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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-03-28 · 443 added, 379 removed, 150 unchanged (85% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial

statements and notes thereto appearing elsewhere in this Annual Report.

In addition to historical financial information, the following

discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions.

Our actual results could

differ materially from those anticipated by these forward-looking statements as a result of many factors.

We discuss factors that we

believe could cause or contribute to these differences below and elsewhere in this Form 10-K, including those set forth under “Risk

Factors” and “Forward-Looking Statements.”

are a clinical-stage immunology company focused on developing drugs that may reprogram the patient’s innate immune system to treat

We believe this may be done by targeting cells of the innate immune system that cause acute and chronic inflammation and are

involved in immune dysfunction associated with chronic diseases such as cancer and neurodegenerative diseases.

The Company’s drugs

are in clinical trials and have not been approved by a regulatory authority.

The Company has two therapeutic platforms – a dominant-negative

TNF platform (“DN-TNF”, “XPro™”, “XPro1595™” or “ pegipanermin” ) and

a Natural Killer (“NK”, or “INKmune™”) platform.

The DN-TNF platform neutralizes soluble TNF (“sTNF”)

without affecting trans-membrane TNF (“tmTNF”) or TNF receptors -TNFR1 and TNFR2.

This unique biologic mechanism differentiates

the DN-TNF drugs from currently approved non-selective TNF inhibitors that inhibit both sTNF and tmTNF.

Protecting the function of tmTNF

and TNF receptors while neutralizing the function of sTNF is a potent anti-inflammatory strategy that does not cause immunosuppression

or demyelination which occur in the currently approved non-selective TNF inhibitors.

Currently approved non-selective TNF inhibitors

treat autoimmune disease, but are contraindicated in patients with infection, cancer and neurologic diseases because they increase the

risk of infection, cancer and demyelinating neurologic diseases, respectively;

these safety problems are due to off-target effects on

inhibiting tmTNF.

The NK platform targets the dysfunctional natural killer cells in patients with cancer.

NK cells are part of the normal

immunologic response to cancer with important roles in immunosurveillance to prevent cancer and in preventing relapse by eliminating

residual disease.

Residual disease is the cancer left behind after therapy is finished.

Residual disease can grow to cause relapse.

mechanism by which INKmune improves the ability of the patient’s NK cells to kill their cancer is complex.

The NK cells of cancer

patients lose the ability to bind and kill cancer cells.

A measure of NK cell binding to cancer cells is avidity.

The higher the avidity,

the greater the bond between the NK cell to cancer cell and thus the greater NK killing of cancer cells.

INKmune increases NK avidity

and further improves mitochondrial function and upregulates nutrient receptors.

These metabolic changes may help the INKmune primed NK

cell to function in the hostile tumor microenvironment and persist much longer.

These mechanisms improve the ability of INKmune primed

NK cells to overcome the immune evasion of the patient’s cancer cells.

We believe INKmune is best used to eliminate residual disease

after the patient has completed other cancer therapies.

Both the DN-TNF platform and the INKmune platform can be used to treat multiple

The DN-TNF platform will be used as an immunotherapy for the treatment of cancer and neurodegenerative disease.

being developed to treat NK sensitive hematologic malignancies and solid tumors.

You should read the following discussion and

analysis of our financial condition and results of operations in conjunction with our financial statements and notes thereto appearing

elsewhere in this Annual Report.

In addition to historical financial information, the following discussion and analysis contains forward-looking

statements that involve risks, uncertainties, and assumptions.

Our actual results could differ materially from those anticipated by these

forward-looking statements as a result of many factors.

We discuss factors that we believe could cause or contribute to these differences

below and elsewhere in this Form 10-K, including those set forth under “Risk Factors” and “Forward-Looking Statements.”

Our objective is to develop

and commercialize our product candidates to treat diseases where the innate immune system is dysfunctional causing or contributing to

the patient’s disease.

Innate immune dysfunction can occur for a variety of reasons including genetics, lifestyle, and other factors.

However, age plays a significant role in the development of immune dysfunction.

Innate immune dysfunction can be seen in cancer where

Natural Killer (“NK”) cells are impaired and facilitate a tumor’s evasion of the immune system and subsequent disease

Chronic inflammation is implicated in neurologic and metabolic diseases where it impairs the innate immune system.

focus continues to be treatment of cancer with INKmune and treatment of Alzheimer’s Disease (“AD”) and Treatment Resistant

Depression (“TRD”) with XPro1595.

We have added CORDStrom, a pooled, human umbilical cord mesenchymal stem cell product to

treat recessive dystrophic epidermolysis bullosa (RDEB), a pediatric orphan disease caused by mutations in the COL7A1 gene that results

in a debilitating disease of skin blistering, dysphagia and failure to thrive with chronic wound problems that often results in fatal

squamous cell carcinoma.

XPro1595 (“XPro”),

targets Alzheimer’s Disease and TRD.

XPro for AD has completed Phase I trials and a Phase II trial has completed enrollment of patients

at clinical sites in the United Kingdom, EU, Australia and Canada.

Patients are currently being treated with XPro for Early AD as part

of that clinical trial.

TRD is being prepared for Phase II trials.

We expect to start a pivotal global registration trial in patients

with AD after the results of the Phase II trial have been analyzed.

The INKmune program is in an open label Phase II trial in metastatic

castrate resistant prostate cancer (mCRPC).

CORDStrom for the treatment of children with RDEB has completed a pivotal blinded randomized

cross-over trial.

The data will be submitted for a marketing authorization by filing a Biologics License Application (BLA) with the FDA

in the US which is anticipated in late 2025 or early 2026.

Afterwards, the company intends to file a Marketing Authorization Application

(MAA) in the United Kingdom and EU.

developed by INmune Bio circa 2020, represents a breakthrough in mesenchymal stem cell technology.

The CORDStrom platform leverages, among

other things, proprietary screening, pooling and expansion techniques to create off-the-shelf, allogeneic, pooled human umbilical cord

-derived mesenchymal stromal cells (HucMSCs) as medicines to treat complex inflammatory diseases.

CORDStrom products are designed to provide

high-quality, off-the-shelf, batch-to-batch consistent, scalable, cGMP manufactured, potent cellular medicines that can be produced at

low cost and with repeatable specification independent of donor characteristics.

Initially developed at the INKmune manufacturing facilities

utilizing United Kingdom academic grant funding, CORDStrom is a product platform that shows promise as a therapy for RDEB and many other

debilitating conditions.

While the first generation CORDStrom product is agnostic to indication, the platform enables creation of indication-specific

products, which can be tuned for optimization of anti-inflammatory, immunomodulatory, wound healing, and other characteristics.

CORDStrom product platform shares many similarities, including starting materials, equipment, and procedures, with the Company’s

INKmune oncology product, enabling the Company to leverage economies of scale, experienced staff, and other resources to strategically

manufacture both products in a rotational campaign with resource and environmental efficiencies.

Children with Recessive Dystrophic Epidermolysis Bullosa (RDEB) have skin

that is damaged by even the smallest amount of friction which causes severe blistering, deep wounds, and scars.

It is caused by a fault

in a gene that makes collagen, a protein that holds the skin layers together.

There are limited options available for treatment,

none that adequately meet the needs of patients, and the condition gets worse over time with most children reliant on a wheelchair as

they move into their teenage years.

Many of those with an RDEB diagnosis will also go on to develop aggressive life-threatening skin cancer

in adulthood caused by the accumulated damage to their skin.

The Company estimates roughly 2,000 people suffer from RDEB in the US,

United Kingdom and EU representing a large unmet opportunity to potentially provide routine clinical care to these children.

2020, the Company has supplied CORDStrom HucMSCs as an investigational medical product to the Great Ormond Street Hospital (GOSH),

London, in connection with the MissionEB study, which was primarily funded by a grant from the National Institute for Health and

Care Research (NIHR) in the United Kingdom.

INmune Bio was compensated for CORDStrom used in the trial and was not a sponsor of the Mission

Investigators recently concluded a double blinded, placebo-controlled arm of the study, which evaluated the safety and efficacy

of CORDStrom in 30 pediatric patients (less than 16 years old) in the United Kingdom with intermediate and severe RDEB using a novel cross-over

clinical trial design.

Patients were randomized to CORDStrom or placebo arms and received 2, intravenous infusions two weeks apart and

then followed for 9 months.

Each child then crossed over to the other arm and received two doses of placebo or CORDStrom two weeks apart

with a further 9-month follow-up.

All patients were treated as day-cases and no CORDStrom related serious

adverse events were reported through the study.

Top-line results showed the treatment was easily administered, well tolerated and there

were beneficial effects across all types of patients receiving CORDStrom with respect to Itch Man Scale, iscorEB clinician score and iscorEB

skin involvement.

Most notably, CORDStrom significantly reduced itch scores as measured by the Itch Man Scale.

In patients with

the most severe disease activity, CORDStrom reduced itch at 3 months and led to a sustained reduction of over 27% at 6 months.

These results

demonstrate a clinically meaningful reduction in itch severity sustained over time.

Intermediate group patients showed a broader range

of improvements, including reduced skin involvement and less pain as well as large reduction in itch.

The younger patients (less

than 10 years old) showed improvements in skin score, indicating better skin integrity and reduced disease activity.

Interviews with patients

and caregivers on completing follow up strongly support the clinical benefits of the therapy;

both caregivers and patients were able to

correctly identify which treatment had been CORDStrom and which had been placebo.

Those who completed the study are asking to continue

on therapy, which the Company intends to pursue as an open-label study.

The Mission EB data form the basis of a license that was entered into

between INmune Bio and GOSH, whereby the Company gains exclusive access to the clinical study data for commercial uses in exchange for

payment of an initiation milestone of £250,000 (approximately $0.3 million at February 6, 2025) and a single development milestone

of approximately £6 million (approximately $7.5 million at February 6, 2025) due on receipt of first marketing authorization from

the FDA, EMA, or MHRA, and an ongoing commitment to supply CORDStrom to patients enrolled in an open label arm of the Mission EB trial,

subject to certain limitations.

reviewing results of the Mission EB study, the Company initiated a Type C meeting with the FDA to obtain CMC and regulatory feedback and

submitted information, data and requests for Rare Pediatric Disease and Orphan Drug Designations (RPDD/ODD).

FDA granted RPDD to the Company’s CORDStrom product on December 13, 2024, ahead of the sunset period under Section 529(b)(5) of

the Federal Food, Drug, and Cosmetic Act.

As such, CORDStrom remains eligible to receive a Priority Review Voucher (PRV) if approved by

the FDA on or prior to September 30, 2026.

If granted, a PRV can be redeemed to receive priority review for a different product.

Alternatively,

a PRV may be transferred or sold to another sponsor.

FDA granted ODD to the Company’s CORDStrom product on January 6, 2025.

Benefits of ODD include certain tax credits and eligibility

for select grants, waiver of FDA user fees, including the BLA application fees, access to frequent meetings with the FDA for efficient

drug development, and eligibility for seven (7) years of market exclusivity post approval.

company plans to prepare for and hold a pre-BLA meeting to discuss particulars of its planned BLA submission, with intent to submit a

BLA this year seeking approval of CORDStrom for treatment of RDEB.

Concurrently, the company will also seek to submit MAAs to the EU and

United Kingdom in 2026.

We believe our DN-TNF platform

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to target neuroinflammation in treatment resistant depression (“TRD”).

as a drug to prevent muscle

degeneration, prevent fibrosis and promote muscle regeneration in Duchene muscular dystrophy (“DMD”);

and as a cancer therapy

to reduce resistance in immunotherapy.

The primary focus of the company’s development efforts for XPro is AD.

The next indication

to be developed with XPro will be TRD.

Treatment of DMD and cancer will occur when partners for the programs are found.

The drug is named

differently for the oncology and CNS indications;

INB03™ or XPro, respectively, but it is the same drug product.

For DMD, the company

is exploring DN-TNF compounds that is optimized for the treatment of DMD.

This novel compound has the same mechanism of action but has

novel IP protection.

In each case, we believe neutralizing sTNF is a cornerstone to the treatment of these diseases.

As an immunotherapy

for cancer, we are using INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast cancers to reverse resistance to targeted

sTNF produced by the tumor causes an up-regulation of MUC4 express causing steric hindrance of trastuzumab binding to the HER

receptor on HER2+ breast cancer cells.

Without binding, trastuzumab based therapies are not effective.

Neutralizing sTNF reverses MUC4

expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell.

In addition, INB03 may

change the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive myeloid cells, both myeloid derived

suppressor cells and tumor active macrophages, and increasing the number of cytotoxic lymphocytes and phagocytic macrophages in the TME.

The Company has completed an open label dose escalation trial in cancer patients with metastatic solid tumors that have failed multiple

lines of therapy.

The pre-clinical data in MUC4+ expressing tumors and the clinical trial informs the design of a future Phase II trial

by demonstrating that INB03 was safe and well tolerated, defined the dose of INB03 to carry into Phase II trials, and demonstrated a pharmacodynamic

The company does not plan to commence a Phase II trial in patients with advanced MUC4+ expressing cancer until a partner can

Likewise, we believe the DN-TNF

platform can be used to treat selected neurodegenerative diseases by modifying the brain microenvironment (“BME”).

believes the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.

Neurodegeneration is

nerve cell death that may include demyelination.

Synaptic dysfunction means the connections between nerve cells stop working efficiently

and may decrease in number.

The combination of neurodegeneration and synaptic dysfunction causes cognitive decline and behavioral changes

associated with Alzheimer’s disease (“AD”).

XPro completed a Phase I trial treating patients with Alzheimer’s

disease that was partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

We believe XPro targets activated

microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss, synaptic dysfunction and prevents myelin repair

- key elements in the development of dementia.

In animal models, elimination of sTNF prevents nerve cell dysfunction, reverses synaptic

pruning and promotes myelin repair.

The primary focus of the

company’s development efforts for XPro is AD.

The next indication to be developed with XPro will be TRD.

In each case, we believe

neutralizing sTNF is a cornerstone to the treatment of these diseases.

We believe the DN-TNF platform

can be used to treat selected neurodegenerative diseases by reducing neuroinflammation without immunosuppression.

The Company believes

the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.

Neurodegeneration is nerve cell

death that may include demyelination.

Synaptic dysfunction means the connections between nerve cells stop working efficiently and may

decrease in number.

The combination of neurodegeneration and synaptic dysfunction causes cognitive decline and behavioral changes associated

with Alzheimer’s disease (“AD”).

XPro completed a Phase I trial treating patients with Alzheimer’s disease that

was partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

We believe XPro targets activated microglia and

astrocytes of the brain that produce sTNF that promotes nerve cell loss, synaptic dysfunction and prevents myelin repair - key elements

in the development of dementia.

In animal models, elimination of sTNF prevents nerve cell dysfunction, reverses synaptic pruning and promotes

myelin repair.

The Phase I trial in patients with biomarkers of inflammation with AD has been completed.

label, dose escalation trial was designed to demonstrate that XPro can safely decrease neuroinflammation in patients with ADi.

the term used to delineate patients with AD with biomarkers of inflammation.

The endpoints of the trial were measures of neuroinflammation

and neurodegeneration in blood and cerebral spinal fluid by measuring changes in inflammatory cytokine levels in the CNS and using MRI-DTI

to measure brain microstructural changes.

XPro, at the 1mg/kg/week dose, decreased inflammatory cytokines in the CSF in the brain demonstrating

that XPro can decrease neuroinflammation in patients with AD.

We also studied downstream benefits of decreasing neuroinflammation by measuring

changes in the CSF proteome and quantifying changes in novel white matter MRI biomarkers.

The open label, dose escalation

trial was designed to demonstrate that XPro can safely decrease neuroinflammation in patients with ADi.

ADi is the term used to delineate

patients with AD with biomarkers of inflammation.

The endpoints of the trial were measures of neuroinflammation and neurodegeneration

in blood and cerebral spinal fluid by measuring changes in inflammatory cytokine levels in the CNS and using MRI-DTI to measure brain

microstructural changes.

XPro, at the 1mg/kg/week dose, decreased inflammatory cytokines in the CSF in the brain demonstrating that XPro

can decrease neuroinflammation in patients with AD.

We also studied downstream benefits of decreasing neuroinflammation by measuring changes

in the CSF proteome and quantifying changes in novel white matter MRI biomarkers.

XPro significantly decreases biomarkers of neurodegeneration as

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The AD program is

open in the United States, Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia.

All patients will

be offered to stay on therapy for at least 12 months in an extension trial.

Clinical and biomarker data will be collected during the extension

There are at least 4 clinical

milestones associated with the Phase II trial in AD.

Enrollment of 201 patients in the Phase II AD trial should be complete by mid-year.

Six months after the last patient is enrolled, top line cognition data with EMACC will be available.

Secondary end-points which include

blood biomarker, neuroimaging and additional neuropsychiatric end-points will be available after data base lock 2-3 months after top line

Finally, several months after all the data are analyzed, the Company plans an end-of-phase II meeting with the FDA to finalize plans

for the pivotal Phase III trial.

The Company plans to apply for an accelerated pathway during 2024.

XPro for treatment of AD may be eligible

for one or both accelerated approval pathways.

The Company plans to submit of Fast Track status in 2024.

We expect to be eligible for

Break Through status after completion of the Phase II in 2025.

open in Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia.

Full enrollment in the Phase

II AD trial occurred in late 2024 with 208 patients enrolled.

Topline data of EMACC is expected to be reported in June followed by secondary

end-points which include blood biomarker, neuroimaging and additional neuropsychiatric end-points which should be available 2-3 months

after top line data.

Finally, several months after all the data are analyzed, the Company plans an end-of-phase II meeting with the FDA

to finalize plans for the pivotal Phase III trial.

XPro for treatment of AD may be eligible for one or both accelerated approval pathways.

We expect to be eligible for Break Through status after completion of the Phase II in 2025.

Effective therapy for TRD

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and treatment with infliximab treated their depression (Miller, 2011).

The Company received a $2.9M USD award from the National Institute

of Mental Health (“NIMH”) to treat TRD with XPro.

The blinded, randomized Phase II trial will use biomarkers of peripheral

inflammation to select patients with TRD for enrollment.

The Company has a $2.0M USD award from the National Institute of

Mental Health (“NIMH”) to treat TRD with XPro.

The blinded, randomized Phase II trial will use biomarkers of peripheral inflammation

to select patients with TRD for enrollment.

Patients will be treated for 6 weeks.

Primary end-points include both clinical

and neuroimaging measures.

The final trial design is ongoing and discussions with the FDA are not complete.

The Company received authorization

to initiate a clinical trial in AD in the US during January 2024.

The TRD trial is expected to start enrollment after the AD Phase II

trial finishes patient enrollment.

Primary end-points include both clinical and neuroimaging

The TRD trial is expected to start enrollment during 2025.

We believe that INKmune improves

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The Company will report data from each cohort as it becomes available.

In addition to clinical

data, the Company will communicate when the Phase I portion of the trial has completely enrolled.

This is expected in September 2024.

Because of the modified Bayesian design, the Company estimates the trial will be completely enrolled 1H25 with top-line data available

6 months later.

Topline data is divided into immunologic and tumor response variables.

The most important immunologic response variable

is related to memory like NK cell persistence.

Because of the modified

Bayesian design, the Company estimates the trial will be completely enrolled 1H25 with top-line data available 6 months later.

data is divided into immunologic and tumor response variables.

The most important immunologic response variable is related to memory like

NK cell persistence.

This is how long are the number of mlNK cells in patients blood compared to baseline.

are 3 important variables to tumor response:

There are 3 important variables

to tumor response:

i) blood PSA changes;

ii) change in PMSA scan and iii) change in circulating tumor DNA (ctDNA).

Ideally, the levels of all three variables decrease with treatment.

Ideally, the levels

of all three variables decrease with treatment.

We do not expect this 6 month trial to provide survival data.

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and our ability to generate revenues, if any.

Our recurring net losses

and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year

after the issuance of our consolidated financial statements for the year ended December 31, 2023.

Until we can generate sufficient revenue

from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity,

debt financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets,

or licensing arrangements with third parties.

Our recurring net losses and

negative cash flows from operations raise substantial doubt regarding our ability to continue as a going concern within one year after

the issuance of our consolidated financial statements for the year ended December 31, 2024.

Until we can generate sufficient revenue from

the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt

financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or

licensing arrangements with third parties.

To date, the Company has relied on equity and debt financing to fund its operations.

a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company”

under the JOBS Act.

As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that

are otherwise applicable generally to public companies.

These provisions include:

only two years of audited

financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

reduced disclosure about

our executive compensation arrangements;

no non-binding advisory

votes on executive compensation or golden parachute arrangements;

exemption from the auditor

attestation requirement in the assessment of our internal control over financial reporting;

delaying the adoption of

new or revised accounting standards that have different effective dates for public and private companies until those standards apply

to private companies.

have elected to take advantage of the above-referenced exemptions and we may take advantage of these exemptions for up to five years

or such earlier time that we are no longer an emerging growth company.

We would cease to be an emerging growth company if we have more

than $1.235 billion in annual revenues, we have more than $700 million in market value of our stock held by non-affiliates, or we issue

more than $1 billion of non-convertible debt over a three-year period.

We may choose to take advantage of some but not all of these reduced

of Operating Results

and Development

and development expense consists of expenses incurred while performing research and development activities to discover and develop our

product candidates.

This includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities

related to regulatory filings for product candidates.

Components of Operating Results

Operating Expenses

Research and Development

Research and development expense

consists of expenses incurred while performing research and development activities to discover and develop our product candidates.

includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings

for product candidates.

We recognize research and development expenses as they are incurred.

and development expense primarily consist of:

trial and regulatory-related costs;

incurred under agreements with investigative sites and consultants that conduct our clinical trials;

manufacturing

and testing costs and related supplies and materials;

employee-related

expenses, including salaries, benefits, travel and stock-based compensation

following table summarizes our research and development expenses by product candidate for the periods indicated (in thousands):

Our research and development expense primarily

clinical trial and regulatory-related costs;

expenses incurred under agreements with investigative sites and consultants that conduct our clinical trials;

manufacturing and testing costs and related supplies and materials;

employee-related expenses, including salaries, benefits, travel and stock-based compensation

The following table summarizes

our research and development expenses by product candidate for the periods indicated (in thousands):

External Costs

DN-TNF – Alzheimer’s disease

INKmune – High Risk MDS/AML & Prostate Cancer

INKmune (High Risk MDS/AML & Prostate Cancer) and CORDStrom

Preclinical and other programs

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The Australian research and development tax incentive is recognized

when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of

the consideration can be reliably measured.

Substantially

all of our research and development expenses to date have been incurred in connection with our current and future product candidates.

We expect our research and development expenses to increase significantly for the foreseeable future as we advance an increased number

of our product candidates through clinical development, including the conduct of our planned clinical trials and manufacturing drug to

be used in those clinical trials.

The process of conducting clinical trials necessary to obtain regulatory approval is costly and time

The successful development of product candidates is highly uncertain.

At this time, we cannot reasonably estimate the nature,

timing or costs required to complete the remaining development of any product candidates.

This is due to the numerous risks and uncertainties

associated with the development of product candidates.

costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:

patient trial costs;

number of sites included in the clinical trials;

countries in which the clinical trials are conducted;

length of time required to enroll eligible patients;

number of patients that participate in the clinical trials;

number of doses that patients receive;

cost of comparative agents used in clinical trials;

drop-out or discontinuation rates of patients;

additional safety monitoring or other studies requested by regulatory agencies;

duration of patient follow-up;

efficacy and safety profile of the product candidate;

cost of manufacturing, finishing, labeling and storage drug used in the clinical trial

do not expect any of our product candidates to be commercially available for at least the next several years, if ever.

We expect to continue

to incur significant expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter

and year-to-year.

when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the

consideration can be reliably measured.

Substantially all of our research

and development expenses to date have been incurred in connection with our current and future product candidates.

We expect our research

and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates

through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical

The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming.

The successful

development of product candidates is highly uncertain.

At this time, we cannot reasonably estimate the nature, timing or costs required

to complete the remaining development of any product candidates.

This is due to the numerous risks and uncertainties associated with the

development of product candidates.

The costs of clinical trials

may vary significantly over the life of a project owing to, but not limited to, the following:

per patient trial costs;

the number of sites included in the clinical trials;

the countries in which the clinical trials are conducted;

the length of time required to enroll eligible patients;

the number of patients that participate in the clinical trials;

the number of doses that patients receive;

the cost of comparative agents used in clinical trials;

the drop-out or discontinuation rates of patients;

potential additional safety monitoring or other studies requested by regulatory agencies;

the duration of patient follow-up;

the efficacy and safety profile of the product candidate;

the cost of manufacturing, finishing, labeling and storage drug used in the clinical trial

We do not expect any of our

product candidates to be commercially available for at least the next several years, if ever.

We expect to continue to incur significant

expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year.

We anticipate that our expenses will increase substantially as we:

research and development, including preclinical and clinical development of our existing product candidates;

seek regulatory approval for our product candidates;

to discover and develop additional product candidates;

a commercialization infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product

candidates for which we may obtain regulatory approval;

to comply with regulatory standards and laws;

leverage and expand our intellectual property portfolio;

clinical, manufacturing, scientific and other personnel to support our product candidate’s development and future commercialization

operational, financial and management information systems and personnel;

additional legal, accounting and other expenses in operating as a public company.

and Administrative Expenses

and administrative expenses consist principally of payroll and personnel expenses, including stock-based compensation;

professional fees

for legal, consulting, accounting and tax services;

continue research and development, including preclinical and clinical development of our existing product candidates;

potentially seek regulatory approval for our product candidates;

seek to discover and develop additional product candidates;

establish a commercialization infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product candidates for which we may obtain regulatory approval;

seek to comply with regulatory standards and laws;

maintain, leverage and expand our intellectual property portfolio;

hire clinical, manufacturing, scientific and other personnel to support our product candidate’s development and future commercialization efforts;

add operational, financial and management information systems and personnel;

incur additional legal, accounting and other expenses in operating as a public company.

General and Administrative Expenses

General and administrative

expenses consist principally of payroll and personnel expenses, including stock-based compensation;

professional fees for legal, consulting,

accounting and tax services;

insurance, overhead, including rent and utilities;

and other general operating expenses

not otherwise classified as research and development expenses.

expense consists primarily of interest expense incurred on debt, partially offset by interest income from a money market investment.

Accounting Policies and Significant Judgments and Estimates

management’s discussion and analysis of our financial condition and results of operations is based on our financial statements,

which we have prepared in accordance with accounting principles generally accepted in the United States.

The preparation of our financial

statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure

of contingent assets and liabilities at the date of our financial statements, as well as the reported revenues and expenses during the

reported periods.

We evaluate these estimates and judgments on an ongoing basis.

We base our estimates on historical experience and on

various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these

estimates under different assumptions or conditions.

Research and Development

Company evaluates the carrying value of indefinite-lived intangible assets, which consists of in-process research and development (“IPR&D”),

and other general operating expenses not otherwise classified

as research and development expenses.

Other income, net

Other expense consists primarily

of interest expense incurred on debt, partially offset by interest income from a money market investment.

Critical Accounting Estimates

This management’s discussion

and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance

with accounting principles generally accepted in the United States.

The preparation of our financial statements requires us to make estimates

and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at

the date of our financial statements, as well as the reported revenues and expenses during the reported periods.

We evaluate these estimates

and judgments on an ongoing basis.

We base our estimates on historical experience and on various other factors that we believe are reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that

are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

In-Process Research and Development

The Company evaluates the

carrying value of indefinite-lived intangible assets, which consists of in-process research and development (“IPR&D”),

on an annual basis or more frequently when indicators of impairment exist.

An impairment of indefinite-lived intangible assets would

occur if the fair value of the intangible asset is less than the carrying value.

An impairment of indefinite-lived intangible assets would occur

if the fair value of the intangible asset is less than the carrying value.

Intangible assets with finite lives are tested for impairment

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exist, the Company assesses for recovery by comparing the carrying values of the assets with their future undiscounted net cash flows.

Significant management judgment is required in the forecast of future operating results that are used in the preparation of expected

undiscounted cash flows.

assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development projects.

During the period the assets are considered indefinite-lived, they are tested for impairment.

If the related project is terminated or

abandoned, the Company may have a full or partial impairment related to the IPR&D assets, calculated as the excess of their carrying

value over fair value.

The valuation process is very complex and requires significant input and judgment using internal and external

sources with respect to the Company’s future revenue and expense growth rates, changes in working capital use, the selection of

an appropriate discount rate, and other assumptions and estimates.

and Development (“R&D”)

expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, and other R&D expenses.

Clinical studies and outside services costs relate primarily to services performed by clinical research organizations and related clinical

or development manufacturing costs, materials and supplies, filing fees, regulatory support, and other third-party fees.

Personnel expenses

relate primarily to salaries, benefits and share-based compensation.

R&D expenditures are charged to operations as incurred.

recognize R&D tax credits receivable from the Australian government for spending on R&D as a reduction of R&D expenses.

measure and recognize compensation expense for all stock-based awards granted to service providers, employees, and directors based on

the estimated fair value of the award on the grant date.

We calculate the estimated fair value of stock options on the date of grant

using the Black-Scholes option-pricing model, which is impacted by the fair value of our common stock, as well as changes in assumptions

regarding a number of highly complex and subjective variables.

These variables include, but are not limited to, the market value of common

stock on the grant date, the expected dividend yield, the expected term of the awards, the risk-free interest rates and the expected

common stock price volatility over the term of the option awards.

The expected volatility is based on the historical volatility of a

few unrelated public companies within our industry over the most recent period commensurate with the estimated expected term of our stock

options as we have insufficient historical information regarding the volatility of the share price of our common stock.

We use the simplified

approach to determine the expected term as we do not have sufficient data related to stock option exercises.

The risk-free interest rate

for periods within the contractual life of the option is based on the U.S.

Significant management judgment is required in the forecast of future operating results that are used in the preparation of expected undiscounted

IPR&D assets are considered

to be indefinite-lived until the completion or abandonment of the associated research and development projects.

During the period the

assets are considered indefinite-lived, they are tested for impairment.

If the related project is terminated or abandoned, the Company

may have a full or partial impairment related to the IPR&D assets, calculated as the excess of their carrying value over fair value.

The valuation process is very complex and requires significant input and judgment using internal and external sources with respect to

the Company’s future revenue and expense growth rates, changes in working capital use, the selection of an appropriate discount

rate, and other assumptions and estimates.

Stock-Based Compensation

We measure and recognize compensation

expense for all stock-based awards granted to service providers, employees, and directors based on the estimated fair value of the award

on the grant date.

We calculate the estimated fair value of stock options on the date of grant using the Black-Scholes option-pricing

model, which is impacted by the fair value of our common stock, as well as changes in assumptions regarding a number of highly complex

and subjective variables.

These variables include, but are not limited to, the market value of common stock on the grant date, the expected

dividend yield, the expected term of the awards, the risk-free interest rates and the expected common stock price volatility over the

term of the option awards.

The expected volatility is based on the historical volatility of a few unrelated public companies within our

industry over the most recent period commensurate with the estimated expected term of our stock options as we have insufficient historical

information regarding the volatility of the share price of our common stock.

We use the simplified approach to determine the expected

term as we do not have sufficient data related to stock option exercises.

The risk-free interest rate for periods within the contractual

life of the option is based on the U.S.

Treasury yield in effect at the time of grant.

never declared or paid dividends and have no plans to do so in the foreseeable future.

recognize the fair value of stock options on a straight-line basis over the period during which a service provider is required to provide

services in exchange for the award (generally the vesting period).

We have never declared or paid dividends and

have no plans to do so in the foreseeable future.

We recognize the fair value

of stock options on a straight-line basis over the period during which a service provider is required to provide services in exchange

for the award (generally the vesting period).

We account for forfeitures as they occur.

Sheet Arrangements

the periods presented, we did not have any off-balance sheet arrangements as defined under SEC rules.

and Collaboration Agreements

anticipate that in-licensing, out-licensing and strategic collaborations will become an integral part of our operations, providing the

company with opportunities to leverage our partners’ expertise and capabilities to further expand the potential of our technologies,

product candidates and revenue streams.

Off-Balance Sheet Arrangements

During the periods presented,

we did not have any off-balance sheet arrangements as defined under SEC rules.

Licensing and Collaboration Agreements

We anticipate that in-licensing,

out-licensing and strategic collaborations will become an integral part of our operations, providing the company with opportunities to

leverage our partners’ expertise and capabilities to further expand the potential of our technologies, product candidates and revenue

In October 2017, we licensed

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in conjunction with partners.

of Operations

of the Years Ended December 31, 2023 and December 31, 2022

Results of Operations

Comparison of the Years Ended December 31,

2024 and December 31, 2023

(in thousands)

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Research and Development

Other (Income) Expense, net

During 2024 and 2023, the

Company sold MSC’s to one customer in the United Kingdom and recognized $14,000 and $155,000 of revenues, respectively.

General and Administrative

General and administrative

expenses were $9.5 million for the year ended December 31, 2024, compared to $9.6 million for the year ended December 31, 2023.

in general and administrative expenses is due to lower travel expense.

Research and Development

Research and development expenses

increased to $33.2 million for the year ended December 31, 2024 from $20.3 million for the year ended December 31, 2023.

in research and development expenses during the year ended December 31, 2024 compared to 2023 is mainly due to the Company incurring $9.9

million higher costs with our Alzheimer’s clinical trial, $1.3 million of higher costs in connection with our INKmune/CORDStrom

clinical trials, $0.7 million higher internal costs and $1.2 million lower accrued R&D rebate, partially offset by $0.3 million lower

of preclinical and other expenses.

Other Expense, net

2023 and 2022, the Company sold MSC’s to one customer and recognized $155,000 and $374,000 of revenues, respectively.

and Administrative

and administrative expenses were $9.6 million for the year ended December 31, 2023, compared to $9.3 million for the year ended December

The increase in general and administrative expenses is due to higher stock-based compensation ($0.1 million higher during the

year ended December 31, 2023), higher travel expense ($0.1 million higher during the year ended December 31, 2023) and higher professional

fees ($0.1 million higher during the year ended December 31, 2023).

and Development

Research and development expenses increased to $20.3 million for the

year ended December 31, 2023 from $17.1 million for the year ended December 31, 2022.

The increase in research and development expenses

during the year ended December 31, 2023 compared to 2022 is mainly due to the Company incurring $1.8 million of higher costs in connection

with our INKmune clinical trials, $1.2 million higher costs with our Alzheimer’s clinical trial, $0.7 million higher internal costs

and $0.5 million lower accrued R&D rebate, partially offset by $1.0 million lower of preclinical and other expenses.

expense, net decreased to $0.3 million during the year ending December 31, 2023, compared to $1.3 million during the year ending December

The decrease in other expense is due to the Company earning higher interest income from money market investments in 2023 ($1.3

million higher) partially offset by higher interest expense on the Company’s debt in 2023 ($0.3 million higher).

and Capital Resources

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate

on an ongoing basis.

We incurred a net loss of $30,008,000 and $27,299,000 for the years

ended December 31, 2023 and 2022, respectively.

Net cash used in operating activities was $11,980,000 and $22,686,000 for the years ended

December 31, 2023 and 2022, respectively.

Since inception, we have funded our operations primarily with proceeds from the sales of our

common stock.

The Company generated other

income of $553,000 in 2024 compared to other expense of $267,000 in 2023.

The change is due to the Company incurring $1.5 million lower

interest expense in 2024 as a result of the Company paying off its debt in full in 2024, partially offset by earning $0.7 million lower

interest income from money market investments in 2024 as a result of lower amounts invested in money markets investments in 2024.

Liquidity and Capital Resources

Liquidity is the ability of

a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing

We incurred a net loss of

$42,082,000 and $30,008,000 for the years ended December 31, 2024 and 2023, respectively.

Net cash used in operating activities was $33,361,000

and $11,980,000 for the years ended December 31, 2024 and 2023, respectively.

Since inception, we have funded our operations primarily

with proceeds from the sales of our common stock.

As of December 31, 2024, we had cash and cash equivalents of $20,922,000.

We anticipate that operating losses and net cash

used in operating activities will increase over the next few years as we advance our products under development.

primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services,

costs incurred to manufacture our drugs under development, compensation and related expenses, legal, patent and other regulatory expenses

and general overhead costs.

We anticipate

that operating losses and net cash used in operating activities will increase over the next few years as we advance our products under

Our primary uses of capital

are, and we expect will continue to be, third-party clinical and preclinical research and development services, costs incurred to manufacture

our drugs under development, compensation and related expenses, legal, patent and other regulatory expenses and general overhead costs.

We believe our use of CROs provides us with flexibility in managing our spending.

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for the year ended December 31, 2024.

Until we can generate sufficient revenue from the commercialization of our product candidates,

we expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government

Until we can generate sufficient revenue from the commercialization of our product candidates, we

expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government

funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties.

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financial condition and prospects.

Financing strategies we

may pursue include, but are not limited to, the public or private sale of equity, debt financing or funds from other capital sources,

such as government or grant funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with

third parties.

There can be no assurances additional capital will be available to secure additional financing, or if available, that it

will be sufficient to meet our needs on favorable terms.

If we are unable to raise additional capital in sufficient amounts or on terms

acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.

If we raise additional funds through the public or private sale of equity or debt financings, it could result in dilution to our existing

stockholders or increased fixed payment obligations and these securities may have rights senior to those of our common stock and could

contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to

incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions

that could adversely impact our ability to conduct our business.

Any of these events could significantly harm our business, financial

condition and prospects.

Sales Agreement

July 2023, the Company sold 75,697 shares

of its common stock at an average price of $ 10.56 per share under the ATM program.

The aggregate net proceeds were approximately $ 775,000 after offering expenses.

June 10, 2021, we entered into a Loan and Security Agreement with SVB and an affiliate of SVB, providing for a $15.0 million term loan.

The Term Loan provides for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall

Street Journal plus 4.50% and (ii) 7.75% and also includes a final payment fee equal to 6.5% of the original principal

amount borrowed payable on the earlier of the repayment of the loan in full and the maturity date.

The Term loan is payable in 2024.

following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022:

Financing strategies we may

pursue include, but are not limited to, the public or private sale of equity, debt financing or funds from other capital sources, such

as government or grant funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third

There can be no assurances additional capital will be available to secure additional financing, or if available, that it will

be sufficient to meet our needs on favorable terms.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable

to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.

additional funds through the public or private sale of equity or debt financings, it could result in dilution to our existing stockholders

or increased fixed payment obligations and these securities may have rights senior to those of our common stock and could contain covenants

that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional

debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions that could

adversely impact our ability to conduct our business.

Any of these events could significantly harm our business, financial condition and

ATM Sales Agreement

During the year ending

December 31, 2024, the Company sold 247,126 shares of common stock at an average price of $9.85 for gross proceeds of approximately $2.4

million under the at the market offerings.

During the period from January 1, 2025 through March 27, 2025, the

Company sold 649,860 shares of its common stock through its ATM program for net proceeds of $5.3 million.

Registered Direct Offerings

During September 2024, the

Company entered into securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company’s common

stock and warrants to purchase an additional 2,341,260 shares of the Company’s common stock exercisable six months from the issuance

date in a registered direct offering in exchange for gross proceeds of $13.0 million (net proceeds of approximately $12.0 million).

Directors and

officers that participated in the offering paid a combined offering price of $6.50 per share and warrant, and other investors paid $5.50

per share and warrant.

The exercise price of the warrants is $6.40, and are exercisable beginning on March 16, 2025 and will terminate

on March 16, 2030 unless accelerated pursuant to the terms of the warrant agreements.

On April 24, 2024, the Company

entered into a securities purchase agreement with an investor in which the Company sold 986,000 shares of common stock and warrants to

purchase 986,000 shares of common stock for gross proceeds of approximately $9.7 million (net proceeds of approximately $8.9 million).

The exercise price of the warrants is $9.84, and the term is the earlier of two years from the issuance of the warrants and thirty trading

days following the release of top line data in the Phase 2 Alzheimer’s program.

On April 19, 2024, the Company

entered into securities purchase agreements with purchasers in which the Company sold 571,592 shares of common stock and warrants to purchase

571,592 shares of common stock for aggregate gross proceeds of approximately $4.8 million (net proceeds of approximately $4.5 million).

The exercise price of the warrants is $9.152, and the term is the earlier of two years from the issuance of the warrants and thirty trading

days following the release of top line data in the Phase 2 Alzheimer’s program, provided that directors and officers of the Company

that are subject to a blackout with respect to trading in the Company’s stock will have an additional 60 days from the termination

of the blackout date to exercise the warrant.

Directors and officers that participated in the offering paid a combined offering price

of $8.445 per share and warrant, and other investors paid $8.32 per share and warrant.

During the year ending December

31, 2024, the Company made $10 million of principal payments and paid off its term loan in full.

February 2025, the Company entered into a letter agreement with its lenders whereby its term loan was terminated.

The following table provides

information regarding our cash flows for the years ended December 31, 2024 and 2023:

Net cash used in operating activities

Net cash provided by financing activities

Net cash used in (provided by) financing activities

Impact on cash from foreign currency translation

Net decrease in cash and cash equivalents

Cash Used in Operating Activities

cash used in operating activities was primarily driven by our net loss.

Operating activities used $12.0 million of cash for the year ended

December 31, 2023, primarily resulting from our net loss of $30.0 million, partially offset by a net cash inflow of $10.4 million for

changes in our net operating assets and liabilities, and non-cash stock-based compensation charges of $7.4 million.

The change in our

net operating assets and liabilities was primarily due to a decrease in research and development tax credit receivable of $6.2 million,

a decrease in prepaid expenses and other current assets of $2.5 million and an increase in accounts payable and accrued liabilities of

$2.7 million, partially offset by a decrease in accrued liability – long term of $0.6 million.

activities used $22.7 million of cash for the year ended December 31, 2022, primarily resulting from our net loss of $27.3 million, a

net cash outflow of $2.9 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation charges

Net Cash Used in Operating Activities

Our cash used in operating

activities was primarily driven by our net loss.

Operating activities used

$33.4 million of cash for the year ended December 31, 2024, primarily resulting from our net loss of $42.1 million, partially offset by

a net cash inflow of $1.0 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation charges

of $7.6 million.

The change in our net operating assets and liabilities was primarily due to an increase in research and development

tax credit receivable of $3.2 million and an increase in prepaid expenses and other current assets of $1.7 million, partially offset

by an increase in accounts payable and accrued liabilities of $1.5 million.

Cash Provided by Financing Activities

The change in our net operating assets and liabilities was primarily due to a decrease in prepaid expenses of $1.2 million,

a decrease in research and development tax rebate receivable of $0.7 million and a decrease in other tax receivable of $0.3 million, partially

offset by a decrease of $1.4 in accounts payable and accrued liabilities.

Operating activities used

$12.0 million of cash for the year ended December 31, 2023, primarily resulting from our net loss of $30.0 million, partially offset by

a net cash inflow of $10.4 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation charges

of $7.4 million.

The change in our net operating assets and liabilities was primarily due to a decrease in research and development tax

credit receivable of $6.2 million, a decrease in prepaid expenses and other current assets of $2.5 million and an increase in accounts

payable and accrued liabilities of $2.7 million, partially offset by a decrease in accrued liability – long term of $0.6 million.

Net Cash Provided by Financing Activities

the years ended December 31, 2024 and 2023, the Company paid off $10.0 million and $5.0 million, respectively, of its debt.

the year ended December 31, 2024, the Company sold 247,126 shares of its common stock for net proceeds of $2.4 million under the Company’s

ATM program with BTIG.

the year ended December 31, 2023, the Company repaid $5 million of its debt.

the year ended December 31, 2022, the Company sold 82,900 shares of its common stock to certain officers and directors for approximately

$0.7 million.

Quantitative and Qualitative Disclosures about Market Risk

are exposed to market risk from changes in foreign currency rates.

the year ended December 31, 2023, the Company sold 75,697 shares of its common stock for net proceeds of $0.8 million under the Company’s

During September 2024, the

Company entered into securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company’s common

stock and warrants to purchase an additional 2,341,260 shares of the Company’s common stock exercisable six months from the issuance

date in a registered direct offering in exchange for gross proceeds of $13.0 million (net proceeds of approximately $12.0 million).

Directors and

officers that participated in the offering paid a combined offering price of $6.50 per share and warrant, and other investors paid $5.50

per share and warrant.

The exercise price of the warrants is $6.40, and are exercisable beginning on March 16, 2025, and will terminate

on March 16, 2030 unless accelerated pursuant to the terms of the warrant agreements.

On April 24, 2024, the Company

entered into a securities purchase agreement with an investor in which the Company sold 986,000 shares of common stock and warrants to

purchase 986,000 shares of common stock for gross proceeds of approximately $9.7 million (net proceeds of approximately $8.9 million).

The exercise price of the warrants is $9.84, and the term is the earlier of two years from the issuance of the warrants and thirty trading

days following the release of top line data in the Phase 2 Alzheimer’s program.

On April 19, 2024, the Company

entered into securities purchase agreements with purchasers in which the Company sold 571,592 shares of common stock and warrants to purchase

571,592 shares of common stock for aggregate gross proceeds of approximately $4.8 million (net proceeds of approximately $4.5 million).

The exercise price of the warrants is $9.152, and the term is the earlier of two years from the issuance of the warrants and thirty trading

days following the release of top line data in the Phase 2 Alzheimer’s program, provided that directors and officers of the Company

that are subject to a blackout with respect to trading in the Company’s stock will have an additional 60 days from the termination

of the blackout date to exercise the warrant.

Directors and officers that participated in the offering paid a combined offering price

of $8.445 per share and warrant, and other investors paid $8.32 per share and warrant.

During the year ended December

31, 2024, the Company received $0.4 million in exchange for the exercise of 108,000 stock options.

Quantitative and Qualitative Disclosures

about Market Risk

We are exposed to market risk

from changes in foreign currency rates.

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