What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-27 · 167 added, 386 removed, 207 unchanged (73% of the section changed)

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

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

can be used as a CNS (“central nervous system”) therapy to target glial activation to prevent progression of Alzheimer’s

disease (“AD”);

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

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.

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

measured by changes in the CSF proteome including neurofilament light chain, phospho Tau 217 and VILIP-1;

decreases of 84%, 46% and 91%

respectively after 3 months of therapy.

Three months of XPro therapy improved measures of synaptic function, as measured in the CSF proteome

including a 222% increase in Contactin 2 and a 56% decrease neurogranin, changes that contribute to improved synaptic function.

The successful completion

of the Phase I trial in AD has informed the design of a blinded randomized, placebo-controlled Phase II trial in patients with early ADi.

Early ADi includes patients with AD and MCI who have at least one biomarker of inflammation (ADi and MCI 2 respectively).

early ADi trial is a blinded randomized trial to test if treatment of early AD patients with neuroinflammation with XPro will affect cognitive

The Phase II trial in early ADi has six important elements.

Two hundred and one patients are being enrolled in a 2:1 ratio (XPro

The patients will receive 1mg/kg/week as a subcutaneous injection for six months.

An enrichment strategy identical to the

successful strategy used in the Phase I trial will be used to ensure patients have neuroinflammation.

Patients will need to have one or

more enrichment criteria:

elevated blood level of at least one of C-reactive protein, hemoglobin A1c, erythrocyte sedimentation and at

least one allele of ApoE4.

The primary end-point will be Early/mild Alzheimer’s Cognitive Composite (“EMACC”), a validated

cognitive measure that is more sensitive than traditional end-points used in many studies of patients with early AD.

The AD program is

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

is a large unmet need.

Twenty percent of patients with a Major Depressive Disorder have TRD.

Once third of TRD patients have peripheral

biomarkers to inflammation (elevated CRP).

This is a large patient population.

The role of TNF and anti-TNF therapeutics was explored

in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory University demonstrated the patients have elevated TNF levels

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

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

The TRD trial is expected to start enrollment during 2025.

We believe that INKmune improves

the ability of the patient’s own NK cells to attack their tumor.

INKmune interacts with the patient’s NK cells to convert

them from inert resting NK cells into memory-like NK cells that kill the patient’s cancer cells.

INKmune is a replication incompetent

proprietary cell line that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and

ii) those NK cells are functional when exposed to INKmune in vitro.

INKmune is designed to be given to patients after their immune system

has recovered after cytotoxic chemotherapy to target the residual disease that remains after treatment with cytotoxic therapy.

INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung,

ovary, breast, renal and prostate cancer.

The Company had a Phase I trial using INKmune to treat patients with high risk MDS/AML, a form

Two patients were treated in the Phase I trial for MDS, three patients have been treated compassionately in AML and another

MDS patient is expected to be treated shortly.

During March 2024, the Company decided to terminate further enrollment in the MDS/AML trial.

In the patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in vitro, and promotes development of cancer

killing memory-like NK cells that can be found in the patient’s circulation of 4 months.

The Company initiated a separate Phase

I/2 trial of INKmune in a metastatic castrate resistant prostate cancer.

The open label trial enrolled the first patient in December 2023.

The Phase I/II trial using

INKmune to treat patients with metastatic castrate resistant prostate cancer (mCPRC) is an open label trial.

Biomarker data from the patients

will be visible as patients are treated.

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

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.

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.

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

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Bio is a clinical-stage biotechnology company dedicated to developing and commercializing a pipeline of product candidates designed to

reprogram the innate immune system.

Our mission is to address a broad range of diseases where chronic inflammation and immune dysfunction

are primary drivers of pathology.

CORDStrom™ for RDEB Our primary focus is the treatment of Recessive Dystrophic Epidermolysis Bullosa (“RDEB”)

using CORDStrom, our proprietary, pooled, human umbilical cord-derived mesenchymal stromal cell platform.

RDEB is a devastating pediatric

orphan disease caused by mutations in the COL7A1 gene.

This genetic deficiency leads to systemic complications, including highly

debilitating skin blistering, chronic non-healing wounds, dysphagia, and failure to thrive.

Over time, the chronic inflammatory environment

associated with RDEB often progresses to fatal squamous cell carcinoma.

RDEB is a systemic disease with no approved systemic treatments.

The only approved products to date are topical and do not address the systemic issues of the disease, which is the focus of CORDStrom.

has recently completed a pivotal, blinded, randomized cross-over trial.

Based on these data, the Company is transitioning toward regulatory

submission and commercialization.

We intend to file a Marketing Authorization Application (“MAA”) in the United Kingdom and

the European Union, followed by a Biologics License Application (“BLA”) with the U.S.

