What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-31 · 133 added, 88 removed, 85 unchanged (72% of the section changed)

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Cocrystal has been developing novel technologies and approaches

to create first-in-class and best-in-class antiviral drug candidates since 2008.

Our focus is to pursue the development and commercialization

of broad-spectrum antiviral drug candidates that will transform the treatment and prophylaxis of viral diseases in humans.

By concentrating

our research and development efforts on viral replication inhibitors, we plan to leverage our infrastructure and expertise in these areas.

our year ended December 31, 2024, the following key aspects of our business advanced:

and Seasonal Influenza A

novel oral PB2 inhibitor, CC-42344, has shown excellent antiviral activity against influenza A strains including pandemic

and seasonal strains, as well as strains resistant to Tamiflu® and Xofluza®.

October 2023 we announced receipt of authorization from the United Kingdom Medicines and Healthcare Products Regulatory Agency (MHRA)

to initiate a Phase 2a human challenge trial with its broad-spectrum, oral PB2 inhibitor CC-42344 as a potential treatment for pandemic

with the goal of creating viable antiviral drug candidates.

Our focus is to pursue the development and commercialization of broad-spectrum

antiviral drug candidates that will transform the treatment and prophylaxis of viral diseases in humans.

By concentrating our research

and development efforts on viral replication inhibitors, we plan to leverage our infrastructure and expertise in these areas.

following provides a summary overview of certain advancements in key aspects of our business:

and Seasonal Influenza A

In December 2023 we announced achievement of first-patient-in for the Phase 2a human challenge clinical

December 2024, the Company announced plans to extend enrollment for the oral CDI-42344 Phase 2a study due to unexpectedly low influenza

infection among study participants.

Specifically, management determined that an extension of the study is necessary due to low infectivity

rate of the challenge influenza strain used in this study.

The Company is currently in continuing discussions with the clinical research

organization to address this study and determine a course forward with respect thereto, including potentially by preparing a protocol

amendment for approval by the United Kingdom MHRA in order to seek to extend enrollment or a resubmission to study and to ensure

necessary infection rates among enrolled study subjects in study.

initial oral CC-42344 Phase 2a study for CC-42344 resulted insufficient data as to efficacy, however the product candidate did demonstrate

favorable safety and tolerability profile, with no serious adverse events (SAEs) and no drug-related discontinuations by study participants.

plan to continue development of oral CC-42344 as a treatment for pandemic and seasonal influenza A including by conducting a new

Phase 2a trial to obtain scientifically viable efficacy results, which among other conditions will require us to raise additional

capital, as described elsewhere in this Report.

development is progressing with an inhaled formulation of CC-42344 as a treatment and prophylaxis for influenza A.

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Protease Inhibitor CDI-988

novel, broad-spectrum pan-viral 3CL protease inhibitor antiviral drug candidate CDI-988 for clinical development as an oral treatment

for coronaviruses (including SARS-CoV-2) and norovirus.

randomized, double-blind, placebo-controlled Phase 1 study of CDI-988 is approved by Australia Human Research Ethics Committees (HREC).

The study is designed to access the safety, tolerability and pharmacokinetics of CDI-988.

September 2024 we initiated dosing of the first subjects in the MAD portion of the Phase 1 study with CDI-988 and topline Phase 1

study safety and tolerability SAD results and testing of 800 mg for 10 consecutive days were reported in January 2025 indicating

favorable safety and tolerability results.

The topline data of the MAD cohorts, including based on an additional cohort with a higher

dose of 1200 mg and a shorter treatment duration of five consecutive days, is expected to be released in the first half of 2025.

novel, broad-spectrum pan-viral 3CL protease inhibitor antiviral drug candidate CDI-988 for

clinical development as an oral treatment for coronaviruses (including SARS-CoV-2) and norovirus.

January 2025 we announced topline favorable safety and tolerability from a Phase 1 study

dosing up to 800 mg per day for 10 consecutive days.

We also announced that an additional

cohort with a higher dose of 1,200 mg and a shorter treatment duration of five consecutive

days would be conducted to further assess CDI-988’s safety, tolerability and pharmacokinetics.

August 2025 we presented favorable safety and tolerability Phase 1 data from all CDI-988

doses, including the high-dose 1200 mg cohort, at the 2025 Military Health System Research

Symposium (MHSRS).

September 2025 we received a Study May Proceed Letter from the FDA to conduct a Phase 1b

challenge study in the U.S.

evaluating CDI-988 as a norovirus preventive and treatment.

December 2025, we received Institutional Review Board approval from Emory University School of Medicine, the clinical study site

for the Phase 1b trial, and announced that subject screening for the study was underway.

are using our proprietary structure-based drug discovery platform technology to discover replication inhibitors for orally administered

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December 31, 2024.

The decrease of $2,632,000 was primarily due to timing of clinical study costs.

The decrease of $7,482,000 was primarily due to the winding down of clinical study costs for our drug candidates,

particularly in connection with an initial Phase 2a study for our CC-42344 influenza a product candidate, and reductions in employee

related expenses.

We expect to incur additional expenses in future periods to pursue a new Phase 2a study for CC-42344 following unexpectedly

low infection rates in the initial study as described above under “Risk Factors.”

For the Twelve Months Ended December 31,

Influenza Program

Norovirus and Coronavirus Programs

Other discoveries

Total External cost

Indirect allocations:

Salaries, Stock based compensation and other employee expenses

Depreciation and other cost

Total R&D expense

and Administrative Expense

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legal fees, audit and tax fees, consultants and professional services, and general corporate expenses.

and administrative expenses were $5,341,000 for the year ended December 31, 2024, compared with $ 5,990,000

for the year ended December 31, 2023.

This decrease of $649,000 was primarily due to reduction

of insurance cost and other general and administrative expenses.

July 2022, the Company filed a legal appeal and deposited $1.6 million with the United State District Court for the District of Delaware

as security during pending our appeal.

During the second quarter ended June 30, 2022, the Company recorded a legal judgement for this

amount inclusive of estimated costs.

During the third

quarter of 2023, the Company received a $1.6 million refund from the registry of the court reflecting the recovery of funds following

a successful appeal in the Company’s litigation with an insurer.

During November 2023, a settlement agreement was executed and

the insurer paid the Company an additional $1.0 million.

There is no further litigation with the insurer following the settlement.

Commitments and Contingencies” in the footnotes to the financial statements contained in this Report for more information

and administrative expenses were $3,964,000 for the year ended December 31, 2025, compared with $5,341,000 for the year ended December

This decrease of $1,377,000 was primarily due to reduction of insurance, compensation and other general administrative expenses.

December 31,2025

December 31, 2024

Salaries and Wages

Professional/outside services

Legal Consultants

Rental Expense

Investor and Public relations

Business Insurance

Public Company expenses

Travel and other Expense

Total G&A expense

other Income/Expense

other income was $374,000 for the year ended December 31, 2024, compared to total other expense of $575,000 for the year ended December

This decrease of $201,000 was primarily due to a decrease in interest income discussed below.

other income, net was $188,000 for the year ended December 31, 2025, compared to total other income, net of $374,000 for the year

ended December 31, 2024.

This decrease of $186,000 was primarily due to a decrease in interest income.

income was $134,000 for the year ended December 31, 2025, compared to interest income of $537,000 for the year ended December 31, 2023.

The interest income was primarily earned on cash held in interest bearing bank accounts.

also had foreign exchange loss of $163,000 and $65,000 for the years ended December 31, 2024 and 2023, respectively, related to currency

exchange rate measurements with regards to our Australian operations.

a result of the above factors, net loss for the years ended December 31, 2024 and 2023 was $ 17,504,000 and $17,984,000 (net of $2.6

million legal settlement received), respectively.

also had foreign exchange gain (loss) of $54,000 and ($163,000) for the years ended December 31, 2025 and 2024, respectively, related

to currency exchange rate measurements with regards to our Australian operations.

a result of the above factors, net loss for the years ended December 31, 2025 and 2024 was $8,831,000 and $17,504,000, respectively.

and Capital Resources

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of $16,485,000 for the year ended December 31, 2024.

This increase was primarily related to period expenses of our Influenza A Phase

2a clinical trial and preparation for our anticipated Influenza A Phase 1 inhaler administer medicine clinical trial and completion of

our COVID-19 Phase 1 clinical trial.

the year ended December 31, 2024, net cash used in investing activities netted to $8,000, which consisted of capital expenditures for

lab equipment, software, and networking for our Lab located in Bothell, Washington.

For the year ended December 31, 2023, our net cash

used in investing activities consisted of $118,000.

the year ended December 31, 2024, net cash provided by financing activities was $0, compared to net cash used by financing activities

This decrease was primarily related to the prior period expenses of our Influenza

A Phase 2a clinical trial and completion of our Norovirus/Coronaviruses Phase 1 clinical trial.

the year ended December 31, 2025, net cash used in investing activities netted to $12,000, compared to net cash used in investing activities

of $8,000 for the year ended December 31, 2024.

Net cash provided by financing activities in 2023 was result of a raise of $4,000,000

in a private placement sale of common stock.

Investing activities consisted of capital expenditures for lab equipment, software, and

networking for our Lab located in Bothell, Washington.

the year ended December 31, 2025, net cash provided by financing activities was $5,369,000, compared to $0 for the year ended December

Net cash provided by financing activities in 2025 was result of capital raises by the sale of equity.

expect that our reported cash balance is not be sufficient to support the Company’s working capital needs for the 12 months following

the filing of this Report, taking into account our intended research and development efforts in 2025.

As a result, we need to complete

a financing to provide the needed working capital.

As a result, we need to raise additional

capital to support our ongoing and anticipated working capital needs.

pharmaceutical products, including conducting preclinical studies and clinical trials, is capital-intensive.

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Wainwright, up to $10,000,000 of shares of the Company’s common stock.

January 2021, the Company sold 1,030,000 shares of its common stock pursuant to the ATM Agreement for net proceeds of approximately $2.1

There have been no sales under the ATM Agreement since then.

The Company sold 85,076 shares at an average price of $1.88

under the ATM agreement during the three and nine months ended September 30, 2025.

As of the date of this Report, the Company has sold

a total 1,200,152 shares of its common stock for total net proceeds of approximately $2,380,000 pursuant to the ATM Agreement.

12, 2025, the Company and Wainwright agreed to terminate the sales of shares under the ATM Agreement and the Company filed a prospectus

supplement with the SEC to that effect.

As a result of this, the at-the-market offering under the ATM Agreement is no longer ongoing

as of September 12, 2025, and the Company will not make any sales of common stock pursuant to the ATM Agreement unless and until a new

prospectus supplement is filed with the SEC;

however, the ATM Agreement remains in full force and effect.

September 12, 2025, the Company, entered into a securities purchase agreement with certain accredited investors, pursuant to which the

Company sold to the investors (i) in a registered direct offering, an aggregate of 2,764,710 shares of the Company’s common stock,

at a price of $1.70 per share (and (ii) in a concurrent private placement, warrants to purchase up to an aggregate of 5,529,420 shares

of common stock (“the Investor Warrants”), at an initial exercise price of $1.50 per share.

The Investor Warrants are exercisable

upon issuance and will expire on September 27, 2027.

Wainwright acted as the Company’s placement agent in connection with offering.

The Company paid Wainwright consideration consisting of (i) a cash fee equal to 7.0% of the aggregate gross proceeds in the offering,

(ii) a management fee equal to 1.0% of the aggregate gross proceeds in the offering, (iii) reimbursement of certain expenses and (iv)

warrants to acquire up to an aggregate of 207,353 shares of common stock (the “Placement Agent Warrants”).

The Placement

Agent Warrants are similar to the Investor Warrants, except that the initial exercise price of the Placement Agent Warrants is $2.125

The Company received net proceeds of $4.18 million from the sale of its common shares and warrants in the direct

October 28, 2025, the Company entered into a securities purchase agreement with four accredited inside the Company investors (under

which the investors purchased a total of 743,024 units of the Company’s securities.

The units were priced at-the-market under the

rules of the Nasdaq Stock Market at a purchase price of $1.39 per unit.

Each unit consisted of one share of common stock and one warrant

to purchase two shares of common stock at an exercise price of $1.24 per share over a 27-month period.

The investors did not receive

registration rights.

The gross proceeds were $1.03 million.

the Company continues to incur losses, achieving profitability is dependent upon the successful development, approval and commercialization

of its product candidates, and achieving a level of revenues adequate to support the Company’s cost structure.

The Company may

never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital.

intends to fund future operations through additional private or public equity offerings and through arrangements with strategic partners

or from other sources.

There can be no assurances, however, that additional funding will be available on terms acceptable to the Company,

or at all, and any equity financing may be very dilutive to existing stockholders.

Note Regarding Forward Looking Statements

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respect to market opportunities for certain product candidates and our plans regarding further clinical development of such product candidates,

our search for collaboration partners, our expectations regarding future operating results, statement regarding the suitability and adequacy

of our properties and capital resources, and our future liquidity.

our search for collaboration partners, our expectations regarding future operating results, the suitability and adequacy of our properties

and capital resources, expectations with respect to our intellectual property rights, and our future liquidity and efforts to raise additional

words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,”

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Important factors, uncertainties and risks that

may cause actual results to differ materially from these forward-looking statements include inflation, the possibility of recession,

interest rate increases, imposed and threatened tariffs and geopolitical conflicts including the conflicts in Ukraine and Israel on our

Company, our collaboration partners, and on the U.S., U.K., Australia and global economy, including manufacturing and research delays

arising from raw materials and labor shortages, supply chain disruptions and other business interruptions including any adverse impacts

on our ability to obtain raw materials and test animals as well as similar problems with our vendors and our current and any future CROs

and CMOs, the progress and results of the studies for CC-42344 and CDI-988 including the delay of the Phase 2a study for CC-42344 which

may require us to incur substantial additional costs, the ability of our CROs to recruit volunteers for, and to proceed with, clinical

studies, our and our collaboration partners’ technology and software performing as expected, financial difficulties experienced

by certain partners, the results of future preclinical and clinical trials, general risks arising from clinical trials, receipt of regulatory

approvals, regulatory changes including based on initiatives and actions taken by the Trump Administration which could, among other things,

result in delays in regulatory approvals or limit access to federal funding for our programs, development of effective treatments and/or

vaccines by competitors, including as part of the programs financed by the U.S.

government, and potential mutations in a virus we are

targeting which may result in variants that are resistant to a product candidate we develop.

Further information on such uncertainties

and risks is contained in the “Risk Factors” in Item 1A of this Annual Report.

We undertake no obligation to publicly

update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

For more information

regarding some of the ongoing risks and uncertainties of our business, see “Item 1A – Risk Factors” and our other filings

with the SEC.

may cause actual results to differ materially from these forward-looking statements include inflation, affordability, a deteriorating

labor market, the possibility of recession, increases or other developments with respect to interest rates, uncertainty surrounding the

impacts arising from imposed and threatened tariffs and developments with respect thereto, and wars and geopolitical conflicts including

those in the Middle East and Ukraine on our Company, our collaboration partners, and on the U.S.

and global economies,

including manufacturing and research delays arising from raw materials and labor shortages, supply chain disruptions and other business

interruptions including any adverse impacts on our ability to obtain raw materials and test animals as well as similar problems with

our vendors and our current and any future CROs and CMOs, the progress and results of the studies for CC-42344 and CDI-988 including

issues with the initial Phase 2a study for CC-42344 which will prolong the development timeline of such product candidate, the ability

of our CROs to recruit volunteers for, and to proceed with, clinical studies, our and our collaboration partners’ technology and

software performing as expected, financial difficulties experienced by certain partners, the results of future preclinical and clinical

trials, general risks arising from clinical trials, receipt of regulatory approvals, regulatory changes including based on initiatives

and actions taken by the Trump Administration which could, among other things, result in delays in regulatory approvals or limit access

to federal funding for our programs, development of effective treatments and/or vaccines by competitors, including as part of the programs

financed by the U.S.

government, and potential mutations in a virus we are targeting which may result in variants that are resistant

to a product candidate we develop.

Further information on such uncertainties and risks is contained in the “Risk Factors”

in Item 1A of this Annual Report.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as

the result of new information, future events or otherwise.

For more information regarding some of the ongoing risks and uncertainties

of our business, see “Item 1A – Risk Factors” and our other filings with the SEC.

Accounting Policies and Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis