEX ® 2-73 were also well tolerated with good medication

All patients who participated in the trial were eligible to receive ANAVEX ® 2-73 under a voluntary open label

extension protocol and subsequent Compassionate Use Program.

The very first trial of ANAVEX ® 2-73

in pediatric Rett syndrome patients, the EXCELLENCE trial, completed enrollment in February 2023.

This randomized, double-blind, placebo-controlled

Phase 2/3 trial in pediatric patients with Rett syndrome included trial sites in Canada, Australia, and the United Kingdom.

patients with Rett syndrome between the ages of 5 through 17 years were treated daily with up to 30 mg ANAVEX ® 2-73.

were randomized 2:1 (ANAVEX ® 2-73:placebo) for 12 weeks, followed by a week 16 safety visit and topline results from this

trial were announced in early January 2024.

After 12 weeks, the study showed improvement on the

key co-primary endpoint RSBQ, which is a detailed 45-item questionnaire for assessing multiple Rett syndrome characteristics by the patients’

The other co-primary endpoint, the CGI-I, which represents a less granular assessment by the site investigators using a seven-point

scoring (one=“very much improved” to seven=“very much worse”), was not met.

In an ad-hoc analysis, using the predefined mixed-effect

model for repeated measure (MMRM) method, after 12 weeks of treatment, ANAVEX ® 2-73-treated patients improved LS Mean (SE)

-12.93 (2.150) points on their RSBQ total score compared to LS Mean (SE) -8.32 (2.537) points in placebo-treated patients.

difference (SE) of -4.61 (2.439) points between treated and placebo groups did not reach statistical significance (n=77;

ANAVEX ® 2-73-treated

patients demonstrated a rapid onset of action with improvements at 4 weeks after treatment with a RSBQ total score LS Mean (SE) -10.32

(2.086) points in the drug-treated group compared to a LS Mean (SE) -5.67 (2.413) points in placebo-treated patients.

The LS Mean difference

of -4.65 (2.233) points between treated and placebo groups was statistically significant (n=77;

The key secondary endpoint, the ADAMS, trended favorably.

In the same analysis, scores for all RSBQ and ADAMS subscales improved over the course of the study.

Collectively, the RSBQ and ADAMS

demonstrated improvements in multiple areas, impacting positively in particular repetitive movements, nighttime disruptive behaviors,

and social avoidance.

A preliminary review of the safety results indicates

there were no new safety signals in the EXCELLENCE study, reinforcing the favorable and manageable safety profile observed with ANAVEX ® 2-73

All patients who participated in the trial were eligible

to receive ANAVEX ® 2-73 under a voluntary open label extension protocol, which was completed in June 2024.

A high enrollment rate in the Open Label Extension

(“OLE”) of over 91% and the high level of requests for the Compassionate Use Program (93%) provide solid numerical evidence

for the reported positive Real World Evidence (RWE) from patients with Rett syndrome under Compassionate Use Authorization.

Families whose

children were previously on drug or placebo in the placebo-controlled trial commented favorably on the improvement of their child’s

daily life due to ANAVEX ® 2-73 treatment in the Compassionate Use Program.

Other indications

We believe preclinical data from our studies also

supports further research into the use of ANAVEX ® 2-73 as a potential platform drug for other neurodegenerative diseases

beyond Alzheimer’s disease, Parkinson’s disease or Rett syndrome, more specifically, epilepsy, infantile spasms, Fragile X

syndrome, Angelman syndrome, multiple sclerosis, and tuberous sclerosis complex (TSC).

ANAVEX ® 2-73 demonstrated significant

improvements in all of these indications in the respective preclinical animal models.

In a preclinical study sponsored by the Foundation

for Angelman Syndrome, ANAVEX ® 2-73 was assessed in a mouse model for the development of audiogenic seizures.

indicated that ANAVEX ® 2-73 administration significantly reduced audiogenic-induced seizures in mice.

In a study sponsored

by FRAXA Research Foundation regarding Fragile X syndrome, data demonstrated that ANAVEX ® 2-73 restored hippocampal brain-derived

neurotrophic factor (BDNF) expression to normal levels.

BDNF under-expression has been observed in many neurodevelopmental and neurodegenerative

BDNF signaling promotes maturation of both excitatory and inhibitory synapses.

ANAVEX ® 2-73 normalization of

BDNF expression could be a contributing factor for the positive preclinical data observed in both neurodevelopmental and neurodegenerative

disorders like Angelman and Fragile X syndromes.

In addition, preclinical data to-date also indicates

that ANAVEX ® 2-73 has the potential to demonstrate protective effects of mitochondrial enzyme complexes during pathological

conditions, which, if impaired, may play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.

In addition, preclinical data on ANAVEX ® 2-73

related to multiple sclerosis indicates that ANAVEX ® 2-73 may promote remyelination in multiple sclerosis disease.

our data also demonstrates that ANAVEX ® 2-73 has the potential to provide protection for oligodendrocytes and oligodendrocyte

precursor cells (“OPCs”), as well as central nervous system neurons in addition to helping repair by increasing OPC proliferation

and maturation in tissue culture.

In March 2018, we presented preclinical data of ANAVEX ® 2-73

in a genetic mouse model of tuberous sclerosis complex (“TSC”).

TSC is a rare genetic disorder characterized by the growth

of numerous benign tumors in many parts of the body with a high incidence of seizures.

The preclinical data demonstrated that treatment

with ANAVEX ® 2-73 significantly increased survival and reduced seizures in those mice.

ANAVEX ® 2-73

(blarcamesine)-specific Biomarkers

As part of some of our clinical trials, we have incorporated

a genomic analysis to better understand potential populations whom our clinical programs might benefit.

A full genomic analysis of Alzheimer’s

disease patients treated with ANAVEX ® 2-73 (blarcamesine) has helped us identify actionable genetic variants.

A significant

impact of the genomic biomarkers SIGMAR1, the direct target of ANAVEX ® 2-73 (blarcamesine) and COMT, a gene involved in

memory function, on the drug response level was identified, leading to an early ANAVEX ® 2-73 (blarcamesine) specific biomarker

We believe that excluding patients with SIGMAR1 identified biomarker variant (approximately 10%-20% of the population)

in prospective studies would identify approximately 80%-90% patients that would display clinically significant improved functional and

cognitive scores.

The consistency between the identified DNA and RNA data related to ANAVEX ® 2-73 (blarcamesine), which

are considered independent of Alzheimer’s disease pathology, as well as multiple endpoints and time-points, provides support for

the potential precision medicine clinical development of ANAVEX ® 2-73 (blarcamesine) by using genetic biomarkers identified

within the trial population itself to either confirm the mechanism of action of ANAVEX ® 2-73 (blarcamesine) or target patients

who are most likely to respond to ANAVEX ® 2-73 (blarcamesine) treatment.

We may in the future utilize such an approach in

certain indications in which ANAVEX ® 2-73 (blarcamesine) is being studied.

ANAVEX ® 3-71

ANAVEX ® 3-71 is an orally available

clinical drug candidate with a novel mechanism of action via SIGMAR1 activation and M1 muscarinic allosteric modulation, which has been

shown to enhance neuroprotection and cognition in Alzheimer’s disease models.

ANAVEX ® 3-71 is a CNS-penetrable potential

disease modifying treatment for cognitive impairments.

We believe it is effective against the major Alzheimer’s hallmarks in transgenic

(3xTg-AD) mice, including cognitive deficits, amyloid and tau pathologies, and also has beneficial effects on inflammation and mitochondrial

dysfunctions.

ANAVEX ® 3-71 indicates extensive therapeutic advantages in Alzheimer’s and other protein-aggregation-related

diseases given its ability to enhance neuroprotection and cognition via SIGMAR1 activation and M1 muscarinic allosteric modulation.

A preclinical study examined the response of ANAVEX ® 3-71

in aged transgenic animal models and showed a significant reduction in the rate of cognitive deficit, amyloid beta pathology and inflammation

with the administration of ANAVEX ® 3-71.

The FDA has granted Orphan Drug Designation to ANAVEX ® 3-71 for the

treatment of Frontotemporal Demetia (“FTD”).

During pathological conditions ANAVEX ® 3-71

demonstrated the formation of new synapses between neurons (synaptogenesis) without causing an abnormal increase in the number of astrocytes.

In neurodegenerative diseases such as Alzheimer’s and Parkinson’s disease, synaptogenesis is believed to be impaired.

preclinical data presented also indicates that in addition to reducing oxidative stress, ANAVEX ® 3-71 has the potential

to demonstrate protective effects of mitochondrial enzyme complexes during pathological conditions, which, if impaired, are believed to

play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.

In July 2020, we commenced the First-in-Human Phase

1 clinical trial of ANAVEX ® 3-71.

The Phase 1 clinical trial was a prospective double-blind,

randomized, placebo-controlled trial conducted in Australia.

A total of 36 healthy male and female subjects were included.

Single escalating

doses of ANAVEX ® 3-71 were administered in order to evaluate the safety, tolerability, and PK of ANAVEX ® 3-71

and the effects of food and gender on its PK in healthy volunteers.

The trial met

its primary and secondary endpoints of safety, with no serious adverse events (“SAEs”) or dose-limiting toxicities observed.

ANAVEX ® 3-71 was well tolerated in all cohorts receiving ANAVEX ® 3-71 in single doses ranging from 5 mg to

200 mg daily with no SAEs and no significant lab abnormalities in any subject.

In the trial, ANAVEX ® 3-71 exhibited linear

Its pharmacokinetics was also dose proportional for doses up to 160 mg.

Gender had no effect on the PK of the drug and food had no

effect on the bioavailability of ANAVEX ® 3-71.

The trial also met the secondary objective of characterizing the effect of

ANAVEX ® 3-71 on electrocardiogram (“ECG”) parameters.

There were no clinically significant ECG parameters throughout

Participant QTcF measures were normal across all dose groups with no difference between ANAVEX ® 3-71 and placebo.

In October 2023

a peer-reviewed publication in the journal Neurobiology of Aging , titled ‘ Early treatment with an M1 and sigma-1 receptor

agonist prevents cognitive decline in a transgenic rat model displaying Alzheimer-like amyloid pathology ’, featured the orally

available small molecule ANAVEX ® 3-71 (AF710B).

The preclinical study described the potential disease-modifying properties

of ANAVEX ® 3-71 on Alzheimer’s disease pathology as a possible drug candidate for a potential once daily oral preventive

strategy for Alzheimer’s disease.

In January 2024,

in another peer-reviewed publication in the journal Clinical Pharmacology in Drug Development , entitled, ‘ Population-Based

Characterization of the Pharmacokinetics and Food Effect of ANAVEX3-71, a Novel Sigma-1 Receptor and Allosteric M1 Muscarinic Receptor

Agonist in Development for Treatment of Frontotemporal Dementia, Schizophrenia, and Alzheimer Disease’ , reported the population-based

characterization of the PK and food effect of ANAVEX ® 3-71 as part of the single ascending dose study in healthy participants

with the primary objective of assessing dose proportionality of ANAVEX ® 3-71, and to characterize the effect of food on

the PK of ANAVEX ® 3-71.

The results from this PK evaluation demonstrated that ANAVEX ® 3-71, at single ascending

doses of 5 to 200 mg, is linear, dose proportional, and time invariant.

Food had no effect on the PK of ANAVEX ® 3-71.

data also expands the safety objectives met in this first-in-human study of ANAVEX ® 3-71, further supporting its drug development

Based on these

results, and ANAVEX ® 3-71 pre-clinical profile, the Company intends to advance ANAVEX ® 3-71 into a biomarker-driven

clinical development dementia program for the treatment of schizophrenia, FTD and Alzheimer’s disease, evaluating longitudinal effect

of treatment with ANAVEX ® 3-71.

The first of these trials is being conducted in schizophrenia.

Schizophrenia

In March 2024,

we commenced the U.S.

FDA-cleared ANAVEX ® 3-71-SZ-001 clinical trial:

a double-blind, placebo-controlled Phase 2 trial in

schizophrenia.

The trial consists of two parts to explore multiple ascending doses in individuals with schizophrenia followed by a 28-day

treatment period in a larger cohort.

The trial will utilize standard clinical outcome measures for schizophrenia including the Positive

and Negative Symptoms Scale (PANSS), and novel fluid and electrophysiological biomarkers will also be assessed, leveraging several advances

in electroencephalography/event-related potential (EEG/ERP) biomarkers in schizophrenia developed in collaboration with the industry-led

ERP Biomarker Qualification Consortium.

In addition to the electrophysiological biomarkers, we are also applying novel neuroinflammatory,

metabolomic, and transcriptomic biomarkers at the intersection of schizophrenia pathophysiology and ANAVEX ® 3-71’s

novel, dual mechanism of action.

results from Part A of the ANAVEX ® 3-71-SZ-001 clinical trial, consisting of a multiple ascending dose study in 16 participants,

demonstrated a dose-dependent effect of ANAVEX ® 3-71 on two key EEG biomarkers in patients with schizophrenia.

were most pronounced in the higher dose group indicating a dose-dependent pharmacodynamic effect.

The observed changes reversed known

electroencephalography (EEG) and ERP biomarker abnormalities associated with schizophrenia.

These EEG biomarkers correlate with positive,

negative, and cognitive symptoms of schizophrenia.

we announced the completion of enrollment of Part B of the study, which included more participants and a longer treatment duration.

top-line data of the Phase 2 ANAVEX ® 3-71-SZ-001 clinical was announced in October 2025.

The study successfully achieved

its primary endpoint, demonstrating that ANAVEX ® 3-71 was safe and well-tolerated.

The safety profile was consistent with

previous studies of ANAVEX ® 3-71 in healthy volunteers, with no serious treatment-emergent adverse events (TEAEs) and no

severe TEAEs reported in either Part A or Part B of the study.

In addition to meeting the primary safety endpoint, secondary and exploratory

analyses revealed encouraging trends in several outcome measures.

The study demonstrated positive trends in objective electroencephalography

(EEG) and event-related potential (ERP) biomarkers of schizophrenia.

Furthermore, neuroinflammatory biomarker assessments showed that

glial fibrillary acidic protein (GFAP), a marker of neuroinflammation, was reduced in participants receiving ANAVEX ® 3-71

compared to placebo.

This reduction in neuroinflammatory markers suggests a potential disease-modifying effect that may become more pronounced

with longer treatment durations.

ANAVEX ® 1-41

ANAVEX ® 1-41 is a sigma-1 agonist.

tests revealed significant neuroprotective benefits (i.e., protects nerve cells from degeneration or death) through the modulation of

endoplasmic reticulum, mitochondrial and oxidative stress, which damages and impairs cell viability.

In addition, in animal models, ANAVEX ® 1-41

prevented the expression of caspase-3, an enzyme that plays a key role in apoptosis (programmed cell death) and loss of cells in the hippocampus,

the part of the brain that regulates learning, emotion and memory.

These activities involve both muscarinic and SIGMAR1 systems through

a novel mechanism of action.

Preclinical data presented also indicates that ANAVEX ® 1-41

has the potential to demonstrate protective effects of mitochondrial enzyme complexes during pathological conditions, which, if impaired,

are believed to play a role in the pathogenesis of neurodegenerative and neurodevelopmental diseases.

ANAVEX ® 1066

ANAVEX ® 1066, a mixed sigma-1/sigma-2

ligand, is designed for the potential treatment of neuropathic and visceral pain.

ANAVEX ® 1066 was tested in two preclinical

models of neuropathic and visceral pain that have been extensively validated in rats.

In the chronic constriction injury model of neuropathic

pain, a single oral administration of ANAVEX ® 1066 dose-dependently restored the nociceptive threshold in the affected paw

to normal levels while leaving the contralateral healthy paw unchanged.

Efficacy was rapid and remained significant for two hours.

a model of visceral pain, chronic colonic hypersensitivity was induced by injection of an inflammatory agent directly into the colon and

a single oral administration of ANAVEX ® 1066 returned the nociceptive threshold to control levels in a dose-dependent manner.

Companion studies in rats demonstrated the lack of any effects on normal gastrointestinal transit with ANAVEX ® 1066 and

a favorable safety profile in a battery of behavioral measures.

ANAVEX ® 1037

ANAVEX ® 1037 is designed for the treatment

of prostate and pancreatic cancer.

It is a low molecular weight, synthetic compound exhibiting high affinity for sigma-1 receptors at

nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar levels.

In advanced pre-clinical studies,

this compound revealed antitumor potential.

It has also been shown to selectively kill human cancer cells without affecting normal/healthy

cells and also to significantly suppress tumor growth in immune-deficient mice models.

Scientific publications highlight the possibility

that these ligands may stop tumor growth and induce selective cell death in various tumor cell lines.

Sigma receptors are highly expressed

in different tumor cell types.

Binding by appropriate sigma-1 and/or sigma-2 ligands can induce selective apoptosis.

In addition, through

tumor cell membrane reorganization and interactions with ion channels, we believe our drug candidates may play an important role in inhibiting

the processes of metastasis (spreading of cancer cells from the original site to other parts of the body), angiogenesis (the formation

of new blood vessels) and tumor cell proliferation.

ANAVEX ® 1037 is currently in the pre-clinical

and clinical testing stages of development, and there is no guarantee that the activity demonstrated in pre-clinical models will be shown

in human testing.

We continue to identify and initiate discussions with

potential strategic and commercial partners to most effectively advance our programs and increase stockholder value.

Further, we may acquire

or develop new intellectual property and assign, license, or otherwise transfer our intellectual property to further our goals.

Our Target Indications

We are developing compounds with potential application

to two broad categories and several specific indications, including:

Central Nervous System Diseases

Alzheimer’s disease – An estimated 7.2 million Americans aged 65 and older are living with Alzheimer’s dementia in 2025, according to the Alzheimer’s Association ® .

The Alzheimer’s Association ® estimates that the annual number of new cases of Alzheimer’s and other dementias is projected to double by 2050.

Medications on the market today treat only the symptoms of Alzheimer’s disease and do not have the ability to stop its onset or its progression.

We believe that there is an urgent and unmet need for both a disease modifying cure for Alzheimer’s disease as well as for better symptomatic treatments.

Parkinson’s disease – Parkinson’s disease is a progressive disease of the nervous system marked by tremors, muscular rigidity, and slow, imprecise movement.

It is associated with degeneration of the basal ganglia of the brain and deficiency of the neurotransmitter dopamine.

Parkinson’s disease currently is estimated to afflict more than 10 million people worldwide, typically middle-aged and elderly people.

The Parkinson’s disease market is expected to reach $11.5 billion by 2029, according to GlobalData.

Rett syndrome – Rett syndrome is a rare X-linked genetic neurological and developmental disorder that affects the way the brain develops, including protein transcription, which is altered and as a result leads to severe disruptions in neuronal homeostasis.

It is considered a rare, progressive neurodevelopmental disorder and is caused by a single mutation in the MECP2 gene.

Because males have a different chromosome combination from females, boys who have the genetic MECP2 mutation are affected in devastating ways.

Most of them die before birth or in early infancy.

For females who survive infancy, Rett syndrome leads to severe impairments, affecting nearly every aspect of the child’s life:

severe mental retardation, their ability to speak, walk and eat, sleeping problems, seizures and even the ability to breathe easily.

Rett syndrome affects approximately 1 in every 10,000-15,000 females.

Schizophrenia - Schizophrenia is a persistent and often disabling mental illness impacting how a person thinks, feels, and behaves, and affects nearly 24 million people worldwide, including 2.8 million people in the U.S., according to the World Health Organization.

It is characterized by three symptom domains:

positive symptoms (hallucinations and delusions), negative symptoms (difficulty enjoying life and withdrawal from others), and cognitive impairment (deficits in memory, concentration, and decision-making).

In part due to limitations with current treatments, people living with schizophrenia often struggle to maintain employment, live independently, and manage relationships.

While current treatments can be effective in managing select symptoms, approximately 34% of people do not respond to therapy, with an additional 50-60% experiencing only a partial improvement in symptoms or unacceptable side effects.

Fragile X – Fragile X syndrome (FXS) is the most prevalent genetic form of intellectual disability and autism spectrum disorder, primarily affecting boys.

As with most neurodevelopmental disorders, FXS is considered a condition of synaptic development and function.

The disease has a range of clinical presentations depending on the specific genetic changes associated with an “expansion” of the FMR1 gene.

The disease is characterized by deficits in long-term potentiation and homeostatic plasticity.

FXS has been detected in all populations and ethnic groups.

Researchers do not know the exact number for how many Americans could have full mutation FXS.

Studies from the Centers for Disease Control (CDC) estimate that the disease affects approximately 1:4,000 males and 1:6,000-8,000 females.

Worldwide, more than 1,400,000 people could be affected by FXS.

Depression – Depression is a major cause of morbidity worldwide according to the World Health Organization.

The global antidepressant drug market is projected to reach $21 billion by 2030 according to Allied Market Research.

Pharmaceutical treatment for depression has been historically dominated by blockbuster brands.

However, the dominance of the leading brands is waning, largely due to an increase in the number of approvals for antidepressant drugs.

Epilepsy – Epilepsy is a common chronic neurological disorder characterized by recurrent unprovoked seizures.

These seizures are transient signs and/or symptoms of abnormal, excessive or synchronous neuronal activity in the brain.

According to the Centers for Disease Control and Prevention, data from 2021 and 2022 suggest epilepsy affects roughly 3.4 million Americans.

Today, epilepsy is often controlled, but not cured, with medications that are categorized as older traditional anti-epileptic drugs and second-generation anti-epileptic drugs.

Because epilepsy afflicts sufferers in different ways, there is a need for drugs used in combination with both traditional anti-epileptic drugs and second generation anti-epileptic drugs.

Infantile Spasms – Infantile spasms are a rare and severe form of epilepsy that typically begin in infancy.

These spasms are characterized by sudden, jerking movements and are often accompanied by developmental delays and abnormal brain wave patterns, requiring immediate medical attention.

Infantile spasms are rare, affecting approximately 1 in 2,000 to 4,000 live births according to the Epilepsy Foundation, 2024.

While the condition is uncommon, it represents a significant proportion of epilepsy cases in infants and young children.

The prognosis varies based on the underlying cause, but early treatment can improve outcomes in many cases.

Frontotemporal Dementia – Frontotemporal Dementia (FTD) is a group of neurodegenerative disorders that primarily affect the frontal and temporal lobes of the brain, leading to changes in behavior, personality, language, and movement.

It is a major cause of dementia in individuals under the age of 65.

FTD is the second most common cause of dementia in individuals under 65, accounting for 10-20% of all dementia cases in this age group according to the FTD Disorders Registry, 2024.

It is estimated to affect around 50,000 to 60,000 people in the United States, with similar rates worldwide.

The onset typically occurs between the ages of 45 and 65, making it a significant concern for younger adults.

Angelman Syndrome – Angelman Syndrome is a rare genetic disorder that affects the nervous system, leading to developmental delays, movement and balance issues, minimal to no speech, and frequent seizures.

Despite these challenges, individuals with Angelman Syndrome often exhibit a happy demeanor, with frequent smiling and laughter.

Angelman Syndrome is estimated to affect 1 in 15,000 to 20,000 live births worldwide according to the Angelman Syndrome Foundation, 2024.

Both males and females are equally impacted by this condition.

Despite its rarity, Angelman Syndrome often goes undiagnosed or is misdiagnosed, delaying crucial interventions that can improve quality of life.

Neuropathic Pain – We define neuralgia, or neuropathic pain, as pain that is not related to activation of pain receptor cells in any part of the body.

Neuralgia is more difficult to treat than some other types of pain because it does not respond well to normal pain medications.

Special medications have become more specific to neuralgia and typically fall under the category of membrane stabilizing drugs or antidepressants.

Stroke – A stroke is a medical emergency that occurs when blood flow to the brain is interrupted, either due to a blocked artery (ischemic stroke) or a ruptured blood vessel (hemorrhagic stroke).

This disruption leads to brain cell death, resulting in physical, cognitive, and emotional impairments.

Stroke is a leading cause of death and disability worldwide, affecting nearly 800,000 people annually in the United States alone.

Globally, approximately 12.2 million new strokes occur each year.

Stroke disproportionately impacts older adults, but it can occur at any age, with an increasing incidence in younger populations due to risk factors like hypertension and diabetes.

Malignant Melanoma – Predominantly a skin cancer, malignant melanoma can also occur in melanocytes found in the bowel and the eye.

Malignant melanoma accounts for a large majority of skin cancer deaths.

The treatment includes surgical removal of the tumor, adjuvant treatment, chemo and immunotherapy, or radiation therapy.

According to iHealthcareAnalyst, Inc.

the worldwide malignant melanoma market is expected to grow to $7.5 billion by 2029.

Prostate Cancer – Specific to men, prostate cancer is a form of cancer that develops in the prostate, a gland in the male reproductive system.

Cancer cells may metastasize from the prostate to other parts of the body, particularly the bones and lymph nodes.

Drug therapeutics for prostate cancer are expected to increase to nearly $10.1 billion by the end of 2030 according to Market Research Future.

Pancreatic Cancer – Pancreatic cancer is a malignant neoplasm of the pancreas.

In the United States, approximately 67,000 new cases of pancreatic cancer will be diagnosed this year and approximately 52,000 patients will die as a result of their cancer, according to the American Cancer Society.

Sales predictions by Market Data Forecast predict that the market for the global pharmaceutical treatment of pancreatic cancer will increase to $3.7 billion by 2027.

Marketing Authorisation Application (“MAA”) to the EMA, under the centralized procedure, for ANAVEX 2-73 for the treatment

In December 2025, we announced that the Committee for Medicinal Products for Human Use (“CHMP”) of the EMA rendered

a negative opinion on the MAA and that we had requested a re-examination of the opinion.

In March 2026, before the re-examination was

complete, we announced that the MAA had been withdrawn following feedback from the CHMP indicating that the MAA was not currently approvable.

In April 2026, we requested scientific advice from

the EMA regarding the design of our proposed pivotal Phase 3 clinical trial of blarcamesine in early AD, and the CHMP adopted its advice

in June 2026.

The advice addressed the overall design of the proposed Phase 3 trial, including matters such as study population, endpoint

hierarchy, treatment duration, statistical framework and subgroup strategy.

We intend to incorporate this feedback into our ongoing discussions

with the FDA regarding future study design and the overall development program for blarcamesine.

In June 2026, the CHMP published a Withdrawal Assessment

Report documenting the completion of its review of the MAA for ANAVEX 2-73, concluding that the overall benefit-risk balance was negative

and recommending refusal of a conditional marketing authorization.

The CHMP determined that our single pivotal Phase 2b/3 trial (ANAVEX2-73-AD-004)

did not meet its co-primary endpoints.

As reported by the CHMP, while the ADAS-Cog13 cognitive endpoint showed a nominally significant

result under our primary analysis, the ADCS-ADL functional endpoint did not reach statistical significance, which the CHMP concluded rendered

the trial formally negative.

The CHMP further found that the statistical analysis underlying the nominally significant ADAS-Cog13 result

was not the analysis pre-specified in the study’s protocol or statistical analysis plan, but reflected changes to the analysis model,

choice of covariates, and covariance structure made after the study was unblinded.

Therefore, the CHMP concluded that this modified analysis

constituted a post-hoc analysis that could not render the failed study successful.

In March 2026, we submitted an Investigational New

Drug (“IND”) application to the FDA for ANAVEX 2-73 for the treatment of early AD (the “AD IND”).

The submission

included cross-referenced information from an existing IND for Rett syndrome that we submitted to the FDA in October 2017 (the “Rett

We are currently proceeding with nonclinical and two foundational clinical pharmacology studies under the AD IND to support

and strengthen our regulatory strategy for ANAVEX 2-73 – an absorption, distribution, metabolism, and excretion (“ADME”)

study and a drug-drug interaction (“DDI”) study.

The first participant visit in the ADME study occurred in August 2026.

in the DDI study is underway and the last participant completing dosing is targeted for the end of September 2026.

These studies are not

sequential requirements.

Rather, these studies support the overall FDA regulatory requirements for ANAVEX 2-73 while we continue to advance

our early AD program in parallel.

Such studies are not indication-specific and would apply across all of our ANAVEX 2-73 programs.

We have submitted clinical trial data under the AD

IND from our Phase 2a clinical trial in mild-to-moderate AD (ANAVEX 2-73-002), the related open label extension trial (ANAVEX 2-73-003),

the ANAVEX2-73-AD-004 trial and the related open-label extension trial (ANAVEX2-73-AD-EP-004).

Data from these studies will form the basis

of planned discussions with the FDA on a U.S.

clinical development program and a Phase 3 protocol design.

The FDA has previously granted Orphan Drug Designation for ANAVEX 2-73 for

the treatment of Rett syndrome and for the treatment of Fragile X syndrome.

Additionally, the FDA has granted the Rare Pediatric Disease

designation and Fast Track designation for ANAVEX 2-73 for the treatment of Rett syndrome.

We are moving forward with initiating a Phase

3 clinical trial for Rett syndrome (ANAVEX2-73-RS-005) in adults while working with the FDA in parallel to align on inclusion of pediatric

patients in this trial.

We submitted a meeting request to the FDA in August 2026 to discuss adding pediatric patients to the protocol.

ANAVEX2-73-RS-005 study is a randomized, double-blind,

placebo-controlled trial evaluating the safety, tolerability and efficacy of once-daily oral blarcamesine in approximately 170 participants

with Rett syndrome.

Following a 12-week double-blind treatment period and a 4-week safety follow-up, eligible participants may continue

into an open-label extension.

We plan to submit an IND for ANAVEX 2-73 for the treatment

of Fragile X syndrome in September 2026.

In summary, we plan to align with the FDA on our three prioritized clinical

development programs, including obtaining guidance from the FDA on all of our past clinical trials for these programs and the extent to

which they can support our clinical development plan.

Specifically, we plan to align on three prioritized programs including (i) a clinical

development strategy for the treatment of early AD, (ii) a Phase 3 trial protocol for the treatment of Rett syndrome that includes pediatrics

and (iii) a clinical development strategy for the treatment of Fragile X syndrome.

We plan to provide updates on the status of these programs

in future filings as we receive guidance from the FDA.

ANAVEX 3-71 is an orally administered clinical drug

candidate with a novel mechanism of action through SIGMAR1 activation and M1 muscarinic allosteric modulation.

ANAVEX 3-71 has been studied

as a CNS-penetrable potential disease modifying treatment for cognitive impairments.

We are party to an exclusive license agreement with

Life Science Research Israel Ltd.

(“LSRI”) pursuant to which we license certain intellectual property related to ANAVEX 3-71

in exchange for certain payments upon the accomplishment of certain regulatory milestones and a royalty applicable to net sales of any

approved product using the intellectual property licensed from LSRI.

The FDA has granted Orphan Drug Designation to ANAVEX

3-71 for the treatment of Frontotemporal Dementia (“FTD”).

Development work on ANAVEX 3-71 has been paused and further development

work will be contingent on additional funding for ANAVEX 3-71 or the signing of a strategic partnership.

It is also possible that we may

sub-license ANAVEX 3-71.

ANAVEX 1-41 is a sigma-1 agonist and a selective allosteric

M1 muscarinic agonist believed to have the potential to demonstrate protective effects of mitochondrial enzyme complexes during pathological

conditions, which, if impaired, are believed to play a role in the pathogenesis of neurodegenerative diseases.

Development work on ANAVEX

1-41 has been paused and further development work will be contingent on additional funding for ANAVEX 1-41 or the signing of a strategic

It is also possible that we may license or sell ANAVEX 1-41.

ANAVEX 1066, a mixed sigma-1/sigma-2 ligand, is designed

for the potential treatment of neuropathic and visceral pain.

Development work on ANAVEX 1066 has been paused and further development

work will be contingent on additional funding for ANAVEX 1066 or the signing of a strategic partnership.

It is also possible that we may

license or sell ANAVEX 1066.

Patents, Trademarks and Intellectual Property

We hold ownership or exclusive rights to thirty (30)

We hold ownership or exclusive rights to thirty-three

(33) issued U.S.

patents, seventeen (17) pending U.S.

patent applications, and numerous PCT and ex-U.S.

patents and patent applications relating

to our drug candidates, methods associated therewith, and to our research programs.

patent applications, and numerous Patent Cooperation Treaty (“PCT”)

patents and patent applications relating to our drug candidates, methods associated therewith, and to our research programs.

Of the total, at least one (1) U.S.

patent relates

to crystalline forms of ANAVEX 2-73.

This patent expires in 2036.

At least seven (7) of the issued U.S.

patents relate to ANAVEX 2-73

for the treatment of AD.

These patents expire in 2034 as to one patent, 2036 as to one patent, 2037 as to four patents, and 2040 as to

At least four (4) of the issued U.S.

patents relate to ANAVEX 2-73 for the treatment of Rett syndrome.

These patents expire

in 2037 as to three patents, and 2040 as to one patent.

Additionally, at least one (1) of the issued U.S.

patents relates to ANAVEX 2-73

for the treatment of Fragile X syndrome and expires in 2040.

intellectual property position, like that of many biomedical companies, is uncertain and involves complex legal and technical questions.

for which important legal principles are unresolved.

For more information regarding our patents, patent applications, and challenges to

our existing or future patents, see “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities

and Exchange Commission on November 25, 2025.

For more information regarding our patents, patent applications, and challenges to our existing or future patents, see “Risk Factors”

in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on November 25, 2025.

Recent Developments

Nasdaq Compliance

As previously disclosed, on May 20, 2026, we received a deficiency notification

letter from the Nasdaq Listing Qualifications Department (the “Nasdaq Staff”) indicating that, as a result of our inability

to timely file our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, we are not in compliance with Nasdaq Listing

Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial reports with the SEC.

On July 20, 2026,

we timely submitted our plan (“Compliance Plan”) to the Nasdaq Staff to regain compliance with Nasdaq Listing Rule 5250(c)(1).

The Compliance Plan is currently under review by the Nasdaq Staff.

We expect the filing of this Quarterly Report on Form

10-Q, and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, to cure the deficiency.

However, the Nasdaq

Staff will consider multiple factors when reviewing our Compliance Plan, including our past compliance history, the reasons for the late

filing, other corporate events that may occur within our review period, our overall financial condition and our public disclosures.

the Compliance Plan is not accepted by the Nasdaq Staff, the Company will have an opportunity to request a hearing on the Nasdaq Staff’s

determination before an independent Hearings Panel.

Financial Overview

3 unchanged sentences

results are not necessarily indicative of results that may occur in future periods.

The discussion contains forward-looking statements,

which involve a number of risks and uncertainties.

See “Forward Looking Statements” included elsewhere in this report.

The following discussion contains forward-looking

statements, which involve a number of risks and uncertainties.

See “Forward-Looking Statements” included elsewhere in this

Quarterly Report on Form 10-Q.

We are in the development stage and have not earned

any revenue since our inception in 2004.

We do not anticipate earning any revenues until we can establish an alliance with other companies

to develop, co-develop, license, acquire or market our products.

any revenue since our inception.

We do not anticipate earning any revenue until one or more of our product candidates is approved and

commercial sales commence or we can establish one or more partnerships to develop, co-develop, license, acquire or market one or more

product candidates, if approved.

Our operating costs consist primarily of research

2 unchanged sentences

(“CRO”) expenses in support of these clinical trials.

Personnel costs include salaries and wages, benefits, and non-cash share-based compensation

charges associated with options and other equity awards granted to employees and consultants who are directly engaged in support of our

research and development activities.

Personnel costs include salaries and wages, benefits, and non-cash share-based

compensation charges associated with options and other equity awards granted to employees and consultants who are directly engaged in

support of our research and development activities.

General and administrative expenses consist of personnel

3 unchanged sentences

Outside professional services and

public company expenses include expenses related to compliance and reporting, additional insurance expenses, audit and SOX compliance,

expenses associated with patent research, applications and filings, investor and stockholder relations activities and other administrative

expenses and professional services.

Comparison of the three-months ended December 31,

2025 and 2024

public company expenses include expenses related to compliance and reporting, additional insurance expenses, audit and Sarbanes-Oxley

Act of 2002 compliance, expenses associated with patent research, applications and filings, investor and shareholder relations activities

and other administrative expenses and professional services.

We have incurred increased legal and other professional expenses arising

out of the review by the special committee (“Special Committee”) of our Board of Directors (“Board”), which resulted

in the termination of our former CEO, and related matters, and we anticipate incurring higher legal and other professional expenses in

future quarters in connection with these matters.

Comparison of the three months ended June 30, 2026

Operating Expenses

Total operating expenses for the three months ended

December 31, 2025 were $6.8 million, compared to $13.6 million for the comparable three months ended December 31, 2024.

June 30, 2026 were $(6.7) million, compared to $14.5 million for the comparable three months ended June 30, 2025.

The primary reason for

the decrease in operating expenses is due to the reversal of $15.5 million in stock-based compensation expense primarily associated with

the termination of our former CEO for Cause.

Additionally, there were also reversals of $1.9 million in stock-based compensation expense

associated with the determination that previously granted milestone-based stock options, will never vest given the Company’s change

General and administrative expenses were $(2.0) million

for the three months ended June 30, 2026 as compared to $4.5 million for the three months ended June 30, 2025.

The decrease was primarily

related to the reversal of $7.5 million in stock-based compensation expense during the period.

Of the total, $6.9 million was associated

with the termination of employees, primarily our former CEO and $0.6 million was associated with the determination that previously granted

milestone-based stock options, will never vest.

These decreases were partially offset by an increase in legal and other professional expenses

of approximately $2.2 million arising out of the review by the Special Committee, which resulted in the termination of our former CEO,

and related matters.

Our research and development expenses for the three

months ended December 31, 2025 were $4.7 million, as compared to $10.4 million for the three months ended December 31, 2024.

The decrease in research and development expenses

during the three-month period is primarily related to the following:

(i) a decrease of approximately $1.7 million over the comparable period relating to completed manufacturing

activities of ANAVEX ® 2-73 for potential commercial use, and to support the MAA;

(ii) a decrease of approximately $1.5 million over the comparable period relating to completion of the ANAVEX ® 3-71-SZ-001

clinical trial;

(iii) a decrease of approximately $0.6 million related to completion of

biomarker and MRI imaging analysis in the comparable period relating to ANAVEX ® 2-73 in Alzheimer’s disease ;

(iv) a decrease of approximately $0.4 million related to completion of biomarker and additional statistical

programming in the comparable period related to our Rett programs;

(v) a decrease of approximately $1.4 million in personnel and consultant costs over the comparable period

relating to personnel engaged to assist in and support the MAA, a reduction in staffing over the comparable period, and a reduction in

accrued bonus compensation for existing staff.

months ended June 30, 2026 were $(4.7) million, as compared to $10.0 million for the three months ended June 30, 2025.

The decrease was

primarily related to the reversal of $9.9 million in stock-based compensation expense during the period.

Of the total, $8.6 million was

associated with the termination of employees, primarily our former CEO, and $1.3 million was associated with the determination that previously

granted milestone-based stock options will never vest.

The following table summarizes our research and development

expenses for the three-months ended December 31, 2025 and 2024 (in thousands):

expenses for the three months ended June 30, 2026 and 2025 (in thousands):

Cost of external service providers

Personnel costs

Share based compensation

Share based compensation (recovery)

Other common costs

Total research and development costs

During the three-months ended December 31, 2025 and

2024, external service provider costs by product candidate was as follows (in thousands):

ANAVEX ® 2-73

ANAVEX ® 3-71

All other product candidates

During the three months ended June 30, 2026 and 2025,

external service provider costs by indication and product candidate were as follows (in thousands):

Alzheimer’s disease

Rett syndrome (recovery)

Fragile X syndrome

Parkinson’s disease (1)

Expanded access programs (2)

All indications (3)

Total ANAVEX 2-73

Phase 1 (FTD)

Schizophrenia

All indications

Total ANAVEX 3-71

Preclinical on all other product candidates

Other external service provider costs

Total external service provider costs

on Parkinson’s disease relates to residual costs or costs in prior period for this indication that has now been de-prioritized.

to patients who have been granted continued access to treatment with ANAVEX 2-73 through the Australian Government Department of Health

– Therapeutic Goods Administration’s compassionate use Special Access Scheme, Health Canada’s Special Access Program

(“SAP”) and the Medicines and Health Care Products Regulatory Agency (“MHRA”) Named Patient Program (“NPP”).

indications may include clinical chemistry, manufacturing and controls (“CMC”) for which the intended use of the resulting

drug product is not necessarily known when the cost is incurred.

The decrease in research and development expenses

during the three-month period is primarily related to the following:

(i) a decrease in stock-based compensation charges of $12.5 million from the comparable period as a result

of the recovery of stock-based compensation expense associated with unvested and forfeited stock options of departing employees, primarily

our former CEO;

(ii) a reduction in personnel costs of $1.2 million as a result of a

reduction in staff, as well as a reduction in consultants engaged in connection with European regulatory affairs activities;

(iii) a decrease of approximately $0.9 million from the comparable period as a result of the completion of the

ANAVEX 3-71 clinical trial for schizophrenia in May 2025;

(iv) a reduction in spending of $0.8 million on the Rett syndrome program,

primarily as a result of the completion of biomarker analysis and CRO involvement associated with the RS-003 clinical trial.

This was partially offset by an increase in spending

on clinical pharmacology studies of $1.1 million, primarily for a DDI study, which commenced in the third quarter of fiscal 2026, and

manufacturing of drug product for our planned ADME study, which is expected to start in the fourth quarter of fiscal 2026.

Other income (net)

Net other income for the three months ended June 30,

2026 was $1.1 million, as compared to $1.2 million for the three months ended June 30, 2025.

The decrease is primarily related to a decrease

in research and development incentive income of $0.1 million as a result of the completion of clinical trial activities in Australia that

had been eligible for the Australian research and development credit.

Net income (loss)

Net income for the three months ended June 30, 2026

was $7.8 million, or $0.08 per share, as compared to a net loss of $13.2 million, or $0.16 per share, in the three months ended June 30,

The decrease in net loss is primarily related to the recovery of stock-based compensation expense, as more fully described above.

Comparison of the nine months ended June 30, 2026

Operating Expenses

Total operating expenses for the nine months ended

June 30, 2026 were $6.5 million, compared to $40.6 million for the nine months ended June 30, 2025.

The primary reason for the decrease

in operating expenses is due to the reversal of $16.4 million in stock-based compensation expense primarily associated with the termination

of our former CEO and other personnel.

Additionally, there were also reversals of $1.9 million in stock-based compensation expense associated

with the determination that previously granted milestone-based stock options will never vest given the Company’s change in strategy.

General and administrative expenses were $2.4 million

for the three months ended December 31, 2025, as compared to $3.1 million for the same quarter of fiscal 2024.

for the nine months ended June 30, 2026 as compared to $10.3 million for the nine months ended June 30, 2025.

The decrease was primarily

related to a decrease in legal and professional fees of approximately $0.3 million, as well as a decrease in personnel costs of $0.6 million,

mostly related to a decrease in stock based compensation expense of $0.3 million as a result of the vesting of previously issued milestone

options, and due to the forfeiture of options, and a reduction in accrued bonus compensation for existing staff of $0.3 million.

related to the reversal of $7.5 million in stock-based compensation expense during the period.

Of the total, $6.9 million was associated

with the termination of employees, primarily our former CEO, and $0.6 million was associated with the determination that previously granted

milestone-based stock options will never vest.

These decreases were partially offset by an increase in legal and professional fees of

approximately $1.5 million arising out of the review by the Special Committee, which resulted in the termination of our former CEO, and

related matters.

Our research and development expenses for the nine

months ended June 30, 2026 were $4.1 million, as compared to $30.3 million for the nine months ended June 30, 2025.

The decrease was primarily

related to the reversal of $10.8 million in stock-based compensation expense during the period.

Of the total, $9.5 million was associated

with the termination of employees, primarily our former CEO, and $1.3 million was associated with the determination that previously granted

milestone-based stock options will never vest.

The following table summarizes our research and development

expenses for the nine months ended June 30, 2026 and 2025 (in thousands):

Cost of external service providers

Personnel costs

Share based compensation expense (recovery)

Other common costs

Total research and development costs

During the nine months ended June 30, 2026 and 2025,

external service provider costs by product candidate were as follows (in thousands):

Alzheimer’s disease

Rett syndrome

Fragile X syndrome

Parkinson’s disease (1)

Expanded access programs (2)

All indications (3)

Total ANAVEX 2-73

Phase 1 (FTD)

Schizophrenia

All indications

Total ANAVEX 3-71

Preclinical on all other product candidates

Other external service provider costs

Total external service provider costs

(1) Spending on Parkinson’s disease relates to residual costs or costs in prior period for this indication

that has now been de-prioritized.

to patients who have been granted continued access to treatment with ANAVEX 2-73 through the Australian Government Department of Health

– Therapeutic Goods Administration’s compassionate use Special Access Scheme, Health Canada’s SAP and the MHRA NPP.

indications may include CMC for which the intended use of the resulting drug product is not necessarily known when the cost is incurred.

The decrease in research and development expenses

during the nine-month period is primarily related to the following:

(i) a decrease in stock-based compensation charges of approximately $14.1 million from the comparable period

as a result of the recovery of stock-based compensation expense resulting from the forfeiture of unvested stock options;

(ii) a decrease of approximately $5.0 million from the comparable period as a result of the completion of the

ANAVEX 3-71 clinical trial for the treatment of schizophrenia in the comparable period ;

(iii) a decrease of approximately $4.0 million from the comparable period related to increased manufacturing

activities in the comparable period for ANAVEX 2-73 for early AD for potential commercial use and increased activities in the comparable

period to support the MAA for ANAVEX 2-73 for the treatment of early AD, which has now been withdrawn;

(iv) a decrease of approximately $2.8 million in personnel and consultant costs from the comparable period

relating to personnel engaged to support the MAA submitted in November 2025, an overall reduction in staffing over the comparable period,

and an overall reduction in accrued cash bonus pool compensation for existing staff;

(v) a reduction of $1.3 million in spending on the Rett syndrome program,

as a result of the completion of biomarker and additional statistical programming analysis and CRO involvement associated with the RS-003

clinical trial in the comparable period.

Other income (net)

Net other income for the three-months ended December

31, 2025 was $1.1 million, as compared to $1.5 million for the comparable three-months ended December 31, 2024.

The decrease is primarily

related to (i) a decrease in research and development incentive income of $0.4 million, as a result of the completion of our clinical

trials in Australia and (ii) a decrease in interest income of $0.3 million as a result of decreased market wide interest rates.

partially offset by a decrease in foreign exchange loss as a result of the stabilization of the Australian dollar against the US dollar,

and the reduced incentive and tax receivable balance denominated in Australian dollars, as compared to the prior year period.

Net loss for the three-months ended December 31, 2025,

was $5.7 million, or $0.06 per share, as compared to $12.1 million, or $0.14 per share in the comparative quarter of fiscal 2024.

Net other income for the nine months ended June 30,

2026 was $3.4 million, as compared to $4.0 million for the nine months ended June 30, 2025.

The decrease is primarily related to a decrease

in research and development incentive income of $0.5 million as a result of the completion of clinical trial activities in Australia that

had been eligible for the Australian research and development credit.

Net loss for the nine months ended June 30, 2026 was

$3.2 million, or $0.03 per share, as compared to $36.6 million, or $0.43 per share, for the nine months ended June 30, 2025.

in net loss is primarily related to the recovery of stock-based compensation expense, as more fully described above.

Liquidity and Capital Resources

Working Capital (in thousands)

December 31, 2025

June 30, 2026

September 30, 2025

2 unchanged sentences

Working Capital

On December 31, 2025, we had net current assets of

$126.6 million, an increase of approximately $31.2 million from our year ended September 30, 2025.

On June 30, 2026, we had net current assets of $112.4

million, an increase of approximately $17.5 million from our fiscal year ended September 30, 2025.

The increase in net current assets

is primarily related to cash received from the issuance of common shares pursuant to the 2025 Sales Agreement.

continue to use our capital resources to advance our clinical trials for ANAVEX ® 2-73 and ANAVEX ® 3-71, and

to perform the work necessary to prepare for future development of our pipeline compounds.

is primarily related to cash received from the issuance of our common stock pursuant to the 2025 Sales Agreement (as defined below) during

the first quarter of fiscal 2026.

We had cash and cash equivalents of $118.3 million

as of June 30, 2026, compared to $102.6 million as of September 30, 2025.

We expect our cash balance at the end of the third quarter of

2026 to fund operations and planned development activities until mid to late fiscal 2028.

continue to use our capital resources to advance our clinical development of ANAVEX 2-73.

The following

table summarizes cash flows during the three months ended December 31, 2025 and 2024 (in thousands):

table summarizes cash flows during the nine months ended June 30, 2026 and 2025 (in thousands):

Net cash flows used in operating activities

Net cash flows provided by financing activities

Net cash flows provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

Cash flow used in operating activities

Net cash used in operating activities for the three-months

ended December 31, 2025 was $7.2 million, compared to $12.1 million during the comparable period ended December 31, 2024.

Net cash used in operating activities for the nine

months ended June 30, 2026 was $20.7 million, compared to $30.4 million during the comparable period ended June 30, 2025.

The principal

reason for this change is due to the decrease in net loss due to the decrease in operating expenditures, as described above.

reason for this change is due to the decrease in net loss due to the decrease in research and development expenditures, net of stock-based

compensation reversals, as more fully described above.

Cash flow provided by financing activities

Cash flows provided by financing activities for the

three-month period ended December 31, 2025 was $36.3 million, compared to $0.7 million during the comparable three-month period ended

December 31, 2024.

During the three months ended December 31, 2025, cash

provided by financing activities was related to cash received from the issuance of common shares pursuant to the 2025 Sales Agreement.

During the three months ended December 31, 2024, cash

provided by financing activities was primarily attributable to cash received from the exercise of stock options by our employees.

Other Financings

nine months ended June 30, 2026 was $36.4 million, compared to cash utilized in financing activities of $0.6 million during the comparable

nine months ended June 30, 2025.

During the nine months ended June 30, 2026, cash provided

by financing activities was related to cash received from the issuance of our common stock pursuant to the 2025 Sales Agreement.

During the nine months ended June 30, 2025, we received

$1.7 million in cash from the exercise of stock options by our employees.

We utilized $2.3 million to satisfy tax withholding obligations

associated with the net exercise of an employee stock option by our former CEO, in exchange for the withholding of shares of our common

stock that would have been received upon exercise of the employee stock option.

Cash flows used in investing activities

There were no cash flows from investing activities

for the nine-month periods ended June 30, 2026 and 2025.

2025 Sales Agreement

2 unchanged sentences

Pursuant to the 2025 Sales Agreement,

the Company may offer and sell up to an aggregate offering price of $150 million (the “Offering”) in shares of common stock

from time to time through the Sales Agent.

we may offer and sell up to an aggregate offering price of $150 million (the “Offering”) in shares of our common stock (“Common

Stock”) from time to time through the Sales Agent.

Upon delivery of a placement notice based on our instructions

3 unchanged sentences

written consent.

We are not obligated to make any sales of shares under the 2025 Sales Agreement.

We or the Sales Agent may suspend or

terminate the Offering upon notice to the other party, subject to certain conditions.

The Sales Agent will act as sales agent on a commercially

reasonable efforts basis consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations

and the rules of Nasdaq.

We are not obligated to make any sales of shares of Common Stock under the 2025 Sales Agreement.

We or the Sales Agent

may suspend or terminate the Offering upon notice to the other party, subject to certain conditions.

The Sales Agent will act as sales

agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices, applicable state and federal

law, rules and regulations and the rules of Nasdaq.

We have agreed to pay the Sales Agent commissions

1 unchanged sentence

also agreed to provide the Sales Agent with customary indemnification and contribution rights.

During the three months ended December 31, 2025, the

Company issued an aggregate of 6,003,237 shares of Common Stock under the 2025 Sales Agreement for net proceeds of $36.3 million, after

deducting commissions.

At December 31, 2025, there was an unused amount of

During the nine months ended June 30, 2026, we issued

an aggregate of 6,026,237 shares of Common Stock under the 2025 Sales Agreement for net proceeds of $36.4 million, after deducting commissions.

We suspended sales under the 2025 Sales Agreement following the formation of the Special Committee described above under “—Financial

Overview.” We will be unable to make sales under the 2025 Sales Agreement after we file our next Annual Report on Form 10-K due

to our loss of Form S-3 eligibility for the untimely filing of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2026

and June 30, 2026 with the SEC.

We will be unable to regain eligibility to use Form S-3 until we have timely filed all reports specified

under Form S-3 for the preceding 12 calendar months.

At June 30, 2026, there was an unused amount of $103.2

million under the 2025 Sales Agreement.

2023 Purchase Agreement

On February 3, 2023, we entered into a $150,000,000

purchase agreement (the “2023 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant

to which we had the right to sell and issue to Lincoln Park, and Lincoln Park was obligated to purchase, up to $150.0 million in value

of our shares of Common Stock from time to time over a three-year period.

In consideration for entering into the 2023 Purchase

Agreement, the Company issued to Lincoln Park 75,000 shares of Common Stock as a commitment fee (the “initial commitment shares”)

during the year ended September 30, 2023 and agreed to issue up to 75,000 shares pro rata (collectively with the initial commitment shares,

the “commitment shares”), when and if, Lincoln Park purchased, at the Company’s discretion, the $150.0 million aggregate

During the three-month period ended December 31, 2025

and 2024, the Company did not issue any shares of common stock under the 2023 Purchase Agreement.

On December 31, 2025, there was an unused

amount of $110.8 million under the 2023 Purchase Agreement.

The 2023 Purchase Agreement expired on February 3, 2026.

Funding Requirements

We will require substantial additional capital to

develop our ANAVEX 2-73 programs and to fund operations for the foreseeable future.

Moreover, we expect our expenses to increase in connection

with our planned clinical development activities of ANAVEX 2-73.

Further, we are subject to all of the risks incidental to the development

of new pharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors

that may harm our business.

Our expenses will increase if, and as, we:

· advance our ANAVEX 2-73 programs through preclinical and clinical development;

· seek regulatory approval for any ANAVEX 2-73 programs that successfully complete clinical trials;

· seek to successfully commercialize any of our product candidates that may be approved for sale, either

alone or through commercial partners;

· expand our operational, financial and management systems and increase personnel, including personnel to

support our development, manufacturing and commercialization efforts and our operations as a public company.

Until we can generate a sufficient amount of revenue

from the commercialization of our product candidates, we may seek to raise any necessary additional capital through the sale of equity,

debt financings or other capital sources, which could include income from collaborations, strategic partnerships or marketing, distribution

or licensing arrangements with third parties or from grants.

To the extent that we raise additional capital through the sale of equity

or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include

liquidation or other preferences that adversely affect the rights of our common shareholders.

Debt financing and preferred equity financing,

if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting

our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain

investments or engage in merger, consolidation, licensing or asset sale transactions.

If we raise funds through collaborations, strategic

partnerships and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates

that we would otherwise prefer to develop and market ourselves.

We may be unable to raise additional funds or enter into such agreements

or arrangements on favorable terms, or at all.

As a result of the un-timely filing of our Quarterly Reports on Form 10-Q for the quarters

ended March 31, 2026 and June 30, 2026 with the SEC, we will be ineligible to utilize our effective Form S-3 registration statement or

to file a new Form S-3 registration statement after we file our next Annual Report on Form 10-K.

We will be unable to regain eligibility

to use Form S-3 until we have timely filed all reports specified under Form S-3 for the preceding 12 calendar months.

If we are unable

to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization

We have based our projections of operating capital requirements on our new operating plan, which is based on several assumptions

that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect.

Because of the numerous risks

and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact

amount and timing of our working capital requirements.

Our future funding requirements will depend on many factors, including but not

· the scope, progress, results and costs of advancing our ANAVEX 2-73 programs, and conducting preclinical

studies and clinical trials;

· the costs, timing and outcome of regulatory review of our ANAVEX 2-73 programs, and any delays we may

· the costs of manufacturing clinical supply of ANAVEX 2-73;

· the cost and timing of hiring new employees to support our growth;

· the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual

property rights and defending intellectual property-related claims;

· changes in our operating plan, resulting in increases or decreases in our need for capital;

· the costs of future activities, including building a commercial organization, product sales, medical affairs,

sales and marketing capabilities, manufacturing and distribution, for any of our product candidates for which we receive marketing approval.

Off-Balance Sheet Arrangements

We have no off-balance sheet

arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,

revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results

of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

CRITICAL ACCOUNTING POLICIES

We prepare our condensed

consolidated interim financial statements in accordance with accounting principles generally accepted in the United States of America

and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures

of contingent liabilities.

We base our estimates on historical experience and other assumptions that we believe are reasonable in the

circumstances.

Actual results may differ from these estimates.

consolidated interim financial statements in accordance with accounting principles generally accepted in the U.S.

and make estimates and

assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities.

We base our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances.

Actual results

may differ from these estimates.

There have been no significant

changes in the critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended September 30,

changes in the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended September

30, 2025, as filed with the SEC on November 25, 2025.

1 unchanged sentence

Please refer to Note 2 “Recent

Accounting Pronouncements” in notes to our Condensed Consolidated Interim Financial Statements included in this Form 10-Q.

Accounting Pronouncements” in notes to our Condensed Consolidated Interim Financial Statements included in this Quarterly Report

on Form 10-Q.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.

As a “smaller reporting company”, we are not required to provide

the information required by this item.

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-Q

Item 2. Management’s Discussion and Analysis