What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-07 compared with 2024-11-13 · 111 added, 132 removed, 323 unchanged (43% of the section changed)

1 unchanged sentence

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

September 30, 2024

March 31, 2025

December 31, 2024

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Preferred stock, $ 0.001 par value, 10,000,000 shares authorized;

no shares issued and outstanding at September 30, 2024 and December 31, 2023

no shares issued and outstanding at March 31, 2025 and December 31, 2024

Common stock, $ 0.001 par value, 250,000,000 shares authorized;

40,806,092 and 32,165,478 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

61,974,755 and 59,854,877 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’ equity

2 unchanged sentences

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Expenses:

4 unchanged sentences

Other income (expense):

Other income (expense), net

Other income, net

Interest expense

7 unchanged sentences

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

9 unchanged sentences

Balances as of March 31, 2024

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

Exercise of stock options

Equity-based compensation

Balances as of June 30, 2024

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Exercise of stock options

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

Equity-based compensation

Balances as of September 30, 2024

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(in thousands, except share amounts)

Comprehensive

1 unchanged sentence

Balances as of December 31, 2024

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Issuance of common stock as commitment shares for equity line financing (see Note 7)

Issuance of common stock under the at-the-market (ATM) sales agreement, net

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

Equity-based compensation

Other comprehensive gain

Balances as of March 31, 2025

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Equity-based compensation

Other comprehensive gain

Balances as of June 30, 2023

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Issuance of common stock related to the equity line financing

Equity-based compensation

Balances as of September 30, 2023

The accompanying notes are an integral part of these consolidated financial statements.

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Loss on currency translation from liquidation of subsidiary

Issuance of common stock as commitment shares for equity line financing

Changes in operating assets and liabilities:

9 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common stock in follow-on public offering, net

Proceeds from issuance of common stock under the ATM sales agreement, net

Proceeds from the exercise of common stock options

Proceeds from sale of common stock related to the equity line financing

Proceeds from issuance of common stock in follow-on public offering, net

Payment of employee withholding taxes on vested restricted stock units

1 unchanged sentence

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents

3 unchanged sentences

Cognition Therapeutics, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

6 unchanged sentences

The Company was founded on the unique combination of biological expertise around these targets, including proprietary assays that emphasize functional responses, and proprietary medicinal chemistry intended to produce novel, high-quality small-molecule drug candidates.

In January 2024, the Company ceased operations at Cognition Therapeutics PTY LTD, a wholly owned subsidiary (the “Subsidiary”) and completed its liquidation of the Subsidiary (the “Liquidation”).

In accordance with the Liquidation, the Company removed the AOCI balance associated with the currency translation adjustments and recorded a loss on liquidation of the Subsidiary in accumulated deficit.

On December 23, 2022, the Company filed a Registration Statement on Form S-3 (File No.

4 unchanged sentences

(the “Sales Agents”) providing for the offering, issuance and sale by the Company of up to $ 40,000 of its common stock from time to time in “at-the-market” offerings under the Shelf (the “ATM”).

During the nine months ended September 30, 2024, the Company sold 864,404 shares of its common stock pursuant to the ATM for gross proceeds of approximately $ 905 .

Please refer to Note 7 for further details.

During the three months ended March 31, 2025, the Company sold 2,004,729 shares of its common stock pursuant to the ATM for gross proceeds of approximately $ 1,505 .

Please refer to Note 7 – Stockholders’ Equity for further details.

On March 10, 2023, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Purchase Agreement”).

3 unchanged sentences

As part of the Purchase Agreement, the Company issued 189,856 shares of its common stock as consideration for Lincoln Park’s commitment to purchase shares of common stock under the Purchase Agreement.

During the nine months ended September 30, 2024, the Company did not sell any shares of common stock to Lincoln Park.

As of September 30, 2024, $ 34,795 was available to draw pursuant to the Purchase Agreement.

Please refer to Note 7 for further details.

On March 14, 2024, the Company closed a follow-on public offering of 6,571,428 shares of the Company’s common stock at a public offering price of $ 1.75 per share (“March 2024 Offering”).

As part of the March 2024 Offering, the underwriters exercised their option to purchase 985,714 shares of the Company’s common stock on March 28, 2024, at a public offering price of $ 1.75 per share.

The gross proceeds from the March 2024 Offering were $ 13,225 and the net proceeds were approximately $ 11,896 , after deducting underwriting discounts and commissions and other offering related expenses payable by the Company.

During the three months ended March 31, 2025, the Company did not sell any shares of common stock to Lincoln Park.

As of March 31, 2025, $ 34,795 was available to draw pursuant to the Purchase Agreement.

Please refer to Note 7 – Stockholders’ Equity for further details.

Liquidity and Going Concern

The Company’s Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses since inception, including net losses of $ 26,129 for the nine months ended September 30, 2024 and $ 25,788 for the year ended December 31, 2023.

As of September 30, 2024, the Company had cash and cash equivalents of $ 22,011 compared to $ 29,922 of cash and cash equivalents as of December 31, 2023.

The Company has incurred losses and negative cash flows from operations and had an accumulated deficit of $ 167,318 as of September 30, 2024.

The Company has incurred recurring losses since inception, including net losses of $ 8,480 for the three months ended March 31, 2025 and $ 33,971 for the year ended December 31, 2024.

As of March 31, 2025, the Company held cash and cash equivalents of $ 16,428 compared to $ 25,009 of cash and cash equivalents as of December 31, 2024.

The Company has incurred losses and negative cash flows from operations and has an accumulated deficit of $ 183,640 as of March 31, 2025.

The Company expects to continue to incur losses for the foreseeable future.

As of November 13, 2024, the date of issuance of these Consolidated Financial Statements, the Company believes that its cash and cash equivalents as of September 30, 2024 is not sufficient to fund operations for the period through one year after the date of this filing and therefore substantial doubt exists about the Company’s ability to continue as a going concern.

As of May 7, 2025, the date of issuance of these Consolidated Financial Statements, the Company believes that its cash and cash equivalents as of March 31, 2025 is not sufficient to fund operations for the period through one year after the date of this filing and therefore substantial doubt exists about the Company’s ability to continue as a going concern.

To execute its business plans, the Company will need substantial funding to support its continuing operations and pursue its growth strategy.

Until such time that the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of common stock in public offerings and/or private placements, debt financings or other capital sources, including collaborations with other companies or other strategic transactions.

Until such time that the Company can generate significant revenue from product sales, if ever,

t he Company expects to finance its operations through the sale of common stock in public offerings and/or private placements, debt financings or other capital sources, including collaborations with other companies or other strategic transactions.

The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders.

2 unchanged sentences

Basis of Presentation

The accompanying consolidated financial statements as of September 30, 2024, and for the three and nine months ended September 30, 2024 and 2023, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S.

The accompanying consolidated financial statements as of March 31, 2025, and for the three months ended March 31, 2025 and 2024, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“U.S.

GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.

1 unchanged sentence

GAAP for complete financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2024, the statements of operations and comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023.

In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2025, the statements of operations and comprehensive loss and stockholders’ equity for the three months ended March 31, 2025 and 2024, and cash flows for the three months ended March 31, 2025 and 2024.

Such adjustments are of a normal and recurring nature.

The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024, or for any future period.

The results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025, or for any future period.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 20, 2025.

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Grant Receivables

Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Health (“NIH”) and are carried at their estimated collectible amounts.

Grant receivables relate to outstanding amounts due for reimbursable expenditures of awarded grants issued by the National Institute of Aging (“NIA”), a division of the National Institute of Health (“NIH”), and are carried at their estimated collectible amounts.

The Company expects all receivables to be collectible, and accordingly, there is no allowance for doubtful accounts required on these grant receivables.

2 unchanged sentences

Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred.

For the three and nine months ended September 30, 2024, the Company generated grant income of $ 4,293 and $ 16,516 , respectively, as compared to $ 7,684 and $ 18,035 for the three and nine months ended September 30, 2023, respectively, primarily from reimbursements from the National Institute of Aging (the “NIA”), a division of the NIH for aging research.

The current and non-current portion of deferred grant income as of September 30, 2024 was $ 1,117 and $ 0 , respectively, as compared to the current and non-current portion of deferred grant income as of December 31, 2023 of $ 1,701 and $ 0 , respectively.

For the three months ended March 31, 2025 and 2024, the Company generated grant income of $ 5,086 and $ 4,912 , respectively, primarily from reimbursements from the NIA for aging research.

Deferred grant income as of March 31, 2025 and December 31, 2024 was $ 1,066 .

The grants awarded relate to agreed-upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grants, as well as facilities and administrative costs.

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To date, the Company has not been found to have breached the terms of any NIH grant.

As of September 30, 2024, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension.

As of March 31, 2025, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension.

Research and Development Costs

9 unchanged sentences

The Company recognizes compensation expense for these awards commencing in the period in which the vesting condition becomes probable of achievement.

The grant date fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model.

The grant date fair value of stock options are estimated on the date of grant using the Black-Scholes option pricing model.

Forfeitures are recognized in the period in which they occur.

6 unchanged sentences

The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

Prior to the IPO, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value of its common stock.

In determining the exercise prices for stock options granted, the Company has considered the estimated fair value of the common stock as of the measurement date.

The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders and the prospects of a liquidity event.

Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition and the current business climate in the marketplace.

Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.

Subsequent to the IPO, the board of directors determines the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date.

Refer to Note 8 – Equity-based Compensation for additional information.

Concentration of Credit Risk

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For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.

The Company has determined that it operates and manages one operating segment, which is the business of developing and commercializing therapeutics.

The Company has determined that it operates and manages one operating segment, which is the business of development of clinical and preclinical product candidates for neurodegenerative disorders, such as Alzheimer’s disease (“AD”) and dementia with Lewy bodies (“DLB”).

The Company’s chief operating decision maker, its chief executive officer, reviews financial information on an aggregate basis for the purpose of allocating resources.

Refer to Note 10 – Segment Reporting for more information.

Emerging Growth Company Status

4 unchanged sentences

Recent Accounting Pronouncements

Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements (“ASU 2023-06”), to clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB ASC with the SEC's regulations.

The Company is currently evaluating ASU 2023-06 to determine its impact on the Company's consolidated financial statements and disclosures.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances segment disclosures and requires additional disclosures of segment expenses.

This ASU is effective for annual periods in fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

We adopted this ASU for the annual period ended December 31, 2024 and the amendments have been applied retrospectively to all prior periods presented in the financial statements by expanding the disclosure of expenses included in our segment measures of profitability.

Refer to Note 10 – Segment Reporting for more information.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).

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The ASU also requires disaggregated disclosure related to pre-tax income (or loss) and income tax expense (or benefit) and eliminates certain disclosures related to the balance of an entity’s unrecognized tax benefit and the cumulative amount of certain temporary differences.

The ASU is effective for the Company beginning on January 1, 2025.

The Company is currently evaluating ASU 2023-09 to determine its impact on the Company's disclosures.

The Company adopted this ASU for the annual period beginning January 1, 2025.

Not Yet Adopted

The Company is currently evaluating ASU 2023-06 to determine its impact on the Company's consolidated financial statements and disclosures.

In accordance with ASC 270, Interim Reporting , and ASC 740, Income Taxes , the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate, apply that rate in providing for income taxes on a current year-to-date (interim period) basis, and include the tax impact for discrete items within the interim period.

The Company maintains a full valuation allowance against all deferred tax assets as of September 30, 2024 and December 31, 2023, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of September 30, 2024 and December 31, 2023, the Company had no uncertain tax positions.

The Company maintains a full valuation allowance against all deferred tax assets as of March 31, 2025 and December 31, 2024, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of March 31, 2025 and December 31, 2024, the Company had no uncertain tax positions.

Financial Instruments and Fair Value Measurements

Financial assets and liabilities measured at fair value are summarized below:

As of September 30, 2024

As of March 31, 2025

Quoted Priced in

11 unchanged sentences

Accrued expense consists of the following:

September 30, 2024

March 31, 2025

December 31, 2024

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Under the agreement, the Company financed $ 721 of certain premiums at a 8.65 % annual interest rate.

Total payments of approximately $ 62 , including interest and principal, are due monthly from November 2023 through September 2024.

As of September 30, 2024 and December 31, 2023, the outstanding principal of the loan was $ 0 and $ 544 , respectively, and is included in other current liabilities on the consolidated balance sheet.

Total payments of approximately $ 62 , including interest and principal, are due monthly from November 2023 through October 2024.

The outstanding principal of the loan was paid off in 2024.

In October 2024, the Company entered into an insurance premium financing agreement with a lender.

Under the agreement, the Company financed $ 356 of certain premiums at a 8.65 % annual interest rate.

Total payments of approximately $ 41 , including interest and principal, are due monthly from November 2024 through July 2025.

As of March 31, 2025 and December 31, 2024, the outstanding principal of the loan was $ 161 and $ 279 , respectively, and is included in other current liabilities on the consolidated balance sheet.

Commitments and Contingencies

Operating Leases

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of September 30, 2024 were as follows:

September 30, 2024

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2025 were as follows, in thousands:

March 31, 2025

December 31, 2024

4 unchanged sentences

Total operating lease liabilities

Operating lease costs for the three and nine months ended September 30, 2024 was $ 55 and $ 164 , respectively, as compared to operating lease costs for the three and nine months ended September 30, 2023 of $ 53 and $ 161 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of September 30, 2024 were as follows:

Operating lease costs for the three months ended March 31, 2025 and 2024 was $ 54 and $ 55 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of March 31, 2025 were as follows:

For the Years Ended December 31,

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Present value of operating lease liabilities

The following table summarizes the lease term and discount rate as of September 30, 2024 and December 31, 2023, respectively:

September 30, 2024

The following table summarizes the lease term and discount rate as of March 31, 2025:

March 31, 2025

December 31, 2024

3 unchanged sentences

Operating leases

Operating cash flows used for operating leases for the nine months ended September 30, 2024 and 2023 was $ 168 and $ 154 , respectively.

Operating cash flows used for operating leases for the three months ended March 31, 2025 and 2024 was $ 56 and $ 56 , respectively.

Litigation and Contingencies

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When a material loss contingency is only reasonably possible, the Company does not record a liability but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made.

As of September 30, 2024 and December 31, 2023, there was no litigation or contingency with at least a reasonable possibility of a material loss.

As of March 31, 2025 and December 31, 2024, there was no litigation or contingency with at least a reasonable possibility of a material loss.

Stockholders’ Equity

2 unchanged sentences

Common stockholders are entitled to dividends if and when declared by the Company’s board of directors subject to the rights of the preferred stockholders.

As of September 30, 2024, no dividends on common stock had been declared by the Company.

As of March 31, 2025, no dividends on common stock had been declared by the Company.

On December 23, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $ 200,000 in aggregate (the “Shelf”).

1 unchanged sentence

The Company also simultaneously entered into a sales agreement with the Sales Agents providing for the offering, issuance and sale by the Company of up to $ 40,000 of its common stock from time to time in ATM offerings under the Shelf.

The Company sold 864,404 shares of common stock pursuant to the ATM during the nine months ended September 30, 2024 for gross proceeds of approximately $ 905 .

As of September 30, 2024, there was $ 33,809 remaining of common stock available for sale under the ATM.

The Company sold 2,004,729 shares of common stock pursuant to the ATM during the three months ended March 31, 2025 for gross proceeds of approximately $ 1,505 .

As of March 31, 2025, there was $ 20,369 remaining of common stock available for sale under the ATM, subject to the limitations of General Instruction I.B.6 of Form S-3.

Lincoln Park Purchase Agreement

1 unchanged sentence

The Purchase Agreement provides that, subject to the terms and conditions set forth therein, the Company has the right, but not the obligation, to direct Lincoln Park to purchase up to $ 35,000 of shares of common stock in the Company’s sole discretion, over a 36-month period commencing on March 10, 2023.

The Company recorded $ 318 to other expense, net in connection with the issuance of the Commitment Shares.

During the nine months ended September 30, 2024, the Company did not sell any shares of common stock to Lincoln Park.

As of September 30, 2024, $ 34,795 was available to draw pursuant to the Purchase Agreement.

During the three months ended March 31, 2025, the Company did not sell any shares of common stock to Lincoln Park.

As of March 31, 2025, $ 34,795 was available to draw pursuant to the Purchase Agreement.

March 2024 Offering

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All other types of awards may be issued to employees, directors, consultants, and other service providers.

As of September 30, 2024, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 2,547,943 .

As of March 31, 2025, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 3,073,114 .

The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2025 pursuant to an evergreen provision therein by 2,992,743 shares, representing 5 % of total common shares outstanding at December 31, 2024.

1 unchanged sentence

No more than 9,057,517 shares of common stock may be issued under the 2021 Plan through incentive stock options.

Shares subject to the 2021 Plan, the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate

or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan.

Shares subject to the 2021 Plan, the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan.

The total number of shares underlying the Prior Plan awards that may be recycled into the 2021 Plan will not exceed 4,334,131 shares.

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Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price.

As of September 30, 2024, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

As of March 31, 2025, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of common stock, (ii) 1 % of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the board of directors.

Such shares of common stock may be newly issued shares, treasury shares or shares acquired on the open market.

In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.

exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.

Stock Options

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Nine Months Ended September 30,

Three Months Ended March 31,

Expected volatility

91.78 % – 92.29 %

91.53 % – 92.68 %

Risk-free interest rate

4.23 % – 4.45 %

3.46 % – 4.26 %

Dividend yield

Expected term (years)

During the three months ending March 31, 2025, there were no stock options granted.

Expected Term — The expected term represents the period that the stock-based awards are expected to be outstanding.

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Dividend Yield — The expected dividend yield is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.

Fair Value of Common Stock — Prior to the IPO, the fair value of the shares of common stock underlying the stock-based awards had historically been determined by the board of directors with input from management.

Because there was no public market for the common stock, the board of directors had determined the fair value of the common stock at the time of grant of the stock-based award by considering a number of objective and subjective factors, including having contemporaneous valuations of the common stock performed by a third-party valuation specialist.

Subsequent to the IPO, the board of directors determined the fair value of the shares of common stock underlying the stock-based awards based off of the closing price as reported on the Nasdaq Stock Market LLC on the grant date.

Activity for options was as follows:

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Options expired

Balance, September 30, 2024

Exercisable as of September 30, 2024

The weighted-average grant date fair value of stock options granted was $ 0 and $ 1.56 during the three and nine months ended September 30, 2024, respectively.

The weighted-average grant date fair value of stock options granted was $ 1.25 and $ 1.59 during the three and nine months ended September 30, 2023, respectively.

There were 0 and 247,500 stock options granted at an aggregate fair value of $ 0 and $ 385 for the three and nine months ended September 30, 2024, respectively.

There were 19,500 and 595,769 stock options granted at an aggregate fair value of $ 24 and $ 950 for the three and nine months ended September 30, 2023, respectively.

During the three and nine months ended September 30, 2024, there were 20,000 and 93,350 stock options exercised, with an aggregate grant date fair value of $ 12 and $ 58 , respectively.

During the three and nine months ended September 30, 2023, there were no stock options exercised.

The intrinsic value of stock options exercised during the three and nine months ended September 30, 2024 was $ 29 and $ 121 , respectively.

Balance, March 31, 2025

Exercisable as of March 31, 2025

There were no grants of stock options for the three months ended March 31, 2025.

The weighted-average grant date fair value of stock options granted was $ 1.56 during the three months ended March 31, 2024.

There were 205,000 stock options granted at an aggregate fair value of $ 320 for the three months ended March 31, 2024.

During the three months ended March 31, 2025 and 2024, there were no stock options exercised.

Restricted Stock Units

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RSUs with time base vesting conditions for employees vest annually over three or four years on each anniversary of the Grant Date and RSUs for non-employee directors vest on the one-year anniversary of the Grant Date.

RSUs with performance conditions for employees vest on the one-year anniversary of the performance achievement date.

During the three and nine months ended September 30, 2024, the Company granted 35,100 and 873,800 RSU awards containing performance and time based vesting conditions to employees, respectively.

During the three months ended September 30, 2024, one of the two performance target tranches for performance-based RSU awards was achieved.

As of September 30, 2024, the Company determined that the achievement of the second tranche’s performance target was probable and therefore recognized expense during the three and nine months ended September 30, 2024 related to the outstanding performance condition.

The following table summarizes the Company’s RSU activity for the nine months ended September 30, 2024:

RSUs with performance conditions for employees vest on the one-year anniversary of the performance achievement date, assuming continued service from the employee during that period of time.

During the three months ended March 31, 2025 and 2024, the Company granted 2,587,008 and 280,600 RSU awards, respectively, containing time based vesting conditions to employees, non-employees, and non-employee directors.

During the three months ended March 31, 2025 and 2024, the Company granted 0 and 515,600 RSU awards containing performance and time based vesting conditions to employees.

The performance conditions for the RSU awards granted in 2024 were achieved in 2024 and the RSUs will vest on the one-year anniversary of the achievement of the performance condition.

As of March 31, 2025, the RSU awards granted in 2024 had no remaining performance conditions.

The following table summarizes the Company’s RSU activity for the three months ended March 31, 2025:

Weighted-Average

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Outstanding at December 31, 2024

Outstanding at September 30, 2024

Outstanding at March 31, 2025

Equity-based Compensation Expense

The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to stock options and restricted stock units as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development

1 unchanged sentence

Total equity-based compensation

As of September 30, 2024, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 3,121 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.89 years.

Total unrecognized compensation expense related to unvested performance-based awards was $ 628 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.06 years.

As of March 31, 2025, total future compensation expense related to unvested time-based awards yet to be recognized by the Company was $ 3,246 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 2.59 years.

Total unrecognized compensation expense related to unvested performance-based RSU awards was $ 310 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 0.57 years.

Net Loss per Share

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their antidilutive effect:

September 30,

Options issued and outstanding

Restricted stock units issued and outstanding

Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (CODM), or decision-making group, in making decisions on how to allocate resources and assess performance.

The Company views its operations and manages its business in one operating segment related to the development of clinical and preclinical product candidates for neurodegenerative disorders, such as AD and DLB.

The Company’s Chief Executive Officer (CEO) serves as the CODM.

The CEO manages and allocates resources to the operations of the Company on a consolidated basis.

Managing and allocating resources on a consolidated basis enables the CEO to assess the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with the Company’s strategic goals.

Consistent with this decision-making process, the CEO uses consolidated financial information for purposes of evaluating performance, cash forecasting, allocating resources and setting incentive targets.

The CEO bases this assessment on the Company’s consolidated net loss.

The measure of segment assets is reported on the consolidated balance sheets as total assets.

The table below is a summary of the segment loss, including significant segment expenses (in thousands):

Three Months Ended March 31,

Clinical programs

R&D Personnel costs (1)

Preclinical programs

Manufacturing

Other research and development expenses

General and administrative expenses (2)

Equity-based compensation

Other segment items (3)

Segment and consolidated net loss

(1) R&D Personnel costs exclude equity-based compensation

(2) General and administrative expenses exclude equity-based compensation

(3) Other segment items include, Other income, net, Interest expense and Loss on currency translation from liquidation of subsidiary.

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 1. Financial Statements