What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-11 compared with 2024-03-08 · 260 added, 215 removed, 603 unchanged (44% of the section changed)

1 unchanged sentence

Management’s Evaluation of our Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of December 31, 2023, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

We previously identified material weaknesses in our controls, including that the Company did not have sufficiently trained resources involving emerging and evolving threats related to spear phishing, vendor email compromise, and other cyberattack approaches and in designing and implementing controls over changes to vendor payment information.

At December 31, 2024, remediation efforts included the hiring of a finance leader with significant training and experience in evaluating and mitigating cybersecurity risks, increasing finance team training and attention to cyber risks, and enhancing controls around vendor information changes, review and approval of disbursements.

Based on these additional procedures and control, management has concluded this material weakness has been remediated as of December 31, 2024.

As of December 31, 2024, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and effectiveness of our material weakness remediation activity.

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

2 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.

Our management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial and Accounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Our management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial and Accounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting and effectiveness of our material weakness remediation activity as of December 31, 2024 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2024.

2 unchanged sentences

Changes in Internal Control over Financial Reporting

There have been no changes in internal controls over financial reporting during our most recent quarter ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In the three month period ended December 31, 2024, the changes to internal controls over financial reporting consisted of the material weakness remediation efforts listed above.

There have been no additional changes in internal controls over financial reporting during our most recent quarter ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

6 unchanged sentences

Information regarding our Code of Business Conduct and Ethics, or the Code of Conduct, required by this item will be contained in our 2025 Proxy Statement under the caption “Information Regarding the Board and Corporate Governance – Code of Business Conduct and Ethics,” and is hereby incorporated by reference.

If we make any substantive amendments to the Code of Conduct or grant any waiver from a provision of the Code of Conduct to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on its website.

We intend to promptly disclose on our website or in a Current Report on Form 8-K in the future (i) the date and nature of any amendment (other than technical, administrative or other non-substantive amendments) to the Code of Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K and (ii) the nature of any waiver, including an implicit waiver, from a provision of the Code of Conduct that is granted to one of these specified individuals that relates to one or more of the elements of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the name of such person who is granted the waiver and the date of the waiver.

The full text of our Code of Conduct is available at the Investors section of our website at www.ovidrx.com .

8 unchanged sentences

The information required by this item is incorporated by reference to the information set forth in Proposal 3 under the section titled “Independent Registered Public Accounting Firm Fees” and “Pre-Approval Policies and Procedures” contained in our 2025 Proxy Statement.

Exhibit and Financial Statements and Schedules

Exhibits and Financial Statements and Schedules

(a)(1) Financial Statements.

13 unchanged sentences

4.2 Description of the Securities of Ovid Therapeutics Inc.

(incorporated herein by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K (File No.

001-38085), filed with the Commission on March 8, 2024).

4.3 Form of Series A Preferred Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No.

6 unchanged sentences

333-217245), filed with the Commission on April 10, 2017).

Form of Restricted Stock Unit Grant Notice and Award Agreement under the 2017 Equity Incentive Plan .

2014 Equity Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No.

8 unchanged sentences

333-217245), filed with the Commission on April 10, 2017).

Form of Restricted Stock Purchase Agreement under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No.

333-217245), filed with the Commission on April 10, 2017).

Form of Stock Option Agreement—Early Exercise under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No.

333-217245), filed with the Commission on April 10, 2017).

Forms of Stock Option Agreement under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No.

333-217245), filed with the Commission on April 10, 2017).

2017 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 4.14 to the Company’s Registration Statement on Form S-8 (File No.

001-38085), filed with the Commission on May 22, 2017).

Amended Non-Employee Director Compensation Policy, effective May 5, 2022.

Amended Non-Employee Director Compensation Policy, effective February 22, 2024 .

A mended Non-Employee Director Compensati on Policy, effective February 20, 2025.

Executive Employment Agreement between the Registrant and Jeremy M.

3 unchanged sentences

001-38085), filed with the Commission on March 15, 2021).

Executive Employment Agreement between the Company and Jason Tardio, effective October 21, 2019 (incorporated herein by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K (File No.

001-38085), filed with the Commission on March 15, 2021).

Amended and Restated Executive Employment Agreement between the Company and Thomas Perone, effective January 1, 2020 (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K (File No.

001-38085), filed with the Commission on March 15, 2021).

Amended and Restated Executive Employment Agreement between the Company and Margaret Alexander, dated September 9, 2024 (incorporated herein by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (File No.

001-38085), filed with the Commission on September 11, 2024 ) .

License Agreement by and between Northwestern University and the Company, dated December 15, 2016.

(incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K (File No.

001-38085), filed with the Commission on April 10, 2017).

Royalty, License and Termination Agreement, by and between the Company and Takeda Pharmaceutical Company Limited, dated March 2, 2021 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 10-Q (File No.

(incorporated herein by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q (File No.

001-38085), filed with the Commission on May 14, 2024).

2 unchanged sentences

001-38085), filed with the Commission on January 3, 2022).

P urchase and Sale Agreement , dated as of October 1 7 , 2023, by and between the Company and Ligand P harma ceuticals Incorporated.

Purchase and Sale Agreement, dated as of October 17, 2023, by and between the Company and Ligand Pharmaceuticals Incorporated.

(incorporated herein by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K (File No.

001-38085), filed with the Commission on March 8, 2024.

19.1 R e gist rant ’ s Insider Trading Policy .

23.1 Consent of Independent Registered Public Accounting Firm .

4 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97 I ncentive Compensation Reco upment Policy

101.INS Inline XBRL Instance Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained within Exhibit 101)

97 Incentive Compensation Recoupment Policy (incorporated herein by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K (File No.

001-38085), filed with the Commission on March 8, 2024).

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the XBRL document.

Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents.

Cover Page formatted as Inline XBRL and contained within Exhibit 101.

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

14 unchanged sentences

/s/ Jeffrey Rona

Chief Business & Financial Officer

Chief Business and Financial Officer

(Principal Financial and Accounting Officer)

16 unchanged sentences

Barbara Duncan

/s/ Bart Friedman Director March 8, 2024

Bart Friedman

/s/ Kevin Fitzgerald, PhD Director March 11, 2025

Kevin Fitzgerald, PhD

/s/ Robert Michael Poole, MD, FACP Director March 8, 2024

Robert Michael Poole, MD, FACP

/s/ Bart Friedman Director March 11, 2025

Bart Friedman

/s/ Stelios Papadopoulos

Director March 11, 2025

Stelios Papadopoulos

OVID THERAPEUTICS INC.

3 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Equity

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Ovid Therapeutics Inc.

and subsidiary (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

25 unchanged sentences

Consolidated Balance Sheets

(in thousands, except share and per share data) December 31,

2024 December 31,

27 unchanged sentences

71,009,866 and 70,691,992 shares issued and outstanding at December 31, 2024 and 2023, respectively

70,692 70,467

Additional paid-in-capital 372,489 365,591

Accumulated other comprehensive income (loss)

702 ( 42,187 )

Accumulated deficit ( 304,299 ) ( 277,865 )

Total stockholders ’ equity

68,226 87,797

Total liabilities and stockholders ’ equity

$ 92,167 $ 144,027

See accompanying notes to these consolidated financial statements

1 unchanged sentence

Consolidated Statements of Operations

For the Year Ended December 31, 2023

(in thousands, except share and per share data) For the Year Ended December 31, 2024

For the Year Ended December 31, 2023

10 unchanged sentences

Net loss $ ( 26,433 ) $ ( 52,339 )

Net loss per share, basic $ ( 0.74 ) $ ( 0.77 )

Net loss per share, diluted $ ( 0.74 ) $ ( 0.77 )

Weighted-average common shares outstanding, basic

70,580,604 70,424,819

Weighted-average common shares outstanding, diluted

70,580,604 70,424,819

Net loss per share of Series A preferred stock, basic and diluted $ ( 366.33 ) $ ( 728.64 )

Weighted-average Series A preferred stock shares outstanding, basic and diluted 1,250 1,250

Net loss per share of common stock, basic and diluted $ ( 0.37 ) $ ( 0.73 )

Weighted-average common stock shares outstanding, basic and diluted 70,905,422 70,580,604

See accompanying notes to these consolidated financial statements

OVID THERAPEUTICS INC.

Consolidated Statements of Comprehensive Income (Loss)

For the Year Ended December 31,

Consolidated Statements of Comprehensive Loss

(in thousands)

For the Year Ended December 31, 2024 For the Year Ended December 31, 2023

Net loss $ ( 26,433 ) $ ( 52,339 )

Other comprehensive gain (loss):

Unrealized gain (loss) on available-for-sale securities 702 ( 42,187 )

Other comprehensive income:

Cumulative translation adjustment ( 42 ) —

Unrealized gain on available-for-sale securities

Comprehensive loss $ ( 26,468 ) $ ( 52,338 )

2 unchanged sentences

Consolidated Statement of Changes in Stockholders’ Equity

(in thousands, except shares)

Preferred Stock Common Stock Additional

5 unchanged sentences

Balance, December 31, 2023 1 $ — 70,691,992 $ 71 $ 365,591 $ 1 $ ( 277,866 ) $ 87,797

Issuance of common stock from exercise of stock options and employee stock purchase plan — — 225,107 225 534,976 — — 535,201

Issuance of common stock from exercise of stock options and purchases from employee stock purchase plan — — 317,874 — 622 — — 622

Stock-based compensation expense — — — — 6,276 — — 6,276

Other comprehensive income — — — — — 42,889 — 42,889

Other comprehensive loss — — — — — ( 36 ) — ( 36 )

Net loss — — — — — — ( 26,433 ) ( 26,433 )

Balance, December 31, 2024 1 $ — 71,009,866 $ 71 $ 372,489 $ ( 35 ) $ ( 304,299 ) $ 68,226

(in thousands, except shares)

Preferred Stock Common Stock Additional

5 unchanged sentences

Balance, December 31, 2022 1 $ — 70,466,885 $ 70 $ 357,771 $ ( 42 ) $ ( 225,527 ) $ 132,273

Issuance of common stock from exercise of stock options and employee stock purchase plan — — 101,973 108 180,550 — — 180,658

Issuance of common stock from exercise of stock options and purchases from employee stock purchase plan — — 225,107 — 535 — — 535

Stock-based compensation expense — — — — 7,285 — — 7,285

Other comprehensive loss — — — — — ( 42,187 ) — ( 42,187 )

Other comprehensive income — — — — — 43 — 43

Net loss — — — — — — ( 52,339 ) ( 52,339 )

3 unchanged sentences

Consolidated Statements of Cash Flows

Year Ended December 31,

(in thousands) For the Year Ended December 31, 2024 For the Year Ended December 31, 2023

Cash flows from operating activities:

1 unchanged sentence

Adjustments to reconcile net loss to cash used in operating activities:

Non-cash consideration received in licensing agreement transaction — ( 945,366 )

Change in fair value of royalty monetization liability ( 30,000 ) —

Unrealized (gain) loss on equity investments ( 3,349 ) ( 2,003 )

( 2,003,073 ) 454,811

Change in accrued interest income and accretion of discount on marketable securities

( 2,172,254 ) ( 1,211,311 )

Change in accrued interest and accretion of discount on marketable securities ( 2,765 ) ( 2,172 )

Stock-based compensation expense 6,276 7,285

Depreciation and amortization expense 613 568

Amortization of right-of-use asset 1,028,293 869,100

Noncash operating lease expense 1,097 1,028

Change in lease liability ( 1,246 ) ( 534 )

7 unchanged sentences

Sales/maturities of marketable securities 128,000 120,000

Purchase of long-term equity investments

( 10,000,000 ) ( 2,500,000 )

Issuance of convertible short-term note receivable — ( 1,000,000 )

Purchase of long-term equity investment — ( 10,000 )

Purchases of property and equipment ( 71 ) ( 40 )

Software development and other costs ( 90 ) ( 97 )

Net cash used in investing activities ( 2,580,605 ) ( 87,883,217 )

Net cash provided by (used in) investing activities 54,594 ( 2,581 )

Cash flows from financing activities:

5 unchanged sentences

Cash, cash equivalents and restricted cash, at end of period $ 28,232 $ 28,972

Non-cash investing and financing activities:

Right-of-use asset in exchange for lease liability $ — $ 15,791,769

Conversion of short-term note receivable to long-term equity investment $ — $ 1,000,000

See accompanying notes to these consolidated financial statements

4 unchanged sentences

(the “Company”) was incorporated under the laws of the state of Delaware, commenced operations on April 1, 2014, and maintains its principal executive office in New York, New York.

The Company is a biopharmaceutical company that is dedicated to meaningfully improving the lives of people affected by certain epilepsies and brain conditions with seizure symptoms.

The Company is a biopharmaceutical company that is dedicated to developing small molecule medicines for brain conditions with significant unmet need.

The Company is currently focused on developing OV329, OV350, OV4071, OV4041 and OV888 (GV101) (to be evaluated pending review of emerging data from competitor and academic studies in CCM) (see Part I, Item 1 of the annual report on Form 10-K for the period ended December 31, 2024 for detailed program descriptions).

Since its inception, the Company has devoted substantially all of its efforts to business development, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of convertible preferred stock, common stock and other equity instruments, the sale and/or licensing of certain assets and the licensing of certain intellectual property.

4 unchanged sentences

Historically, the Company has incurred recurring losses, has experienced recurring negative operating cash flows and has required significant cash resources to execute its business plans, which the Company expects will continue for the foreseeable future.

The Company has an accumulated deficit of $ 277.9 million as of December 31, 2023, working capital of $ 98.1 million and had cash used in operating activities of $ 45.8 million for the year ended December 31, 2023.

The Company has an accumulated deficit of $ 304.3 million as of December 31, 2024, working capital of $ 45.4 million and used $ 56.0 million of cash in operating activities for the year ended December 31, 2024.

The Company recorded a net loss of $ 26.4 million during the year ended December 31, 2024 and expects to incur losses in subsequent periods for at least the next several years.

The Company is highly dependent on its ability to find additional sources of funding through either equity offerings, debt financings, collaborations, strategic alliances, licensing agreements or a combination of any such transactions.

Management believes that the Company’s existing cash, cash equivalents and marketable securities as of December 31, 2023 will be sufficient to fund its current operating plans through at least 12 months from the date of filing of the Company’s Annual Report on Form 10-K.

Management believes that the Company’s existing cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to fund its current operations through at least 12 months from the date of filing of the Company’s Annual Report on Form 10-K.

Adequate additional funding may not be available to the Company on acceptable terms or at all.

The failure to raise capital as and when needed could have a negative impact on the Company’s financial condition and ability to pursue its business strategy.

The Company may be required to delay, reduce the scope of or eliminate research and development programs, or obtain funds through arrangements with collaborators or others that may require the Company to relinquish rights to certain drug candidates that the Company might otherwise seek to develop or commercialize independently.

The failure to raise capital as and when needed will have a negative impact on the Company’s financial condition and ability to pursue its business strategy.

If the Company is unable to raise capital on acceptable terms, the Company will be required to delay, reduce the scope of or eliminate research and development programs, or obtain funds through arrangements with collaborators or others that may require the Company to relinquish rights to certain drug candidates that the Company might otherwise seek to develop or commercialize independently.

The Company is subject to other challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with:

4 unchanged sentences

complying with applicable regulatory requirements;

and obtaining regulatory approval of any of the Company's product candidates.

and obtaining regulatory approval of any of the Company’s product candidates, among others.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Ovid Therapeutics Inc.

and its wholly owned subsidiary, Ovid Therapeutics Hong Kong Limited.

All intercompany transactions and balances have been eliminated in consolidation.

and its wholly owned subsidiaries, Ovid Therapeutics Australia Pty Ltd and Ovid Therapeutics Hong Kong Limited.

All material intercompany transactions and balances have been eliminated in consolidation.

(B) Use of Estimates

20 unchanged sentences

As of December 31, 2024 and 2023, the equity investment in Gensaic had a carrying value of $ 5.1 million.

As of December 31, 2023, the equity investment in Graviton had a carrying value of $ 11.2 million, which reflects a $ 1.2 million unrealized gain recognized during the year and recorded in other income (expense), net, in the consolidated statements of operations due to an observable change in price.

As of December 31, 2024 and 2023, the equity investment in Graviton had carrying values of $ 15.8 million and $ 11.2 million, respectively, which reflect unrealized gains recognized during the periods and recorded in other income (expense), net, in the consolidated statements of operations due to an observable change in price.

Long-term equity investments also consist of an equity investment in the common shares of Marinus Pharmaceuticals, Inc.

(“Marinus”) that was received as non-cash consideration via the terms of a licensing agreement executed between the two companies effective March 2022.

(“Marinus”) that was received as noncash consideration via the terms of a licensing agreement executed between the two companies effective March 2022.

The equity shares are marked-to-market at each reporting date with changes in the fair value being reflected in the carrying value of the investment on the Company’s consolidated balance sheets and other income (expense), net on the Company’s consolidated statements of operations.

As of December 31, 2024 and 2023, the equity investment in Marinus had a carrying value of approximately $ 0.1 million and $ 1.3 million, respectively.

In January 2025, Immedica Pharma, S.A.

purchased Marinus in an all-cash tender offer, resulting in the Company’s sale of its position in Marinus for $ 0.07 million.

No impairments were recognized in the years ending December 31, 2024 and 2023.

(F) Note Receivable

On March 17, 2022, the Company issued a convertible promissory note with a principal amount of $ 1.0 million to Gensaic.

The note included features that permitted the Company to acquire additional equity or to settle the note in cash.

In August 2022, the Company executed an agreement with Gensaic which resulted in the conversion of the note into additional equity and was recorded as a long-term equity investment in the consolidated balance sheets.

The Company received interest on the convertible promissory note at the rate of 1.5 % per annum through the date of conversion.

(G) Fair Value of Financial Instruments

(F) Fair Value of Financial Instruments

Financial Accounting Standards Board guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained

from independent sources, while unobservable inputs reflect market assumptions.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

10 unchanged sentences

Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The Company's Level 3 liabilities consist of a royalty monetization liability totaling $ 30.0 million at December 31, 2023.

There were no Level 3 assets or liabilities as of December 31, 2022.

The Company’s Level 3 liabilities consist of a royalty monetization liability totaling $ 0.0 million and $ 30.0 million, respectively, as of December 31, 2024 and 2023.

There were no Level 3 assets as of December 31, 2024 and 2023.

The carrying amounts reported in the consolidated balance sheets for cash, cash equivalents and marketable securities, other current assets, accounts payable, and accrued expenses approximate their fair values based on the short-term maturity of these instruments.

4 unchanged sentences

The Company determines the portion of the lease liability that is current as the difference between the calculated lease liability at the end of the current period and the lease liability that is projected 12 months from the current period.

(I) Property and Equipment

(H) Property and Equipment

Property and equipment are stated at cost and depreciated over their estimated useful lives of three years using the straight-line method.

1 unchanged sentence

The Company reviews the recoverability of all long-lived assets, including the related useful life, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.

(J) Research and Development Expenses

(I) Research and Development Expenses

The Company expenses the cost of research and development as incurred.

2 unchanged sentences

Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received in accordance with ASC 730, Research and Development.

(K) Stock-based Compensation

companies to expense the estimated fair value of these awards over the requisite service period.

(J) Stock-based Compensation

The Company accounts for its stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation, which establishes accounting for stock-based awards granted to employees for services and requires companies to expense the estimated fair value of these awards over the requisite service period.

The Company estimates the fair value of all awards granted using the Black-Scholes valuation model.

Key inputs and assumptions include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, stock price and exercise price.

Many of the assumptions require significant judgment and any changes could have an impact in the determination of stock-based compensation expense.

Many of the assumptions require judgment and any changes could have an impact in the determination of stock-based compensation expense.

The Company elected an accounting policy to record forfeitures as they occur.

1 unchanged sentence

The compensation expense is recognized over the vesting period under the straight-line method.

The Company accounts for option awards granted to nonemployee consultants and directors in accordance with ASC 718.

The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received.

The fair value is measured at the value of the Company’s common stock award at the earlier of the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.

(L) Royalty Monetization Liability

The Company accounted for its sale to Ligand Pharmaceuticals Incorporated (“Ligand”) of a 13 % share of royalties and milestones owed to the Company related to the potential approval and commercialization of soticlestat in accordance with ASC 470, Debt, which addresses situations in which an entity receives cash from an investor in return for an agreement to pay the investor a specified percentage of the revenue from a contractual right.

The Company classified the proceeds received from the sale to Ligand as debt as the Company determined that it had significant continuing involvement in the generation of the cash flows to Ligand.

The Company further elected to account for the debt at fair value in accordance with ASC 825, Financial Instruments, which permits a company to elect the fair value option on an instrument specific basis for a recognized financial liability that is not specifically excluded.

If commercialized, the Company will recognize 100 % of the royalties and milestones received for sales of soticlestat as revenue and the 13 % share of royalties payable to Ligand Pharmaceuticals as a cash outflow from financing activities in the consolidated statements of cash flows.

Changes in the fair value of the debt will be classified as a component of other income / expense in the consolidated statements of operations.

The change in fair value of the debt was immaterial for the year-ended December 31, 2023.

(M) Income Taxes

The Company aggregates employee and nonemployee awards for certain disclosures since nonemployee awards are not material.

(K) Royalty Monetization Liability

The Company accounted for its sale to Ligand Pharmaceuticals Incorporated (“Ligand”) of a 13 % share of royalties and milestones owed to the Company related to the potential approval and commercialization of soticlestat (“Ligand Agreement”) in accordance with ASC 470, Debt, classifying the proceeds received from the sale to Ligand as debt as the Company determined that it had significant continuing involvement in the generation of the cash flows to Ligand.

The Company further elected to account for the debt at fair value with changes in the fair value of the debt classified as other income (expense) in the consolidated statements of operations.

In June 2024, Takeda issued a press release indicating the soticlestat trials missed their primary endpoints and noted that while Takeda would discuss the program with FDA, Takeda fully impaired the asset representing soticlestat.

In 2024, the Company recorded a gain of $ 30.0 million due to reducing the fair value of the Ligand Agreement debt to zero as a result of the improbability that the program would be further developed into a commercial product by Takeda or another party.

In January 2025, Takeda announced the discontinuation the program.

(L) Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as for net operating loss carryforwards and research and development credits.

1 unchanged sentence

The impact of a change in tax laws is recorded in the period in which the law is enacted.

(N) Net Loss per Share

Net loss per common share is determined by dividing net loss attributable to common stockholders by the basic and diluted weighted-average common shares outstanding during the period.

The Company applies the two-class method to allocate earnings between common stock and participating securities.

Net loss per diluted share attributable to common stockholders adjusts the basic earnings per share attributable to common stockholders and the weighted-average number of shares of common stock outstanding for the potential dilutive impact of stock options using the treasury-stock method and the potential impact of preferred stock using the if-converted method.

(O) Retirement Plan

(M) Net Loss per Share

The rights and preferences of the Series A Preferred stock are negligible relative to common stock, therefore the Series A Preferred stock is treated as in-substance common stock on an as-converted basis when allocating Net Income (Loss) to actual and in-substance shares of common stock.

The Company applies the two-class method to allocate earnings between common stock, Series A Preferred stock as well as other securities deemed in-substance common stock and participating securities, if any.

Net loss per share of common stock is determined by dividing net loss attributable to common stockholders by the basic and diluted weighted-average shares of common stock outstanding during the period.

Net loss per share of Series A Preferred stock is determined by dividing net loss attributable to Series A Preferred stockholders on an as-converted basis by the basic and diluted weighted-average shares of Series A Preferred stock outstanding during the period.

Net loss per diluted attributable to common stockholders omits the inclusion of options and common stock issuable upon conversion of our preferred stock as these securities would be anti-dilutive.

(N) Retirement Plan

The Company maintains a 401(k)-retirement plan for its employees that is intended to qualify under Sections 401(a) and 501(a) of the U.S.

2 unchanged sentences

These safe harbor contributions vest immediately.

For the years ended December 31, 2023 and 2022 the Company contributed $ 311,640 and $ 339,405 , respectively.

(P) Revenue Recognition

For the years ended December 31, 2024 and 2023 the Company contributed $ 0.3 million.

(O) Revenue Recognition

Under ASC 606, Revenue from Contracts with Customers, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

15 unchanged sentences

The Company defers recognition of upfront license fees if the performance obligations are not satisfied.

(Q) Recent Accounting Pronouncements

(P) Recent Accounting Pronouncements

The Company has reviewed recently issued accounting standards and plans to adopt those that are applicable.

The Company does not expect the adoption of those standards to have a material impact on its financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the consolidated financial statements to provide enhanced transparency into the expense captions presented on the face of the statements of income and comprehensive income.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its related disclosures.

The Company adopts new pronouncements relating to GAAP applicable to the Company as they are issued, and based upon the effective dates included in the pronouncements.

3 unchanged sentences

December 31, 2024

Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value

(in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value

Cash $ 522 $ — $ — $ 522

Money market funds

24,340,121 — — 24,340,121

Cash equivalents 25,779 — — 25,779

Marketable securities 26,767 7 — 26,774

1 unchanged sentence

December 31, 2023

Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value

(in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value

Cash $ 2,701 $ — $ — $ 2,701

Money market funds 42,014,804 — — 42,014,804

Cash equivalents 24,340 — — 24,340

Marketable securities 78,791 1 — 78,792

4 unchanged sentences

Property and equipment is summarized as follows:

(in thousands) December 31,

2024 December 31,

3 unchanged sentences

Total property and equipment, net $ 433 $ 769

Depreciation expense was $ 419,518 and $ 319,173 for the years ended December 31, 2023 and 2022 respectively.

Intangible assets, net of accumulated amortization, were $ 182,974 and $ 222,100 as of December 31, 2023 and 2022, respectively, and are included in other assets.

Amortization expense was $ 148,764 and $ 193,333 for the years ended December 31, 2023 and 2022, respectively.

Depreciation expense was $ 0.4 million for the years ended December 31, 2024 and 2023.

Intangible assets, net of accumulated amortization, were $ 0.1 million and $ 0.2 million as of December 31, 2024 and 2023, respectively, and are included in other assets.

Amortization expense was $ 0.2 million and $ 0.1 million for the years ended December 31, 2024 and 2023, respectively.

NOTE 5 – LEASES

During September 2021, the Company entered into a 10-year lease agreement for its corporate headquarters with a term commencing March 10, 2022, for approximately 19,000 square feet of office space at Hudson Commons in New York, NY.

In September 2021, the Company entered into a 10 -year lease agreement for its corporate headquarters, with a term commencing in March 2022, for approximately 19,000 square feet of office space at Hudson Commons in New York, NY (“Hudson Commons Lease”).

The lease provides for monthly rental payments over the lease term.

The base rent under the lease is currently $ 2.3 million per year.

Rent payments commenced 10 months following the commencement date of the lease, or January 10, 2023, and continue for 10 years following the rent commencement date.

Rent also includes two months of free rent in the sixth and seventh months following the rent commencement date.

The Company issued a letter of credit in the amount of $ 1.9 million in association with the execution of the lease agreement;

Rent payments commenced ten months following the commencement of the lease, or January 2023, and continue for ten years following the rent commencement date.

The Company issued a letter of

credit in the amount of $ 1.9 million in association with the execution of the lease agreement;

the letter of credit is characterized as restricted cash on the Company’s consolidated balance sheets.

The Hudson Commons lease has a remaining lease term of approximately nine years and includes a single renewal option for an additional five years .

The Hudson Commons Lease has a remaining lease term of approximately eight years and includes a single renewal option for an additional five years .

The Company did not include the renewal option in the lease term when calculating the lease liability as the Company is not reasonably certain that it will exercise the renewal option.

2 unchanged sentences

ROU asset and lease liabilities related to the Company’s operating lease are as follows:

(in thousands) December 31,

2024 December 31,

$ 13,894,376 $ 14,922,669

ROU asset, net $ 12,797 $ 13,894

Current lease liability $ 1,336 $ 1,246

1 unchanged sentence

The components of operating lease cost for the year ended December 31, 2024 and 2023 were as follows:

(in thousands) December 31,

2024 December 31,

3 unchanged sentences

Future minimum commitments under the non-cancelable operating lease are as follows:

2024 $ 2,316,303

2025 2,316,303

2026 2,316,303

2027 2,316,303

2028 2,469,447

(in thousands)

Thereafter 7,408

1 unchanged sentence

Accrued expenses consist of the following:

(in thousands) December 31,

2024 December 31,

2 unchanged sentences

Professional fees accrual 168 522

Other 330,508 192,956

Total $ 5,994 $ 6,524

8 unchanged sentences

The holders of common stock are entitled to liquidation proceeds after all liquidation preferences for the preferred stock are satisfied.

On February 10, 2025, the Company received a notification letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC notifying the Company that the average closing bid price of the Company’s shares of common stock was below the closing bid price of $1.00 per share during the last 31 consecutive trading days.

We have an initial period of 180 calendar days, or until August 11, 2025, to regain compliance with the minimum bid price requirement.

There were 1,250 shares of Series A Preferred Stock outstanding as of December 31, 2024 and 2023.

2 unchanged sentences

provided, however, that effective 61 days after delivery of such notice, such beneficial ownership limitations shall not be applicable to any holder that beneficially owns either 10.0 % or 15.0 %, as applicable based on the holder’s initial written election noted above, of the total number of shares of common stock issued and outstanding immediately prior to delivery of such notice.

In the event of a liquidation, dissolution, or winding up of the

Company, holders of Series A Preferred Stock will receive a payment equal to $ 0.001 per share of Series A Preferred Stock before any proceeds are distributed to the holders of common stock.

Through December 31, 2023, the Company has not declared any dividends.

In the event of a liquidation, dissolution, or winding up of the Company, holders of Series A Preferred Stock will receive a payment equal to $ 0.001 per share of Series A Preferred Stock before any proceeds are distributed to the holders of common stock.

Holders of Series A Preferred Stock are entitled to receive dividends paid to holders of common stock at an equal rate, in the same form, and in the same manner on an as-if-converted basis.

Through December 31, 2024, the Company has not declared or paid any dividends.

No dividends on the common stock shall be declared and paid unless dividends on the preferred stock have been declared and paid.

NOTE 8 – STOCK-BASED COMPENSATION

The Company’s Board of Directors (the “Board”) adopted and approved the 2014 Equity Incentive Plan (“2014 Plan”), which authorized the Company to grant shares of common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock and restricted stock units.

The types of stock-based awards, including share purchase rights amount, terms, and provisions for exercising grants were determined by the Board.

The Board adopted, and the Company's stockholders approved, the 2017 equity incentive plan (“2017 Plan”), which became effective on May 4, 2017.

The Company’s Board of Directors (the “Board”) adopted, and the Company’s stockholders approved, the 2017 Equity Incentive Plan (“2017 Plan”), which became effective on May 4, 2017.

The initial reserve of shares of common stock under the 2017 Plan was 3,052,059 shares.

The 2017 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards, and other forms of stock-based awards.

Additionally, the 2017 Plan provides for the grant of performance awards.

The 2017 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, performance-based stock awards and other forms of stock-based awards.

Additionally, the 2017 Plan provides for the grant of performance cash awards.

The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2017 Plan.

Upon the adoption of the 2017 Plan, no further awards were granted under the 2014 Plan.

Upon the adoption of the 2017 Plan, no further awards were granted under the prior plan.

Pursuant to the terms of the 2017 Plan, on each January 1st, the plan limit shall be increased by the lesser of (x) 5 % of the number of shares of common stock outstanding as of the immediately preceding December 31 and (y) such lesser number as the Board may determine in its discretion.

2 unchanged sentences

As of December 31, 2024, there were 7,276,450 shares of the Company’s common stock reserved for issuance under the 2017 Plan.

On January 1, 2024, an additional 3,534,600 shares were reserved for issuance under the 2017 Plan.

On January 1, 2025, no additional shares were reserved for issuance under the 2017 Plan.

The Board adopted, and the Company’s stockholders approved, the 2017 employee stock purchase plan (“ESPP”), which became effective on May 4, 2017.

3 unchanged sentences

The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1 of each year, beginning on January 1, 2018 and continuing through and including January 1, 2027, by the lesser of (i) 1 % of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, (ii) 550,000 shares or (iii) such lesser number of shares determined by the Board.

The Board acted prior to January 1, 2024 to provide that there be no increase in the number of shares reserved for issuance under the ESPP.

The Board acted prior to January 1, 2024 to provide

that there be no increase in the number of shares reserved for issuance under the ESPP.

As of December 31, 2024 and 2023, there were 282,996 and 352,846 shares of the Company’s common stock reserved for issuance under the ESPP.

The Board adopted, and the Company’s stockholders approved, the 2014 Equity Incentive Plan (“2014 Plan”), which authorized the Company to grant shares of common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock and restricted stock units.

The 2014 Plan was terminated as to future awards in May 2017, although it continues to govern the terms of options that remain outstanding under the 2014 Plan.

No additional stock awards will be granted under the 2014 Plan, and all outstanding stock awards granted under the 2014 Plan that are repurchased, forfeited, expire or are cancelled will become available for grant under the 2017 Plan in accordance with its terms.

As of December 31, 2024, options to purchase 1,328,715 shares of common stock were outstanding under the 2014 Plan.

Unless specified otherwise in an individual option agreement, stock options granted under the 2014 Plan and 2017 Plan have a ten-year term and a four-year graded vesting period.

5 unchanged sentences

Performance-based option awards generally have similar vesting terms, with vesting occurring on the date the performance condition is achieved and expire in accordance with the specific terms of the agreement.

At December 31, 2023 and 2022, there were zero and 100,000 performance-based options outstanding and unvested, respectively, that include options to vest upon the achievement of certain research and development milestones.

At December 31, 2024 and 2023, there were no performance-based options outstanding and unvested that include options to vest upon the achievement of certain research and development milestones.

The fair value of options granted during the years ended December 31, 2024 and 2023 was estimated using the Black-Scholes option valuation model.

The inputs for the Black-Scholes option valuation model require significant assumptions made by management and are detailed in the table below.

The inputs for the Black-Scholes option valuation model require assumptions made by management and are detailed in the table below.

The risk-free interest rates were based on the rate for U.S.

Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant

Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date.

The expected life was based on the simplified method in accordance with the SEC Staff Accounting Bulletin No.

The expected volatility was estimated based on the Company’s published historical stock prices.

All assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for options granted to employees.

In the event the Company terminates any of its consulting agreements, the unvested options underlying the agreements would also be cancelled.

The Company granted 45,000 and zero stock options to nonemployee consultants for services rendered during the years ended December 31, 2023 and 2022, respectively.

There were 98,542 and 127,459 unvested nonemployee options outstanding as of December 31, 2023 and 2022, respectively.

Total expense recognized related to the nonemployee stock options for the years ended December 31, 2023 and 2022 was $ 202,114 and $ 575,995 , respectively.

Total unrecognized compensation expenses related to the nonemployee stock options was $ 133,769 and $ 626,977 as of December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, there were no expenses for nonemployee performance-based option awards recognized.

The Company granted 2,993,000 and 4,575,641 stock options to employees during the years ended December 31, 2023 and 2022, respectively.

There were 5,376,910 and 6,090,889 unvested employee options outstanding as of December 31, 2023 and 2022, respectively.

Total expense recognized related to the employee stock options for the years ended December 31, 2023 and 2022 was $ 7.5 million and $ 5.9 million, respectively.

Total unrecognized compensation expense related to employee stock options was $ 9.3 million and $ 11.5 million as of December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, the Company recognized zero and $ 0.1 million, respectively, in expenses for employee performance-based option awards.

The Company granted 4,699,810 and 3,038,000 stock options during the years ended December 31, 2024 and 2023, respectively.

There were 5,688,743 and 5,475,452 unvested options outstanding as of December 31, 2024 and 2023, respectively.

Total expense recognized related to the stock options for the years ended December 31, 2024 and 2023 was $ 6.2 million and $ 7.7 million, respectively.

Total unrecognized compensation expense related to stock options was $ 9.1 million and $ 9.4 million as of December 31, 2024 and 2023, respectively.

During the years ended December 31, 2024 and 2023, the Company recognized no expense for performance-based option awards.

The Company granted 348,575 RSUs during the year ended December 31, 2024.

No RSUs were granted by the Company in prior periods.

The RSUs granted will vest in equal installments over three years beginning in the first quarter of 2025.

The Company’s stock-based compensation expense was recognized in operating expenses as follows:

For the Year Ended December 31,

(in thousands) 2024 2023

Research and development $ 1,631 $ 1,937

2 unchanged sentences

For the Year Ended December 31,

Stock options $ 7,228,044 $ 6,471,367

(in thousands) 2024 2023

Stock options and RSUs $ 6,212 $ 7,228

Employee Stock Purchase Plan 65 57

57,148 85,319

Total $ 6,276 $ 7,285

The fair value of employee options granted during the years ended December 31, 2023 and 2022, respectively, was estimated by utilizing the following assumptions:

For the Year Ended December 31,

Average Weighted

Volatility 84.52 % 87.16 %

Expected term in years 6.07 6.07

Dividend rate 0.00 % 0.00 %

Risk-free interest rate 3.97 % 2.21 %

Fair value of option on grant date $ 1.92 $ 2.12

The fair value of nonemployee options granted and remeasured during the years ended December 31, 2023 and 2022, respectively, was estimated by utilizing the following assumptions:

The fair value of stock options granted during the years ended December 31, 2024 and 2023, respectively, was estimated by utilizing the following assumptions:

For the Year Ended December 31,

10 unchanged sentences

Options outstanding at December 31, 2022

12,961,238 $ 4.13 7.42 $ 62,158

Vested and exercisable at December 31, 2022

6,742,890 $ 5.05 6.20 $ 61,214

Granted 3,038,000 2.63 9.20

1 unchanged sentence

Forfeited or expired ( 728,346 ) 3.44

( 2,365,643 ) 5.56

Options outstanding December 31, 2023

15,124,546 $ 3.87 6.90 $ 5,212,586

Vested and exercisable at December 31, 2023

9,649,094 $ 4.47 5.97 $ 2,464,620

Granted 4,699,810 2.58 5.87

1 unchanged sentence

Forfeited or expired ( 4,234,976 ) 3.77

( 728,346 ) 3.44

Options outstanding December 31, 2024

15,341,356 $ 3.49 5.87 $ —

Vested and exercisable at December 31, 2024

9,652,613 $ 4.07 5.87 $ —

At December 31, 2024, there was $ 9.1 million of unamortized stock-based compensation expense, which is expected to be recognized over a remaining average vesting period of 2.15 years.

8 unchanged sentences

The Company maintains a full valuation allowance against its net deferred tax assets.

The valuation allowance increased by $ 18.9 million and $ 10.4 million during the years 2023 and 2022, respectively.

The increase in valuation allowance in 2023 is primarily due to increases in NOL carryforwards and capitalized research and experimental costs.

The valuation allowance decreased by $ 3.2 million for the year ended December 31, 2024 and increased by $ 18.9 million for the year ended December 31, 2023.

The increase in valuation allowance in 2023 is primarily due to the royalty monetization liability, increase in stock-based compensation and increase in capitalized research and experimental costs.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:

(in thousands) 2024 2023

Deferred tax assets/liabilities:

3 unchanged sentences

Stock-based compensation 5,534 7,248

Royalty monetization liability 8,427,970 —

Lease liability 3,324 4,495

Royalty monetization liability — 8,428

Research and development tax credits 2,229 2,878

Accrued compensation — —

Charitable contributions 2 —

9 unchanged sentences

State income tax, net of federal benefit ( 26.01 ) 9.12

Foreign rate differential 0.31 —

Permanent items ( 1.70 ) ( 1.32 )

3 unchanged sentences

Effective income tax expense rate 0.00 % 0.00 %

0.00 % 0.00 %

The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies related to the tax benefit.

27 unchanged sentences

Since the intangibles acquired in the AstraZeneca license agreement do not have an alternative future use, all costs incurred were treated as research and development expense.

The Company recorded a total of $ 12.3 million as research and development expense related to this agreement during December 2021.

Pursuant to the AstraZeneca license agreement, the Company agreed to potential milestone payments of up to $ 203.0 million upon the achievement of certain developmental, regulatory and sales milestones.

The first payment of $ 3.0 million is due upon the successful completion of the first Phase 2 clinical study of a licensed product following a positive biomarker readout in a Phase 1 clinical study.

Gensaic Collaboration and Option Agreement

In August 2022, the Company entered into a collaboration and option agreement with Gensaic (“Gensaic Collaboration Agreement”).

The Gensaic Collaboration Agreement involves the research and development of phage-derived particle (“PDP”) products on Gensaic's proprietary platform for certain rare central nervous system (“CNS”) disorder targets.

Under the Collaboration Agreement, Gensaic grants the Company an option to obtain an exclusive license with respect to certain identified lead PDP products, which are exercisable at any time prior to the expiration of the option period.

Gensaic Equity Agreement and Collaboration and Option Agreement

In August 2022, the Company entered into an equity agreement and a collaboration and option agreement with Gensaic (“Gensaic Collaboration Agreement”).

Under the terms of the equity agreement, the Company invested a total of $ 5.1 million in exchange for convertible preferred stock in Gensaic.

The Company also retained rights to invest in future equity financing rounds.

Jeremy Levin, the Company’s Chairman and CEO, is currently the Chairman of Gensaic’s board of directors.

The Gensaic Collaboration Agreement involves the research and development of Gensaic’s proprietary platform for certain rare central nervous system (“CNS”) disorder targets.

Under the Gensaic Collaboration Agreement, Gensaic granted the Company an option to obtain an exclusive license with respect to certain identified lead phage-derived particle (“PDP”) products, which are exercisable at any time prior to the expiration of the option period.

Once a product is identified by the Company that demonstrates sufficient efficacy, the Company may exercise its option with respect to the specific research program for that PDP product.

4 unchanged sentences

The amount is expensed as the research and development occurs with the remaining amount included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

If a product is ultimately commercialized under this agreement, the Company shall make tiered royalty payments to Gensaic in the mid-single to low double-digit range based on the net sales of all licensed PDP products during the royalty term.

The balance of the previously provided research funds was $ 1.0 million and $ 2.5 million as of December 31, 2024 and 2023, respectively.

Research and development expense was $ 1.5 million and $ 1.1 million during the years ended December 31, 2024 and 2023, respectively.

If a product is ultimately commercialized under this agreement, the Company is required to make tiered royalty payments to Gensaic in the mid-single to low double-digit range based on the net sales of all licensed PDP products during the royalty term.

The Company is also responsible for potential tiered milestone payments of up to $ 452.0 million based upon the achievement of certain sales milestone events and developmental milestone approvals for three or more products.

2 unchanged sentences

The Company may terminate this agreement by providing written notice to Gensaic 90 days in advance of the termination date.

In March 2025, Novo Nordisk invested in Gensaic’s novel protein design technology with the aim to discover tissue targeting ligands and develop new therapeutic candidates to treat cardiometabolic disease.

Under the agreement, Gensaic is eligible to receive up to $ 354 million in upfront payments, development and commercial milestones per target plus tiered royalties.

As of December 31, 2024, none of these contingent payments were considered probable.

Non-Operating Loss

During the quarter ended September 30, 2024, the Company was the victim of a criminal scheme involving a business email compromise at one of its development collaborators, which led to a fraudulent transfer totaling $ 1.8 million to a third-party impersonating one of the Company’s development collaborators.

The matter was reported to the U.S.

Secret Service and Federal Bureau of Investigation and a loss was recorded in Other income (expense) in the Consolidated Statement of Operations.

The Company continued to work with law enforcement authorities and the banks involved in the funds transfer to pursue recovery of the $ 1.8 million, but had no assurance of recovery until January 15, 2025, when the Company fully recovered the $ 1.8 million and intends to record a gain in Other income (expense) in the Consolidated Statement of Operations in the first quarter of 2025.

Contingencies

6 unchanged sentences

In January 2017, the Company entered into a license and collaboration agreement with Takeda under which the Company licensed from Takeda certain exclusive rights to develop and commercialize soticlestat in certain territories.

In March 2021, the Company entered into the RLT Agreement with Takeda, pursuant to which Takeda secured rights to the Company’s 50 % global share in soticlestat, and the Company granted to Takeda an exclusive worldwide license under the Company’s relevant intellectual property rights to develop and commercialize the investigational medicine soticlestat for the treatment of developmental and epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome.

medicine soticlestat for the treatment of developmental and epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome.

Under the RLT Agreement, all rights in soticlestat are owned by Takeda or exclusively licensed to Takeda by the Company.

Takeda assumed all responsibility for, and costs of, both development and commercialization of soticlestat, and the Company will no longer have any financial obligation to Takeda under the original collaboration agreement, including milestone payments or any future development and commercialization costs.

In March 2021, upon the closing of the RLT Agreement, the Company received an upfront payment of $ 196.0 million and, if soticlestat is successfully developed, will be eligible to receive up to an additional $ 660.0 million upon Takeda achieving developmental, regulatory and sales milestones.

In addition, the Company will be entitled to receive tiered royalties beginning in the low double-digits, and up to 20 % on sales of soticlestat if regulatory approval is achieved.

Royalties will be payable on a country-by-country and product-by-product basis for any indications that soticlestat is approved for and sold during the period beginning on the date of the first commercial sale of such product in such country and ending on the later to occur of the expiration of patent rights covering the product in such country and a specified anniversary of such first commercial sale.

In 2023, the Company sold a 13 % stake in the royalty, regulatory and commercial milestone payments that the Company is eligible to receive under the RLT Agreement to Ligand for $ 30.0 million.

In March 2021, upon the closing of the RLT Agreement, the Company received a non-refundable upfront payment of $ 196.0 million and was eligible to receive up to an additional $ 660.0 million upon Takeda achieving developmental, regulatory and sales milestones.

Additionally, the Company was entitled to receive tiered royalties beginning in the low double-digits, and up to 20 % on sales of soticlestat if regulatory approval was achieved.

In 2023, the Company sold a 13 % stake in the royalty, regulatory and commercial milestone payments that the Company was eligible to receive under the RLT Agreement to Ligand for $ 30.0 million.

During the years ended December 31, 2024 and 2023, no income or expense was recognized pursuant to the RLT Agreement.

In January 2025, Takeda discontinued the program.

Healx License and Option Agreement

3 unchanged sentences

In February 2023, the Company granted an extension of the option period for up to four months for Healx to continue to investigate gaboxadol.

Royalties are payable on a country-by-country and product-by-product basis during the period beginning on the date of the first commercial sale of such product in such country and ending on the later to occur of the expiration of patent rights covering the product in such country and a specified anniversary of such first commercial sale.

Royalties on net sales, if any, are payable on a country-by-country and product-by-product basis during the period beginning on the date of the first commercial sale of such product in such country and ending on the later to occur of the expiration of patent rights covering the product in such country and a specified anniversary of such first commercial sale.

Healx will assume all responsibility for, and costs of, both development and commercialization of gaboxadol following the exercise of the option.

7 unchanged sentences

Additionally, the parties agreed that following the exercise of the option, Healx would assume direct responsibility for patent maintenance and prosecution and that the Company would transfer to Healx all supply obligations with respect to the active pharmaceutical ingredient and finished gaboxadol products and any related licensed technology and know-how in the Company’s possession that is relevant to the manufacture of such licensed products.

No revenue was recognized relating to this agreement during the year ended December 31, 2023.

During the year ended December 31, 2022, the Company recorded revenue of $ 0.5 million associated with the Healx License and Option Agreement.

No revenue was recognized relating to this agreement during the years ended December 31, 2024 and 2023.

Marinus Pharmaceuticals Out-License Agreement

In March 2022 the Company entered into an exclusive patent license agreement with Marinus (“Marinus License Agreement”).

Under the Marinus License Agreement, the Company granted Marinus an exclusive, non-transferable (except as expressly provided therein), royalty-bearing right and license under certain Ovid patents relating to ganaxolone to develop, make, have made, commercialize, promote, distribute, sell, offer for sale and import licensed products in the territory (which consists of the United States, the European Economic Area, United Kingdom and Switzerland) for the treatment of CDKL5 deficiency disorders.

develop, make, have made, commercialize, promote, distribute, sell, offer for sale and import licensed products in the territory (which consists of the United States, the European Economic Area, United Kingdom and Switzerland) for the treatment of CDKL5 deficiency disorders.

Following the date of regulatory approval by the FDA of the first licensed product in the territory which was received on March 18, 2022, Marinus issued, at the Company’s option, 123,255 shares of Marinus common stock, par value $ 0.001 per share, as payment.

1 unchanged sentence

The Company recorded revenue and an associated investment in equity securities of approximately $ 0.9 million related to the Marinus License Agreement in March 2022, based on the price of Marinus common stock at that time.

The Company had unrealized gains on the Marinus common stock of $ 0.8 million for the year ended December 31, 2023, and unrealized loss of $ 0.5 million for the year ended December 31, 2022, which were recorded as unrealized gains (losses) on equity securities and reflected in other income (expenses), net in the consolidated statements of operations.

The Company had unrealized losses on the Marinus common stock of $ 1.3 million and $ 0.8 million, respectively, for the years ended December 31, 2024 and 2023, which were recorded as unrealized gains (losses) on equity securities and reflected in other income (expenses), net in the consolidated statements of operations.

Marinus was acquired by Immedica, S.A.

in February 2025.

Graviton License Agreement and Equity Purchase

5 unchanged sentences

The Company recorded the purchase of the preferred stock as a long-term equity investment on its consolidated balance sheets.

In December 2023, the Company recognized an unrealized gain on the investment due to an observable change in price, and recorded the gain in other income (expense), net, in the consolidated statements of operations.

In December 2023 and March 2024, the Company recognized unrealized gains on the investment due to an observable change in price, and recorded the gain in other income (expense), net, in the consolidated statements of operations.

The program related to this collaboration agreement is currently paused, pending regulatory feedback on another competitive clinical-stage development program.

NOTE 12 – RELATED PARTY TRANSACTIONS

2 unchanged sentences

NOTE 13 – NET LOSS PER SHARE

Basic net loss per share is calculated based upon the weighted-average number of common shares outstanding during the period, excluding outstanding stock options that have not yet vested.

For any period in which the Company records net income, diluted net income per share is calculated based upon the weighted-average number of common shares outstanding during the period plus the dilutive impact of weighted-average common equivalent shares outstanding during the period resulting from the assumed exercise of outstanding stock options determined under the treasury stock method and the assumed conversion of preferred stock into common shares determined using the if-converted method.

Diluted net loss per share is equivalent to the basic net loss per share due to the exclusion of outstanding stock options and convertible preferred stock because the inclusion of these securities would result in an anti-dilutive effect on per share amounts.

The basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities and multiple classes of shares.

The Company considers its preferred stock to be participating securities.

For any period in which the Company records net income, undistributed earnings allocated to the participating securities are subtracted from net income in determining net income attributable to common stockholders.

The undistributed earnings have been allocated based on the participation rights of preferred stock and common shares as if the earnings for the year have been distributed.

For periods in which the Company recognizes a net loss, undistributed losses are allocated only to common shares as the participating securities do not contractually participate in the Company’s losses.

Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Participating securities are excluded from basic weighted-average common shares outstanding.

The following tables summarizes the calculation of basic and diluted net loss per share:

The Company considers its preferred stock to be in-substance common stock (Note 2).

The Series A Preferred stock was excluded from the calculation of net loss per share and presented as anti-dilutive in prior periods, but is deemed in-substance common stock and is now reflected as a class of common stock for purposes of calculating net loss per share for the years ended December 31, 2024 and 2023.

The impact of the change to previously reported net loss per share is not material.

Basic net loss per common share is calculated based upon the allocation of net loss to the weighted-average number of common shares outstanding during the period, excluding outstanding stock options that have not yet vested, and weighted-average number of shares of Series A Preferred stock outstanding during the period on an as-converted basis.

For any period in which the Company records net income, diluted net income per share is calculated in the same manner as basic net loss per share, except that diluted net loss per common share includes outstanding common stock and common shares underlying outstanding options in the number of shares used to allocate net loss to share classes and as the denominator in calculating net loss per common share - diluted.

Diluted net loss per common share is equivalent to the basic net loss per common share due to the exclusion of outstanding stock options because the inclusion of these securities would result in an anti-dilutive effect on per common share amounts.

The following tables summarize the calculation of basic and diluted net loss per share:

For the Year Ended December 31, 2024

Net loss $ ( 52,338,959 ) $ ( 54,169,029 )

Net income attributable to participating securities — —

Net loss attributable to common stockholders $ ( 52,338,959 ) $ ( 54,169,029 )

(in thousands, except share and per share data) Series A Preferred Stock Common Stock

Net loss per share, basic and diluted

Allocation of loss $ ( 458 ) $ ( 25,975 )

Weighted-average shares outstanding, basic and diluted 1,250 70,905,422

Net loss per share, basic and diluted $ ( 366.33 ) $ ( 0.37 )

For the Year Ended December 31, 2023

Net loss attributable to common stockholders $ ( 52,338,959 ) $ ( 54,169,029 )

Weighted average common shares outstanding used in computing net loss per share - basic

70,580,604 70,424,819

Weighted average common shares outstanding used in computing net loss per share - diluted

70,580,604 70,424,819

Net loss per share, basic $ ( 0.74 ) $ ( 0.77 )

Net loss per share, diluted $ ( 0.74 ) $ ( 0.77 )

(in thousands, except share and per share data) Series A Preferred Stock Common Stock

Net loss per share, basic and diluted

Allocation of loss $ ( 911 ) $ ( 51,428 )

Weighted average shares outstanding, basic and diluted 1,250 70,580,604

Net loss per share, basic and diluted $ ( 728.64 ) $ ( 0.73 )

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as they would be anti-dilutive:

1 unchanged sentence

Stock options to purchase common stock 15,341,356 15,124,546

Common stock issuable upon conversion of Series A convertible preferred stock 1,250,000 1,250,000

NOTE 14 – SEGMENT REPORTING

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

2023-07, “Segment Reporting (Topic 280),” which requires companies to enhance disclosure of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, and permits more than one measure of segment profit or loss to be reported under certain conditions.

The amendments are effective for the Company in years beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024.

The Company has determined that it operates as one segment focused on developing medicines for brain conditions with significant unmet need.

The Company’s pre-commercial development drug candidates have similar economic and other characteristics, including all being in the small-molecule therapeutic class that share target markets, development pathways, and regulatory environments.

The Chief Operating Decision Maker (“CODM”) is the Chairman and Chief Executive Officer (“CEO”), who reviews profit and loss information on a consolidated basis to assess performance and make operating and planning decisions, including resource allocations among active programs.

The determination of the single segment is consistent with the information provided to the CEO.

As the Company’s operations are comprised of a single reporting segment, the segment assets are reflected on the accompanying consolidated balance sheet as “total assets”.

Segment asset information is not used by the CODM to allocate resources.

The following tables summarize the Company’s segment information as presented to the CEO and as required in ASU 2023-07 for the periods indicated:

For the Year Ended December 31,

(in thousands) 2024 2023

Revenue $ 566 $ 392

Payroll and payroll-related expenses 9,889 10,541

Direct program expenses

OV350/KCC2 library 8,785 2,656

OV888 (GV101) 8,212 3,788

OV329 4,485 4,285

Gensaic projects 1,493 1,057

Other programs 990 2,819

Total direct program expenses 23,965 14,605

Other research and development expenses 2,913 3,442

Total research and development expenses 36,767 28,588

Payroll and payroll-related expenses 13,835 17,131

Legal and professional fees 6,573 7,610

General office expenses 5,275 6,344

Total general and administrative expenses 25,684 31,085

Total operating expenses 62,451 59,673

Operating loss ( 61,885 ) ( 59,281 )

Other (income) expense ( 35,452 ) ( 6,943 )

Net loss $ ( 26,433 ) $ ( 52,339 )

Other research and development expenses include general office expenses allocated to research and development, b including costs related to rent and depreciation of leasehold improvements, and nonclinical contract labor.

Other income/expense includes decrease in fair value of royalty monetization liability, loss on fraudulent funds transfer, unrealized net gain on equity investments and interest/accretion income on securities.

Other significant segment information includes:

For the Year Ended December 31,

(in thousands) 2024 2023

Decrease in fair value of royalty monetization liability $ 30,000 $ —

Stock-based compensation expense 6,276 7,285

Interest/accretion income on securities 3,915 4,940

Severance expense 3,508 1,653

Loss on fraudulent funds transfer 1,800 —

Unrealized net gain on equity investments 3,337 2,003

Depreciation and amortization 613 568

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 9A. Controls and Procedures