Food and Drug Administration (“FDA”)

targeted for 2026.

Neuroinflammation

and Oncology Pipelines In addition to our lead rare disease program, the Company is advancing two other clinical-stage platf orms:

A next-generation protein therapeutic that targets neuroinflammation

by selectively neutralizing soluble TNF.

XPro has completed Phase I and Phase II clinical trials for the treatment of Alzheimer’s

Disease (“AD”), with enrollment spanning clinical sites in the United Kingdom, the European Union, Australia, and Canada.

A novel natural killer (NK) cell-priming platform designed to harness

the patient’s own innate immune system to eliminate cancer cells.

The INKmune program is currently nearing the completion of an

open-label Phase II trial for the treatment of metastatic castrate-resistant prostate cancer (“mCRPC”).

targeting the innate immune system across these distinct therapeutic areas, INmune Bio aims to deliver disease-modifying treatments for

patients with high unmet medical needs.

We continue to incur significant

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DN-TNF – Alzheimer’s disease

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

INKmune (Prostate Cancer) and CORDStrom

Preclinical and other programs

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We track outsourced development costs by product candidate or development

program, but we do not allocate internal costs personnel costs including salaries and stock-based compensation to specific product candidates

program, but we do not allocate internal personnel costs including salaries and stock-based compensation to specific product candidates

or development programs.

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consideration can be reliably measured.

participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United

Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United

Kingdom government, and such incentives are reflected as a reduction of research and development expense.

The United Kingdom 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

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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:

We intend to file an MAA for

CORDStrom in the United Kingdom and the European Union, followed by a BLA with the FDA targeted for 2026.

There can be no assurance that

any such applications will be submitted on our anticipated timeline, accepted for review, approved within any particular timeframe, or

approved at all.

The regulatory review process

in each jurisdiction is lengthy, complex, and inherently unpredictable.

Regulatory authorities may require additional information, analyses,

or clinical data, which could result in delays or prevent approval.

Even if approval is obtained in one or more jurisdictions, we may

experience delays in commercial launch, pricing and reimbursement approvals, manufacturing scale-up, distribution, or market acceptance.

Accordingly, we may not generate

any product revenue for the foreseeable future, if ever.

We expect to continue to incur significant operating expenses and substantial

losses as we pursue regulatory approvals, prepare for potential commercialization, and continue development of our product candidates.

Our operating results are likely to fluctuate significantly from quarter to quarter and year to year due to the timing and outcome of

regulatory submissions, regulatory review processes in multiple jurisdictions, potential approval decisions, and commercial preparation

We anticipate that our expenses will increase

substantially as we:

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

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Other expense consists primarily

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

of interest income on money market investments.

In addition, other income includes interest expense incurred on debt, if any, and other

items such as gain on forgiveness of payables.

Critical Accounting Estimates

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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.

Intangible assets with finite lives are tested for impairment

when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

If these facts and circumstances

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

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.

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.

The Company does not have any critical accounting estimates that are

likely to have a material impact on our financial condition or results of operation.

Off-Balance Sheet Arrangements

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

CORDStrom Clinical Data License Agreement

On February 6, 2025, the Company

and Great Ormond Street Hospital for Children NHS Foundation Trust (“GOSH”) entered into a license agreement for the exclusive

commercial use to clinical trial data associated with a GOSH study investigating the potential of CORDStrom to treat RDEB in pediatric

patients (the “MissionEB study”).

The Company owns the intellectual property covering CORDStrom, the investigational medicinal

product used in the Mission EB study.

In addition, the Company owns intellectual property and maintains trade secret protections covering

the manufacturing of CORDStrom.

With this license to the clinical trial data, the Company intends to prepare applications seeking marketing

authorization of CORDStrom for treatment of pediatric RDEB in each of the FDA, EMA, and MHRA.

In October 2017, we licensed

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Comparison of the Years Ended December 31,

2024 and December 31, 2023

2025 and 2024

(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.

Impairment of acquired in-process research and development intangible assets

Other Income, net

During 2025 the Company recognized

$50,000 of revenue in connection with a license agreement.

In 2024, the Company sold MSC’s to one customer in the United Kingdom

and recognized $14,000 of revenues.

General and Administrative

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expenses were $10.3 million for the year ended December 31, 2025, compared to $9.5 million for the year ended December 31, 2024.

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

in general and administrative expenses is mainly due to higher stock-based compensation ($1.3 million higher), partially offset by lower

investor relations expense ($0.2 million lower) and lower payroll expense ($0.2 million lower) compared to the prior year.

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

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.

Research and development expenses decreased to $20.7 million for the

year ended December 31, 2025 from $33.2 million for the year ended December 31, 2024.

