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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-27 · 91 added, 99 removed, 139 unchanged (58% of the section changed)

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Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

We are a clinical-stage pharmaceutical company developing therapeutics to modify the course of cardiopulmonary and other diseases including those that arise from aberrant signaling through the Abelson Tyrosine Kinase, and type III receptor tyrosine kinases including platelet derived growth factor receptors and c-KIT.

The Company’s multi-therapeutic pipeline is developing IKT-001, a prodrug of imatinib mesylate, for Pulmonary Arterial Hypertension (“PAH”).

We have completed non-human primate safety studies and a bioequivalence clinical trial in healthy volunteers to determine the doses of IKT-001 that are equivalent to imatinib mesylate and the results are being utilized to set the doses in a Phase 2b trial to determine if IKT-001 could be a disease-modifying treatment for PAH.

We have also developed risvodetinib (also known as IkT-148009), a selective inhibitor of the non-receptor Abelson Tyrosine Kinases that targets the treatment of Parkinson’s disease inside and outside the brain.

In 2021, we commenced clinical development of risvodetinib.

In 2023, we initiated the Phase 2 201 trial (“201 Trial”) for risvodetinib (IkT-148009) as a treatment for Parkinson’s disease and completed that trial on October 6, 2024.

In January 2025, we reported results from the 201 Trial and decided to pause further development of risvodetinib as we focus our resources on advancing lead program IKT-001 in PAH.

We will consider our strategic options for the risvodetinib program.

IKT-001 and PAH

IKT-001 emerged from the Company’s medicinal chemistry program that aimed to develop improvements to drugs that inhibit Abelson Tyrosine Kinase and type III receptor tyrosine kinases.

IKT-001, a prodrug of imatinib mesylate, was designed to improve areas of the molecule that might play a role in the gastrointestinal (“GI”) side effects commonly observed with oral imatinib mesylate, the current standard of care.

A three-part dose finding/dose equivalence study in 66 healthy volunteers (known as ‘the 501 trial’) was completed with IKT-001 in 2023.

The study was designed to evaluate the 96-hour single-dose pharmacokinetics of imatinib delivered as IKT-001 and determine the dose relationship between IKT-001 and imatinib mesylate.

Based on this study it was determined that bioequivalence was established with a 300 mg dose of IKT-001 to a dose of 230 mg of imatinib mesylate while a 500 mg dose of IKT-001 was established as bioequivalent to a dose of 383 mg of imatinib mesylate.

These doses are adequate to cover the target systemically and were similar to the doses of imatinib mesylate used in the Phase 3 IMPRES trial in PAH.

On January 19, 2024, we met with the Food and Drug Administration (“FDA”) Hematological Malignancy Review Team (“Review Team”) in a Pre-New Drug Application (“pre-NDA”), meeting to discuss our bioequivalence studies of IKT-001 and its path to approval.

All questions were addressed and summarized in official meeting minutes the issued by the FDA on February 12, 2024.

During the meeting, we inquired whether additional clinical studies would be needed to seek approval and discussed manufacturing and quality control requirements for approval.

The Review Team acknowledged that the 505(b)(2) pathway appeared to be the appropriate pathway for approval of IKT-001.

The Review Team also discussed the possible difference between IKT-001 and imatinib mesylate absorption in the gut and recommended that we evaluate whether IKT-001 and imatinib mesylate behave differently with respect to certain gut transporters that regulate absorption.

This evaluation was completed and determined that IKT-001 and imatinib mesylate have similar behavior toward the transporters P-glycoprotein (“PGP”) and the Breast Cancer Resistance Protein (“BCRP”).

Finally, a number of recommendations were discussed to prevent the potential mix-up between IKT-001 and imatinib mesylate either at the pharmacy or by patients for two drugs delivering the same active ingredient.

The Company discussed alternate dosage forms for IKT-001 relative to imatinib mesylate as the primary mitigation strategy and will provide a justification of the dosage forms chosen and why they are unlikely to cause medication errors if/when the Company submits a New Drug Application (“NDA”) for approval of IKT-001 in these cancer indications.

PAH is a rare disease of the pulmonary microvasculature found in 15 to 50 persons per million within the United States and Europe.

The global PAH market size was valued at $7.66 billion in 2023 and is estimated to grow at a compound annual growth rate of 5.4% between 2024 to 2030.

Most of the treatments that constitute the standard of care (e.g.

ERAs, PDE5s, prostacyclins) primarily act as vasodilators.

In 2024, sotatercept was approved for the treatment of PAH on top of SOC.

Sotatercept is recombinant fusion protein

that acts as a trap for transforming growth factor-beta superfamily ligands, including activin A and bone morphogenetic protein 9.

These ligands may play a role in the development and progression of PAH by promoting cell proliferation and fibrosis.

The success of sotatercept has created renewed enthusiasm around the anti-proliferative pathways in PAH.

As previously mentioned, imatinib inhibits Abelson Tyrosine Kinase and type III receptor tyrosine kinases and through these pathways inhibits Platelet-derived growth factor receptor which is involved in cell proliferation and angiogenesis as well as Stem cell factor receptor which targets mast cells and other hematopoietic progenitors.

Through these targets imatinib may inhibit vascular smooth muscle cell proliferation and fibrosis.

This pathway may provide an alternate pathway for disease modification in PAH.

The first reports of the use of imatinib in PAH were published in 2005 and 2006.

A phase 2, RCT was subsequently conducted showing clinical benefit of imatinib in PAH.

In 2013, the outcome of a Phase 3 trial (IMPRES) evaluating imatinib mesylate as a treatment for PAH was reported, demonstrating that imatinib may improve key parameters associated with PAH.

In this study imatinib improved exercise capacity and hemodynamics in patients with advanced PAH but approval was precluded because of the bleeding risk associated with concomitant anti-coagulant therapy and the high discontinuation rate in the imatinib group.

As we considered revisiting the use of imatinib in PAH, we recognized that changes in standard-of-care for these patients may have alleviated much of the safety risk previously observed for imatinib in PAH patients.

This analysis prompted us to file a pre-IND (“PIND”) meeting request to discuss the application of IKT-001 as a potential disease-modifying treatment for PAH.

To evaluate this further, members of the Company met with the FDA Division of Cardiology and Nephrology in a PIND meeting to discuss our plan to utilize IKT-001 in a Phase 2b efficacy, safety and tolerability study in PAH.

At the meeting, the FDA confirmed that IKT-001 would be viewed as a New Molecular Entity (“NME”) and that the appropriate path for approval remained to be the 505(b)(2) statute.

This opens up the possibility of IKT-001 being granted NME status and market exclusivity on approval.

The FDA requested at the PIND meeting that we conduct a comparative cell-culture based study of the human Ether-a-go-go-related Gene (“hERG”) ion channel, a standard cardiovascular safety test performed for any NME for which a new Investigative New Drug Application (“IND”) is to be opened.

Neither IKT-001 nor imatinib mesylate were found to be inhibitors of hERG.

Following completion of this study, the IND was filed with the FDA on August 9, 2024 and we were cleared to initiate a Phase 2b trial on September 9, 2024.

On October 21, 2024, we closed a private placement with gross proceeds of approximately $110 million, before deducting placement fees and offering expenses, to support this program.

If the warrants issued in such offering are exercised for cash, the total gross proceeds from the financing may be up to $275 million.

We intend to use the net proceeds from the private placement to finance the initiation of a Phase 2b trial in PAH and for general corporate purposes.

We have had discussions with the FDA regarding Orphan Drug Designation (“ODD”) for delivery of imatinib by IKT-001 for PAH and plan to apply for ODD once the required pre-clinical studies are complete.

We currently have commercialization rights to all of our development programs and patent protection in the United States until 2033 for IKT-001 with upcoming patent application filings potentially extending patent protection for certain methods of treatment using IKT-001 until 2045.

We are a clinical-stage pharmaceutical company developing therapeutics to modify the course of cardiopulmonary diseases, namely, Pulmonary Arterial Hypertension (“PAH”), in which aberrant signaling through type III receptor tyrosine kinases, including platelet derived growth factor receptors and a stem cell factor receptor, known as “c-Kit”, has been implicated.

Our lead product candidate is IKT-001, a prodrug of imatinib mesylate (“imatinib”), for PAH which is an orphan indication.

Imatinib was first approved in the United States in 2001 for various cancers and blood disorders and, following more than 20 years of clinical use, has a well-characterized safety profile with the first reported use of imatinib in PAH occurring in 2005.

PAH is a progressive, life-threatening disease characterized by pulmonary vascular remodeling and elevated pulmonary vascular resistance that affects approximately 50,000 Americans.

We have completed a non-human primate safety study and a bioequivalence clinical study in healthy volunteers to determine the doses of IKT-001 that are equivalent to imatinib.

Our Phase 3 clinical study, named IMPROVE-PAH ( I KT-001 for M easuring P ulmonary Vascular R esistance and O utcome V ariables in a Phase 3 E valuation of PAH ), has been initiated with the activation of a small number of sites and the recent commencement of patient pre-screening activities at those sites.

Components of Operating Results

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All external costs are tracked by therapeutic indication.

We do not track personnel or other operating expenses incurred for our research and development programs on a program-specific basis.

These expenses primarily relate to salaries and benefits and stock-based compensation and office consumables.

We do not track other operating expenses incurred for our research and development programs on a program-specific basis.

These expenses primarily relate to stock-based compensation and office consumables.

At this time, we can only estimate the nature, timing and costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates.

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• our ability to successfully file IND and NDA applications with the FDA;

• our ability to conduct and commence trials;

• our ability to establish an appropriate safety profile with IND-enabling toxicology studies;

• our ability to commence and conduct trials;

• our ability to establish an appropriate safety or tolerability profile with IND-enabling toxicology studies;

• our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates;

• our successful enrollment in and completion of our current and future clinical trials;

• our ability to produce sufficient clinical product in a timely or cost effective manner to support our clinical trials;

• the ability of our products to adequately exhibit product features (safety, efficacy, convenience) that are attractive to physicians and patients relative to offerings of our competitors;

• the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations;

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• our receipt of marketing approvals from applicable regulatory authorities;

• the impact of the outbreak of the COVID-19 pandemic or other future pandemics;

• our ability to commercialize products, if and when approved, whether alone or in collaboration with others;

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We allocate salary and benefit costs directly related to specific programs.

We do not allocate personnel-related discretionary bonus or stock-based compensation costs, laboratory and related expenses, depreciation or other indirect costs that are deployed across multiple projects under development and, as such, the costs are separately classified as other research and development expenses in the table below:

We do not allocate stock-based compensation costs, depreciation or other indirect costs that are deployed across multiple projects under development and, as such, the costs are separately classified as other research and development expenses in the table below:

Year ended December 31,

Parkinson's disease

Other research and development expenses

Total research and development expenses

(1) This amount includes a one-time (non-cash) charge of $7.4 million for the acquired In-Process Research and Development ( “IPR&D”) related to the CorHepta acquisition during the year ended December 31, 2025.

Selling, General and Administrative

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Outside professional services consist of legal, accounting and audit services and other consulting fees.

Allocated expenses consist of rent expenses related to our offices in Lexington, Massachusetts and Atlanta, Georgia not otherwise included in research and development expenses.

We expect to incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and those of any national securities exchange on which our securities are traded, additional insurance expenses, investor relations activities and other administrative and professional services.

We are also increasing our administrative headcount as a public company and as we advance our product candidates through clinical development, which will also likely require us to increase our selling, general and administrative expenses.

Allocated expenses consist of rent expenses related to our former offices in Lexington, Massachusetts and Atlanta, Georgia not otherwise included in research and development expenses.

As a public company, we incur expenses related to compliance with the rules and regulations of the SEC and those of Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services.

We also are increasing our headcount as we advance our product candidates through clinical development, which will also require us to increase our selling, general and administrative expenses.

Results of Operations

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The following table sets forth the significant components of our results of operations:

Year ended December 31,

Grant revenue

For the year ended December 31,

Research and development

Selling, general and administrative

Change in fair value contingent consideration

Loss from operations

Interest income

Grant Revenue

Grant revenue for the year ended December 31, 2024 decreased by $260,501 or 100.0% to $0 from $260,501 in the prior year.

The Company has no active grants during the period ended December 31, 2024.

Research and Development

Research and development expenses increased by $12,582,598 or 73.1% to $29,793,146 from $17,210,548 in the prior year.

The $3.6 million increase was due to an increase of $4.5 million in stock-based compensation, an increase of $1.7 million in PAH expenses, a $0.3 million increase in risvodetinib (IkT-148009) expenses partially offset by a net decrease of $2.9 million in all other research and development activities.

The $12.6 million increase was primarily due to an increase of $11.4 million in the PAH program and other research and development expenses, together with a $9.9 million research and development expense related to the CorHepta transaction comprising a one-time (non-cash) expense charge for acquired IPR&D related to the CorHepta acquisition cost of $7.4 million and $2.5 million of stock-based compensation expense.

These increases were offset by a decrease of $8.7 million in the discontinued (outlicensed) risvodetinib (IkT-148009) program.

Selling, General and Administrative

Selling, general and administrative expenses increased by $12,176,559 or 107% to $23,555,079 from $11,378,520 in the prior year.

The $4.6 million increase was primarily driven by an increase of $3.1 million in stock-based compensation, a $2.0 million increase in legal, consulting and compliance related fees partially offset by a $0.3 million decrease in Directors and Officers (“D&O”) insurance, a $0.5 million decrease in advertising and promotions and a net increase of $0.3 million in all other selling, general and administrative expenses.

The $12.2 million increase was primarily driven by an increase of $6.4 million in stock-based compensation, a $4.2 million increase in personnel-related costs, including severance costs of approximately $1.0 million for our former Chief Executive Officer and Chief Financial Officer, $0.8 million increase in legal, compliance and support service fees, a $0.2 million increase in insurance, primarily in Directors and Officers (“D&O”) insurance, and a $0.6 million increase in miscellaneous other expenses.

Change in Fair Value Contingent Consideration

Change in fair value contingent consideration increased by $1,373,942 or 100% from $0 in the prior comparable period.

The increase is due to the change in fair value of the contingent consideration related to the CorHepta transaction from the acquisition date of February 21, 2025 to December 31, 2025.

Interest Income

Interest income increased by $2,645,912 or 247.5% to $3,715,094 from $1,069,182 in the prior comparable period.

The increase was driven by interest earned on our cash, cash equivalents and marketable securities.

The increase was driven by interest earned on our increased balances of cash, cash equivalents and marketable securities.

Liquidity and Capital Resources

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From our inception up until our December 2020 initial public offering, we funded our operations primarily through private, state and federal contracts and grants.

At December 31, 2024, the Company had cash, cash equivalents, and marketable securities of $97,543,528.

The Company has incurred recurring losses and at December 31, 2024 had an accumulated deficit of $94,420,611.

In October 2024, we raised approximately $99.6 million in net proceeds from a private placement and in November 2025, we raised approximately $107.6 million in net proceeds from our underwritten public offering.

On June 20, 2025, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC, as sales agent ("Jefferies"), pursuant to which we may, from time to time, issue and sell shares of our common stock through or to Jefferies.

Under the terms of the Sales Agreement, Jefferies may sell the shares of our common stock at market prices by any method that is deemed to be an "at the market offering" as defined in Rule 415 under the Securities Act of 1933, as amended.

As of December 31, 2025, no shares of our common stock had been sold under the Sales Agreement.

In February 2026, we sold 1,904,762 shares of common stock pursuant to the Sales Agreement for an aggregate gross sales price of $3.0 million.

At December 31, 2025, we had cash, cash equivalents, and marketable securities of $178.8 million.

We have incurred recurring losses since our inception and at December 31, 2025 had an accumulated deficit of $142.7 million.

Future Funding Requirements

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We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

Moreover, following the completion of the December 2020 initial public offering, we incurred additional costs associated with operating as a public company.

We anticipate that we will need substantial additional funding in connection with our continuing operations.

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Since our inception, we have incurred significant losses and negative cash flows from operations.

We have an accumulated deficit of $94,420,611 at December 31, 2024.

We have an accumulated deficit of $142.7 million at December 31, 2025.

We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities.

We may seek to fund our operations through public equity or private equity or debt financings, as well as other sources.

We expect to fund our operations through public equity or private equity or debt financings, as well as other sources.

However, we may be unable to raise additional working capital, or if we are able to raise additional working capital, we may be unable to do so on commercially favorable terms.

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• our ability and success in securing manufacturing relationships with third parties or, in the future, in establishing and operating a manufacturing facility;

• any costs, including upfront of or licensing costs, associated with new programs such as any in-licensed new compounds or expanded indications of IKT-001;

• the costs involved in prosecuting, defending and enforcing patent claims and other intellectual property claims;

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Net cash used in operating activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

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Net Cash Flows Used in Operating Activities

Net cash flows used in operating activities for the year ended December 31, 2024 totaled $19,148,067, and consisted primarily of a net loss of $27.5 million adjusted for non-cash stock compensation of $8.1 million, a decrease in prepaid expenses and other assets of $0.6 million, an increase in accounts payable of $0.3 million, an increase in accrued expenses and other current liabilities of $0.4 million and an increase in prepaid research and development of $0.1 million.

Net cash flows used in operating activities for the year ended December 31, 2023 totaled $18,085,043, and consisted primarily of a net loss of $19.0 million adjusted for non-cash stock compensation of $0.5 million, depreciation and lease expense of $0.2 million, increase in prepaid expenses and other assets of $0.1 million, decrease in accounts payable of $0.5 million, decrease in prepaid research and development of $0.9 million and a decrease in accrued expenses and other current liabilities of $0.1 million.

Cash (Used in) Provided by Investing Activities

Net cash flows used in investing activities for the year ended December 31, 2024, totaled $37,004,201, of which $60.5 million was used for the purchase of marketable securities investments and $23.5 million was provided by maturity of marketable securities.

Net cash flows provided by investing activities for the year ended December 31, 2023, totaled $11,656,666, of which $29.4 million was used for the purchase of marketable securities investments and $41.1 million was provided by maturity of marketable securities.

Net cash flows used in operating activities for the year ended December 31, 2025 totaled $27.8 million, and consisted primarily of a net loss of $48.3 million adjusted for non-cash stock compensation of $15.3 million, a write-off of in-process research and development of $7.4 million associated with the CorHepta transaction, a decrease in the fair value of contingent consideration of $1.4 million associated with the CorHepta transaction, non-cash accretion on marketable securities of $0.9 million, an increase prepaid research and development of $1.9 million mainly associated with our PAH program, a decrease in prepaid expenses and other current assets of $0.5 million and an increase in accrued expenses and other current liabilities of $1.4 million.

Net cash flows used in operating activities for the year ended December 31, 2024 totaled $19.1 million, and consisted primarily of a net loss of $27.5 million adjusted for non-cash stock compensation of $8.1 million, a decrease in prepaid expenses and other assets of $0.6 million, an increase in accounts payable of $0.3 million, an increase in accrued expenses and other current liabilities of $0.4 million and an increase in prepaid research and development of $0.1 million.

Cash Provided by (Used in) Investing Activities

Net cash flows provided by investing activities for the year ended December 31, 2025, totaled $2.1 million, of which $41.6 million was provided by maturity of marketable securities, $39.1 million was used for the purchase of marketable securities and $0.4 million related to acquired in-process research and development associated with the CorHepta acquisition discussed above.

Net cash flows provided by investing activities for the year ended December 31, 2024, totaled $37.0 million, of which $60.5 million was used for the purchase of marketable securities investments and $23.5 million was provided by maturity of marketable securities.

Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 totaled $103,477,668, which consisted of $3.8 million of net proceeds from issuance of common stock and pre-funded warrants in connection with our May 2024 Offering and our ATM Offering and $99.6 million of net proceeds from issuance of common stock and pre-funded warrants in connection with our October 2024 Offering.

Net cash provided by financing activities for the year ended December 31, 2023 totaled $8,405,003, which consisted of $8.5 million net from the issuance of common stock and pre-funded warrants and $0.1 million of deferred offering costs.

Net cash provided by financing activities for the year ended December 31, 2025 totaled $108.5 million, which consisted of $107.6 million of net proceeds from issuance of common stock and pre-funded warrants in connection with our underwritten public offering in November 2025 and $0.8 million of net proceeds from the issuance of common stock related to the exercise of stock options.

Net cash provided by financing activities for the year ended December 31, 2024 totaled $103.5 million, which consisted of $3.8 million of net proceeds from issuance of common stock and pre-funded warrants in connection with our registered direct offering in May 2024 and our at-the-market offering and $99.6 million of net proceeds from the private placement of common stock and pre-funded warrants in October 2024.

Contractual Obligations and Commitments

On April 18, 2022, the Company entered into an operating lease agreement through September 30, 2025 for its office space in Lexington, Massachusetts.

The Lexington lease contains escalating payments during the lease period.

Upon execution of this lease agreement, the Company prepaid one month of rent, applied to the first month's rent, and a security deposit, which will be held in escrow and credited at the termination of the lease.

Our total lease obligation is $114,966, consisting of minimum annual rental obligations of $114,966 for fiscal year 2025.

In April 2022, we entered into an operating lease agreement through September 30, 2025 for our office space in Lexington, Massachusetts.

The Lexington lease contained escalating payments during the lease period.

Upon execution of this lease agreement, we prepaid one month of rent, which applied to the first month's rent, and a security deposit, which is held in escrow and will be credited after the termination of the lease with the refund expected in the first half of 2026.

Our total lease obligation at December 31, 2025 is $0.

In July 2025, we entered into a clinical trial supply agreement in the amount of approximately $6.5 million with a clinical trial supply organization whereby the clinical trial supply organization will provide services for our Phase 2b clinical study in PAH, known as IMPROVE-PAH.

In November 2025, we began transitioning the PAH Phase 2b study to a Phase 3 study.

The estimated total remaining contract costs as of December 31, 2025 is approximately $6.3 million.

The estimated period of performance for the committed work with the clinical trial supply organization is through the first quarter of 2028.

In August 2025, we entered into an arrangement with a contract research organization (“CRO”) to support our Phase 2b clinical study in PAH, known as IMPROVE-PAH.

As of December 31, 2025, the total contracted amount under this arrangement is $25.5 million, of which $2.6 million is subject to achievement of certain performance milestones by the CRO.

In November 2025, we transitioned the PAH Phase 2b study to a Phase 3 study and began evaluating the arrangement together with the CRO.

The estimated total remaining contract costs as of December 31, 2025 is approximately $18.4 million, excluding potential milestone payments.

The estimated period of performance for the committed work with the CRO is through 2028.

We made an upfront payment of $1.9 million to the CRO, of which $1.0 million will be held as a retainer until the end of the study and applied against final invoicing and $0.9 million will be applied to passthrough costs as incurred.

The amount and timing of any such payments related to the $2.6 million performance milestones are contingent upon the vendor meeting specific contractual criteria.

As of December 31, 2025, the achievement of these milestones is not considered probable, and the potential payments cannot be reasonably estimated.

Accordingly, no liability has been recorded in the accompanying consolidated financial statements.

We will continue to evaluate this arrangement each reporting period and will recognize a liability when achievement of the milestones become probable, and the amount can be reasonably estimated.

In March 2026, we signed a change order with the CRO related to our transition to a Phase 3 study in the amount of $48.2 million, increasing the total contracted amount under the arrangement to $73.7 million, of which $7.5 million is subject to achievement of certain performance milestones by the CRO.

Critical Accounting Policies and Significant Judgments and Estimates

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We record research and development expenses to operations as incurred.

Research and development expenses represent costs incurred by us for the discovery and development of our product candidates and the development of our RAMP drug discovery program and prodrug technologies and include:

Research and development expenses represent costs incurred by us for the discovery and development of our product candidates and prodrug technologies and include:

employee-related expenses, such as salaries, benefits, travel and non-cash stock-based compensation expense;

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Stock-Based Compensation

We have granted stock-based awards, consisting of non-qualified stock options, to our employees, certain non-employee consultants and members of our board of directors, both past and present.

We have granted stock-based awards, consisting of non-qualified stock options and incentive stock options, to our employees, and non-qualified stock options to certain non-employee consultants and members of our board of directors, both past and present.

We measure stock-based compensation expense for stock options granted to our employees and directors on the date of grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.

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The intrinsic value of all in-the-money outstanding options as of December 31, 2025 was approximately $7.7 million, based on the closing price of our common stock of $2.05 per share at December 31, 2025, and $5.7 million of the intrinsic value of options was exercisable.

The Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

We have elected to avail ourselves of the extended transition period for complying with new or revised financial accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.235 billion or more;

(ii) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding equity securities held by non-affiliates;

(iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years;

or (iv) the last day of our fiscal year following the fifth anniversary of the date of the completion of our December 2020 public offering.

Contingent Consideration Liabilities

We evaluate acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

If the screen is met, the transaction is accounted for as an asset acquisition.

Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

On February 21, 2025, we entered into an Agreement and Plan of Merger and Reorganization (“Merger Agreement”) with Project IKT Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary and CorHepta Pharmaceuticals, Inc.

(“CorHepta”).

We determined that the transaction represented an asset acquisition as defined by ASC 805 as substantially all of the value was attributed to a single intangible asset, in-process research and development (“IPR&D”).

The fair value was determined based on our share price at closing.

We agreed to issue 4,979,101 shares of our common stock to the shareholders of CorHepta, of which (i) 829,849 shares were fully vested on the acquisition date, (ii) 2,489,030 shares represented contingent consideration which were subject to the achievement of certain milestones by February 21, 2026, and (iii) 1,660,222 shares represented post-merger compensation expense, subject to both service- and performance-based vesting conditions.

The performance milestone was not satisfied as of February 21, 2026 and therefore these shares were forfeited as of that date.

As of the acquisition date, the achievement of one of the contingent consideration milestones was deemed probable, and the fair value of the related shares was included in the purchase price of the acquisition.

We remeasure the initial contingent consideration recognized at acquisition to fair value at each reporting date and recorded a change in fair value of $1,373,942 from the acquisition date of February 21, 2025 to December 31, 2025, which is included within operating expenses.

We will recognize a contingent consideration liability and corresponding expense for the remaining contingent consideration shares in future periods when it is probable that a liability has been incurred and the amount of that liability can be reasonably estimated.

As of December 31, 2025, the remaining performance-based vesting conditions are not probable and cannot be estimated.

As of February 21, 2026, the performance milestone was not satisfied.

The IPR&D had not reached technological feasibility and had no alternative future use at the acquisition date, and therefore, the acquired IPR&D asset of $7,357,294 was written-off as research and development expense in our consolidated statements of operations and comprehensive loss immediately following the acquisition in accordance with ASC 730.

As of December 31, 2025, we no longer qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

As such, we are subject to additional expenses that we did not previously incur in complying with the Sarbanes-Oxley Act of 2002 and rules implemented by the SEC.

We are also subject to certain disclosure requirements that are applicable to other public companies that were not applicable to us as an emerging growth company, for example, compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements and compliance with the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

However, we will continue to qualify as a “smaller reporting company,” as defined in the Securities Exchange Act of 1934, as amended, or Exchange Act, and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies.

To the extent that we continue to qualify as a “smaller reporting company” as such term is defined in Rule 12b-2 under the Exchange Act, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an “emerging growth company” continue to be available to us as a “smaller reporting company,” including exemption from compliance with the auditor attestation requirements pursuant to SOX and reduced disclosure about our executive compensation arrangements.

We will continue to be a “smaller reporting company” until we have $250 million or more in public float (based on our Common Stock) measured as of the last business day of our most recently completed second fiscal quarter or, in the event we have no public float (based on our Common Stock) or a public float (based on our Common Stock) that is less than $700 million, annual revenues of $100 million or more during the most recently completed fiscal year.

Recent Accounting Pronouncements

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards has had or may have a material impact on the Company's consolidated financial statements or disclosures

Unless otherwise discussed below, we do not believe that the adoption of recently issued standards has had or may have a material impact on our consolidated financial statements or disclosures.

Quantitative and Qualitat ive Disclosures About Market Risk.

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Financial Statement s and Supplementary Data.

The consolidated financial statements and the report of our independent registered public accounting firm (PCAOB ID:596) required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K.

An index of those consolidated financial statements is found on page F-1 of this Annual Report on Form 10-K.

An index of those consolidated financial statements is found on page F-1 of this Annual Report.

Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure.

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