The decrease in research and development expenses

during the year ended December 31, 2025 compared to 2024 is mainly due to the Company incurring $13.7 million lower costs with our Alzheimer’s

clinical trial as a result of completing the Phase 2 trial in 2025, $1.1 million higher accrued rebate and $0.5 million lower preclinical

and other expenses, partially offset by $1.8 million of higher internal costs, and $1.0 million higher costs in connection with our INKmune/CORDStrom

products under development.

Impairment of acquired in-process research

and development intangible assets

During the year ended December

31, 2025, the Company released the Phase 2 clinical trial results for our Alzheimer’s drug candidate, XPro, which failed to meet

the primary endpoint, though a subgroup showed potential benefits.

Due to insufficient resources to fund further trials, the Company has

halted immediate plans to develop XPro for Alzheimer’s or other indications and are instead seeking a partner to continue these

As part of preparing its consolidated financial statements, the Company determined that the intangible asset’s fair value

was likely below its carrying value.

Following a quantitative impairment assessment, the Company estimated the asset’s fair value

at $0, resulting in a recorded impairment of $16.5 million during the second quarter of 2025.

Other Income, net

During 2025, the Company recognized

$0.6 million of gain on the forgiveness of payables compared to $0 in 2024.

Also, in 2025 the Company recognized $0.9 million of interest

income compared to $1.3 million in 2024.

During 2024, the Company recognized $0.7 million of interest expense related to debt that was

paid off during 2024.

Liquidity and Capital Resources

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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.

that we will continue to incur net losses for the foreseeable future as we continue the research and development of our product candidates,

expand our clinical activities, hire additional personnel, and incur expenses associated with operating as a public company.

to incur significant expenses and operating losses as we advance our clinical development programs, pursue regulatory submissions, and,

if approved, prepare for the potential commercialization of CORDStrom.

As a result, we expect that we will require additional capital

to fund our operations, which we may seek to obtain through equity or debt financings, collaborations, licensing arrangements, or other

strategic transactions.

There can be no assurance that such financing will be available on acceptable terms, or at all.

The Company incurs significant

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$0.2 million.

Our recurring net losses and

negative cash flows from operations, as well as forecast of continued 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, 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

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

cash equivalents were $20.9 million and total current assets were $22.7 million at December 31, 2024, which the Company is projecting

will be insufficient to sustain its operations through one year following the date that the financial statements are issued.

Our recurring net losses and negative cash flows from operations, as

well as forecast of continued 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, 2025.

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.

Our cash and cash equivalents were $24.8 million and total

current assets were $29.9 million at December 31, 2025, which the Company is projecting will be insufficient to sustain its operations

through one year following the date that the financial statements are issued.

Additional capital may not

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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 year ending December 31, 2025, the Company sold 1,304,707 shares of common stock at an average price of $8.01 for gross proceeds of

approximately $10.4 million under the at-the-market offerings.

Registered Direct Offering

During June 2025, the Company

entered into securities purchase agreements with investors whereby the Company sold 3,000,000 shares of the common stock in a registered

direct offering in exchange for gross proceeds of $18.9 million (net proceeds of approximately $17.4 million).

The following table provides

information regarding our cash flows for the years ended December 31, 2025 and 2024:

(in thousands)

Net cash used in operating activities

Net cash used in (provided by) financing activities

Net cash used in investing activities

Net cash provided by financing activities

Impact on cash from foreign currency translation

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net Cash Used in Operating Activities

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Operating activities used

$22.6 million of cash for the year ended December 31, 2025, primarily resulting from our net loss of $45.9 million, $2.5 million of changes

in our net operating assets and liabilities and $0.6 million of gain on payables, partially offset by $16.5 million of intangible impairment

expense, and $9.9 million of non-cash stock-based compensation expense.

The change in our net operating assets and liabilities was primarily

due to an increase in research and development tax rebate receivable of $3.1 million, a decrease in deferred liabilities of $0.5 million

and a decrease in other assets of $0.5 million, partially offset by a decrease of $1.9 million in accounts payable and accrued liabilities.

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

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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.

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

Net Used in Investing Activities

During the year ended December

31, 2025, the Company purchased $1.0 million of equipment to be used in connection with its CORDStrom clinical program.

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

During the year ended December

31, 2025, the Company sold 1,304,707 shares of common stock under its ATM program for net proceeds of $10.1 million.

During June 2025, the Company

sold 3,000,000 shares of its common stock in a registered direct offering in exchange for gross proceeds of $18.9 million (net proceeds

of $17.4 million).

During December 2025, the

Company amended warrants for certain warrant holders in exchange for $67,000.

the year ended December 31, 2024, the Company paid off $10.0 million 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

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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

1 unchanged sentence

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

1 unchanged sentence

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis