Annovis Bio(ANVS) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited interim financial statements and management's discussion and analysis of Annovis Bio, Inc. Item 1. Financial Statements This section presents the unaudited interim financial statements of Annovis Bio, Inc., including the Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity (Deficit), Statements of Cash Flows, and accompanying Notes to Financial Statements for the periods ended June 30, 2025 and 2024 Balance Sheets This section provides a comparative overview of the company's financial position as of June 30, 2025, and December 31, 2024 Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :--------------------------------- | :-------------- | :---------------- | :----- | :------- | | Cash and cash equivalents | $17,130,286 | $10,551,916 | $6,578,370 | 62.3% | | Total assets | $21,454,571 | $13,925,633 | $7,528,938 | 54.1% | | Total current liabilities | $2,805,124 | $3,880,987 | $(1,075,863) | -27.7% | | Warrant liability | $319,000 | $737,000 | $(418,000) | -56.7% | | Total liabilities | $3,124,124 | $4,617,987 | $(1,493,863) | -32.3% | | Total stockholders' equity | $18,330,447 | $9,307,646 | $9,022,801 | 96.9% | Statements of Operations This section details the company's financial performance, including revenues, expenses, and net loss, for the three and six months ended June 30, 2025 and 2024 Statements of Operations Highlights (Three Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :-------------- | :-------------- | :----- | | Research and development | $5,161,921 | $5,785,217 | $(623,296) | | General and administrative | $1,109,532 | $1,977,421 | $(867,889) | | Total operating expenses | $6,271,453 | $7,762,638 | $(1,491,185) | | Operating loss | $(6,271,453) | $(7,762,638) | $1,491,185 | | Interest income | $191,395 | $25,978 | $165,417 | | Change in fair value of warrants | $(140,000) | $4,062,308 | $(4,202,308) | | Net loss | $(6,220,058) | $(5,020,412) | $(1,199,646) | | Basic Net loss per share | $(0.32) | $(0.44) | $0.12 | | Diluted Net loss per share | $(0.32) | $(0.44) | $0.12 | Statements of Operations Highlights (Six Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :-------------- | :-------------- | :----- | | Research and development | $10,173,438 | $12,307,308 | $(2,133,870) | | General and administrative | $2,380,696 | $3,265,137 | $(884,441) | | Total operating expenses | $12,554,134 | $15,572,445 | $(3,018,311) | | Operating loss | $(12,554,134) | $(15,572,445) | $3,018,311 | | Interest income | $379,007 | $70,146 | $308,861 | | Change in fair value of warrants | $418,000 | $10,761,000 | $(10,343,000) | | Net loss | $(11,757,127) | $(6,087,359) | $(5,669,768) | | Basic Net loss per share | $(0.64) | $(0.56) | $(0.08) | | Diluted Net loss per share | $(0.64) | $(1.52) | $0.88 | Statements of Changes in Stockholders' Equity (Deficit) This section outlines the changes in the company's equity structure, including stock issuances and net loss, for the periods ended June 30, 2025 and 2024 Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Amount (June 30, 2025) | | :------------------------------------------------ | :------------------- | | Balance, December 31, 2024 | $9,307,646 | | Issuance of common stock (Equity Distribution) | $502,934 | | Issuance of common stock and warrants (Registered Offering) | $19,280,489 | | Stock-based compensation expense | $996,505 | | Net loss | $(11,757,127) | | Balance, June 30, 2025 | $18,330,447 | Stockholders' Equity Changes (Six Months Ended June 30, 2024) | Item | Amount (June 30, 2024) | | :------------------------------------------------ | :------------------- | | Balance, December 31, 2023 | $(7,750,846) | | Exercise of common stock warrants | $1,224,000 | | Issuance of common stock | $3,875,000 | | Stock-based compensation expense | $1,961,277 | | Net loss | $(6,087,359) | | Balance, June 30, 2024 | $(1,750,884) | Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary (Six Months Ended June 30) | Activity | June 30, 2025 | June 30, 2024 | | :--------------------------------------- | :-------------- | :-------------- | | Net cash used in operating activities | $(13,205,053) | $(10,407,937) | | Net cash provided by financing activities | $19,783,423 | $8,650,984 | | Net increase (decrease) in cash | $6,578,370 | $(1,756,953) | | Cash and cash equivalents, end of period | $17,130,286 | $3,997,767 | Notes to Financial Statements This section provides detailed disclosures and explanations for the figures presented in the financial statements, covering the company's business, significant accounting policies, fair value measurements, and specific financial line items 1. Nature of Business, Going Concern and Management's Plan Annovis Bio, Inc. is a late-stage clinical drug platform company focused on neurodegeneration, particularly Alzheimer's and Parkinson's diseases, with its lead product candidate, buntanetap. The company has a history of net losses and negative cash flows, leading management to conclude that substantial doubt exists about its ability to continue as a going concern for the next year without raising additional capital - Annovis Bio, Inc. is a late-stage clinical drug platform company developing buntanetap for neurodegenerative diseases like AD and PD. Buntanetap is designed to inhibit multiple neurotoxic proteins and improve axonal transport[23] - The company has incurred significant net losses and negative cash flows since inception, with an accumulated deficit of $146.6 million as of June 30, 2025. Net loss for the six months ended June 30, 2025, was $11.8 million, compared to $6.1 million in 2024[26] - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern for one year after the filing date, as existing cash ($17.1 million as of June 30, 2025) is insufficient. Plans to mitigate this risk include raising additional capital through equity financings, debt, or other potential alternatives, and deferring certain operating expenses[26] 2. Summary of Significant Accounting Policies This note outlines the significant accounting policies used in preparing the interim financial statements, including the basis of presentation, use of estimates, calculation of basic and diluted net loss per share, treatment of cash and cash equivalents, equity issuance costs, derivative liabilities, common stock warrants, fair value measurements, research and development expenses, stock-based compensation, and income taxes. It also mentions recent accounting pronouncements - The financial statements are unaudited and prepared in conformity with U.S. GAAP, including normal, recurring adjustments. Management makes estimates and assumptions, particularly for equity instruments, warrant liabilities, derivative liabilities, and R&D contracts[28][29][30] - Common stock warrants are classified as liabilities if they contain cash settlement adjustment features outside the company's control or not deemed to be indexed to its stock, requiring re-measurement at fair value each balance sheet date[35] - Research and development costs are expensed as incurred or recorded as prepaid assets, with estimates based on patient enrollment, project milestones, and vendor efforts. Stock-based compensation is recognized based on grant date fair values using the Black-Scholes model[37][38] - The company has a full valuation allowance against its deferred tax assets due to the unlikelihood of realization. Recent accounting pronouncements (ASU 2023-09 and ASU 2024-03) are being evaluated for potential impacts on future disclosures[44][47][48] 3. Fair Value Measurements This note details the fair value measurements of the company's financial instruments, primarily focusing on the warrant liability. It explains the three-level fair value hierarchy and how the Canaccord Warrants, classified as Level 3 liabilities, are valued using a Black-Scholes option-pricing model after certain performance conditions were not met Fair Value Measurement of Warrant Liability (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 (Level 3) | December 31, 2024 (Level 3) | | :---------------- | :---------------------- | :------------------------ | | Warrant liability | $319,000 | $737,000 | - The Canaccord Warrants are classified as Level 3 liabilities due to unobservable inputs and are valued using a Black-Scholes option-pricing model. Key inputs include an exercise price of $9.00, closing stock price of $2.17 (June 30, 2025), volatility of 113%, term of 3.34 years, and a risk-free rate of 3.7%[53][54][55] - During Q3 2024, it was determined that performance conditions for redemption of Canaccord Warrants (positive topline data from Phase 3 PD study and stock price/ADTV thresholds) were not met, leading to a change in valuation model from Monte Carlo to Black-Scholes[53][56][59] 4. Prepaid Expenses and Other Current Assets This note provides a breakdown of the company's prepaid expenses and other current assets, primarily consisting of prepaid clinical expenses Prepaid Expenses and Other Current Assets (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Prepaid clinical expenses | $3,846,146 | $2,998,811 | | Prepaid other | $393,812 | $346,313 | | Prepaid insurance | $76,832 | $21,098 | | Security deposits | $7,495 | $7,495 | | Total prepaid expenses and other current assets | $4,324,285 | $3,373,717 | 5. Accrued Expenses This note details the composition of accrued expenses, which include accrued clinical expenses, payroll and related benefits, and accrued professional and other fees Accrued Expenses (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Accrued clinical expenses | $1,070,293 | $948,695 | | Payroll and related benefits | $526,890 | $364,717 | | Accrued professional and other | $233,630 | $261,601 | | Total accrued expenses | $1,830,813 | $1,575,013 | 6. Commitments and Contingencies This note outlines the company's various commitments and contingencies, including contracts with CROs and CMOs for clinical trials, a short-term lease for its corporate headquarters, an employment agreement with its CEO, and potential litigation - The company has contracts with CROs and CMOs for clinical trials, requiring upfront, milestone, and pass-through payments. These contracts are generally cancellable with notice, but payments for services rendered are obligatory[60] - Total rental expense for the corporate headquarters lease was $24,844 for Q2 2025 and $57,582 for the six months ended June 30, 2025[61] - An employment agreement with the CEO provides for estimated maximum severance payments of $1.2 million at June 30, 2025, under specific termination conditions[62] 7. Stockholders' Equity This note details the company's capital structure, including authorized common and preferred stock, and various equity and warrant issuances. It covers the February 2025 ThinkEquity offering, November 2023 Canaccord offering, IPO warrants, December 2024 ATM facility, and the exhausted 2024 ELOC Purchase Agreement, along with the roll-forward of the common stock warrant liability - The company's authorized capital includes 70.0 million shares of common stock and 2.0 million shares of preferred stock, both with a $0.0001 par value. No preferred stock was outstanding as of June 30, 2025[64][68] - In February 2025, the company completed an underwritten public offering, issuing 5.3 million units (common stock + ThinkEquity Warrants) for net proceeds of $19.3 million. ThinkEquity Warrants are equity-classified, exercisable at $5.00, and expire in February 2030[69][70] - The Canaccord Warrants (from November 2023 offering) are liability-classified due to cash settlement features. The warrant liability decreased from $737,000 at December 31, 2024, to $319,000 at June 30, 2025, primarily due to changes in fair value[71][72] Common Stock Warrants Outstanding (June 30, 2025) | Warrant Type | Classification | Outstanding (June 30, 2025) | Exercise Price | Expiration Date | | :------------- | :------------- | :-------------------------- | :------------- | :-------------- | | ThinkEquity | Equity | 5,250,000 | $5.00 | Feb 4, 2030 | | Canaccord | Liability | 308,333 | $9.00 | Nov 2, 2028 | | IPO | Equity | 0 | $7.50 | Jan 29, 2025 | 8. Stock-Based Compensation This note details the company's stock-based compensation, primarily through stock options under the 2019 Equity Incentive Plan. It provides the stock-based compensation expense recognized and summarizes stock option activity, including grants and expirations - The 2019 Equity Incentive Plan was amended in June 2024 to increase authorized shares from 2.0 million to 3.0 million. As of June 30, 2025, 0.4 million shares were available for future grants[82] Stock-Based Compensation Expense (Three and Six Months Ended June 30) | Expense Category | Q2 2025 (USD) | Q2 2024 (USD) | YTD 2025 (USD) | YTD 2024 (USD) | | :----------------------- | :------ | :------ | :------- | :------- | | General and administrative | $270,395 | $997,779 | $537,333 | $1,233,519 | | Research and development | $226,223 | $598,733 | $459,172 | $727,758 | | Total | $496,618 | $1,596,512 | $996,505 | $1,961,277 | Stock Option Activity (December 31, 2024 to June 30, 2025) | Item | Number of Options | Weighted Average Exercise Price | | :-------------------------------- | :---------------- | :------------------------------ | | Options outstanding at Dec 31, 2024 | 2,336,020 | $11.39 | | Options granted | 20,000 | $1.64 | | Options expired | (92,562) | $10.12 | | Options outstanding at Jun 30, 2025 | 2,263,458 | $11.36 | | Options exercisable at Jun 30, 2025 | 1,912,281 | $12.34 | 9. Net Loss Per Share This note presents the computation of basic and diluted net loss per common share, detailing the numerator (net loss) and denominator (weighted-average common shares outstanding) for both basic and diluted calculations. It also lists potentially antidilutive securities excluded from diluted EPS Net Loss Per Share (Three and Six Months Ended June 30) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :------- | :------- | | Basic net loss per common share | $(0.32) | $(0.44) | $(0.64) | $(0.56) | | Diluted net loss per common share | $(0.32) | $(0.44) | $(0.64) | $(1.52) | Antidilutive Securities Excluded from Diluted EPS (June 30) | Security Type | 2025 | 2024 | | :-------------- | :---------- | :---------- | | Stock options | 2,263,458 | 2,254,747 | | ELOC shares | — | 1,317,491 | | Warrants | 5,558,333 | 2,400 | | Restricted stock | 25,000 | — | 10. Income Taxes This note states that the company recorded no income tax benefit or expense for the periods presented due to a full valuation allowance against its deferred tax assets. It also mentions potential limitations on net operating loss carryforwards due to ownership changes - The company's income tax benefit (expense) was $0 for the three and six months ended June 30, 2025 and 2024, due to a full valuation allowance against its deferred tax assets[88] - Net operating loss and tax credit carryforwards may be subject to annual limitations if there are cumulative changes in ownership interest exceeding 50% over a three-year period, as defined by Sections 382 and 383 of the Internal Revenue Code[89] 11. Segment Information The company operates as a single reportable segment, focusing on the discovery, development, and commercialization of buntanetap for neurodegenerative diseases. The Chief Operating Decision Maker (CODM) assesses performance and allocates resources based on net loss and monitors specific expense categories - Annovis Bio operates as a single reportable segment, encompassing all activities related to the development of buntanetap for AD, PD, and other neurodegenerative diseases[91] Segment Expense Categories (Three and Six Months Ended June 30) | Expense Category | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :---------- | :---------- | :----------- | :----------- | | Program expenses (clinical stage) | $(4,228,642) | $(4,676,084) | $(8,445,857) | $(10,588,112) | | Program expenses (preclinical/discovery) | $(49,714) | $(169,176) | $(80,313) | $(277,514) | | Personnel-related expenses | $(1,496,642) | $(2,333,028) | $(2,894,516) | $(3,527,715) | | General and administrative professional fees | $(292,649) | $(389,485) | $(737,514) | $(758,838) | | Other segment items | $(203,806) | $(194,865) | $(395,934) | $(420,266) | | Interest income | $191,395 | $25,978 | $379,007 | $70,146 | | Other non-cash income (expense) items | $(140,000) | $2,716,248 | $418,000 | $9,414,940 | | Net Loss | $(6,220,058) | $(5,020,412) | $(11,757,127) | $(6,087,359) | 12. Subsequent Events This note indicates that there were no subsequent events requiring disclosure - No subsequent events were reported[94] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, changes in results of operations, and liquidity for the periods presented. It includes a cautionary note on forward-looking statements, an overview of the company's business and clinical development, funding requirements, and a detailed comparison of financial results Cautionary Note Regarding Forward-Looking Statements This section advises readers that the report contains forward-looking statements subject to various risks and uncertainties, and the company undertakes no obligation to update them - The report contains forward-looking statements subject to substantial risks and uncertainties, including those related to cash needs, business strategies, regulatory approvals, clinical trial timing and costs, market acceptance, reliance on third parties, competitive position, market size assumptions, intellectual property, financial results, and industry trends[96][97][98] - Readers are cautioned not to rely on forward-looking statements as predictions of future events and the company undertakes no obligation to update them, except as required by law[99][100] Company Overview Annovis Bio is a late-stage clinical drug platform company developing buntanetap for neurodegenerative diseases, with promising clinical trial results and an ongoing Phase 3 AD trial - Annovis Bio is a late-stage clinical drug platform company focused on neurodegeneration (AD, PD) with its lead product candidate, buntanetap. Buntanetap is an orally administered small molecule designed to inhibit multiple neurotoxic proteins (APP/Aβ, tau/phospho-tau, α-Synuclein) to restore axonal and synaptic activity[102][113][114] - Completed Phase 1/2 clinical studies in AD and PD patients showed buntanetap lowered neurotoxic protein levels, improved axonal transport, reduced inflammation, and improved cognition in AD (ADAS-Cog) and motor function in PD (MDS-UPDRS)[102][103][104] - The Phase 3 PD Study was completed in December 2023, with topline efficacy data released in July 2024 showing improvements in UPDRS and cognition in subgroups. The FDA approved an open-label study for PD patients[107][108] - The Phase 2/3 AD study was completed in February 2024, with topline data in April 2024 showing dose-dependent, statistically significant improvement in ADAS-Cog11 in early AD patients. The FDA has aligned on a development path for buntanetap towards NDA filings for short-term and long-term efficacy[109][110] - A pivotal FDA-cleared ANVS-25001 Phase 3 trial in early AD patients was initiated in February 2025, with a 6-month period for symptomatic efficacy and an additional 12 months for potential disease-modifying efficacy. The trial will use ADAS-Cog13, ADCS-iADL, volumetric MRI, and plasma biomarkers[111][112] Funding Requirements The company has an accumulated deficit and insufficient cash to fund operations for the next year, necessitating substantial additional capital - The company has an accumulated deficit of $146.6 million as of June 30, 2025, and expects to incur further losses. Existing cash and cash equivalents ($17.1 million) are only sufficient to fund operations until Q1 2026[116][117] - Substantial additional capital is required to complete product development and commercialization, to be raised through public/private equity, debt, or collaboration/licensing arrangements. There is no assurance that such capital will be available on acceptable terms[117][118] Results of Operations This section provides a detailed comparison of the company's operating results for the three and six months ended June 30, 2025, and 2024, highlighting changes in research and development expenses, general and administrative expenses, interest income, other financing costs, and the change in fair value of warrants Comparison of the Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, total operating expenses decreased by $1.5 million, primarily due to lower R&D and G&A expenses. Net loss increased by $1.2 million, mainly driven by a significant decrease in the gain from the change in fair value of warrants Operating Results (Three Months Ended June 30) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Research and development | $5,162 | $5,785 | $(623) | | General and administrative | $1,110 | $1,977 | $(867) | | Total operating expense | $6,272 | $7,762 | $(1,490) | | Interest income | $191 | $26 | $165 | | Other financing costs | $0 | $(1,346) | $1,346 | | Change in fair value of warrants | $(140) | $4,062 | $(4,202) | | Net loss | $(6,221) | $(5,020) | $(1,201) | - Research and development expenses decreased by $0.6 million, mainly due to $2.5 million lower contract manufacturing and drug substance costs, partially offset by $1.9 million higher clinical labor and pass-through costs for the Phase 3 AD program[121] - General and administrative expenses decreased by $0.9 million, primarily due to $0.7 million lower stock-based compensation and $0.2 million reduced corporate legal, printing, and public relations fees[123] - Interest income increased by $0.2 million due to higher cash and cash equivalent balances from the February 2025 public offering. Other financing costs decreased by $1.3 million as the 2024 ELOC facility was exhausted[124][125] - The change in fair value of warrants resulted in a $0.1 million loss in Q2 2025, compared to a $4.1 million gain in Q2 2024, a $4.2 million difference driven by increased stock price volatility in Q2 2024[126] Comparison of the Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, total operating expenses decreased by $3.0 million, driven by lower R&D and G&A. However, net loss significantly increased by $5.7 million, primarily due to a substantial reduction in the gain from the change in fair value of warrants compared to the prior year Operating Results (Six Months Ended June 30) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Research and development | $10,173 | $12,307 | $(2,134) | | General and administrative | $2,381 | $3,265 | $(884) | | Total operating expense | $12,554 | $15,572 | $(3,018) | | Interest income | $379 | $70 | $309 | | Other financing costs | $0 | $(1,346) | $1,346 | | Change in fair value of warrants | $418 | $10,761 | $(10,343) | | Net loss | $(11,757) | $(6,087) | $(5,670) | - Research and development expenses decreased by $2.1 million, primarily due to a $6.5 million decrease in costs for completed Phase 3 PD and Phase 2/3 AD studies and a $1.1 million decrease in clinical material manufacturing, offset by $4.7 million increased costs for the active Phase 3 AD program and $0.8 million in clinical support costs[128][129][130] - General and administrative expenses decreased by $0.9 million, mainly from a $0.7 million decrease in stock-based compensation and $0.2 million in reduced employee salary costs[131] - Interest income increased by $0.3 million due to higher cash balances from the February 2025 public offering. Other financing costs decreased by $1.3 million as the 2024 ELOC facility was exhausted[132][133] - The change in fair value of warrants resulted in a $0.4 million gain in YTD 2025, significantly lower than the $10.8 million gain in YTD 2024, a $10.4 million difference primarily due to higher stock price volatility in the first half of 2024[134] Liquidity and Capital Resources This section discusses the company's sources and uses of cash, highlighting its reliance on equity and warrant sales for funding. It details recent financing activities, cash flow trends, and the ongoing need for additional capital to support operations and clinical trials - Since inception, the company has primarily financed operations through common stock and warrant sales, incurring losses and negative cash flows. As of June 30, 2025, cash and cash equivalents totaled $17.1 million, which is not sufficient to fund operations for the next twelve months[135] - In February 2025, a public offering with ThinkEquity generated $19.3 million in net proceeds from the sale of 5.3 million units (common stock and warrants)[136] - Through the December 2024 ATM facility with Oppenheimer & Co. Inc., the company sold 0.1 million shares of common stock for gross proceeds of $0.5 million during the six months ended June 30, 2025[137][138] Cash Flow Summary (Six Months Ended June 30) | Activity | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :--------------------------------------- | :--------------------------- | :--------------------------- | | Operating activities | $(13,205) | $(10,408) | | Financing activities | $19,783 | $8,651 | | Net increase (decrease) in cash | $6,578 | $(1,757) | - Cash used in operating activities increased by $2.8 million to $13.2 million for the six months ended June 30, 2025, driven by additional cash paid for clinical trials and related expenses, with elevated burn expected due to the active Phase 3 AD trial[140][141] - Cash provided by financing activities increased to $19.8 million in YTD 2025 (from $8.7 million in YTD 2024), mainly from the ThinkEquity offering and ATM facility, compared to proceeds from registered direct offerings, ELOC, and warrant exercises in the prior year[142] February 2025 ThinkEquity Underwritten Offering Details the February 2025 public offering where the company sold 5.3 million units, each consisting of common stock and a warrant, generating $19.3 million in net proceeds - On February 3, 2025, the company completed an underwritten public offering of 5.3 million units (common stock and ThinkEquity Warrants) at $4.00 per unit, resulting in gross proceeds of $21.0 million and net proceeds of $19.3 million[136] December 2024 ATM Describes the Equity Distribution Agreement established in December 2024, allowing the company to sell up to $50.0 million of common stock through Oppenheimer & Co. Inc., and the proceeds generated during the current period - The company entered into an Equity Distribution Agreement in December 2024 to sell up to $50.0 million of common stock through Oppenheimer & Co. Inc. During the six months ended June 30, 2025, 0.1 million shares were sold for $0.5 million in gross proceeds[137][138] Cash Flows Provides a summary table of cash flows from operating and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary (Six Months Ended June 30) | Activity | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :--------------------------------------- | :--------------------------- | :--------------------------- | | Operating activities | $(13,205) | $(10,408) | | Financing activities | $19,783 | $8,651 | | Net increase (decrease) in cash | $6,578 | $(1,757) | Operating Activities Explains the increase in cash used in operating activities, primarily due to higher clinical trial expenses, and anticipates continued elevated cash burn - Cash used in operating activities increased by $2.8 million to $13.2 million for the six months ended June 30, 2025, driven by additional cash paid for clinical trials and related expenses. Elevated operating cash burn is expected due to costs associated with the active Phase 3 AD trial[140][141] Financing Activities Details the sources of cash provided by financing activities, primarily from the ThinkEquity offering and ATM facility in 2025, contrasting with prior year sources - Cash provided by financing activities was $19.8 million for the six months ended June 30, 2025, mainly from $19.3 million in proceeds from the ThinkEquity registered offering and $0.5 million from the ATM facility. In 2024, financing activities provided $8.7 million from registered direct offerings, ELOC facility, and warrant exercises[142] Contractual Obligations and Other Commitments This section is not required for smaller reporting companies - This item is not required for smaller reporting companies[143] Factors that May Affect Future Results Refers to the comprehensive discussion of risk factors in the company's Annual Report on Form 10-K for the year ended December 31, 2024, with no material changes noted - Important factors that may affect future results are discussed in Part I, Item 1A 'Risk Factors' of the Annual Report on Form 10-K for the year ended December 31, 2024. No material changes to these disclosures have occurred[144] Off-Balance Sheet Arrangements The company reports having no off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[145] Critical Accounting Policies and Significant Judgments and Estimates States that there were no significant changes to the critical accounting policies from those described in the 2024 Annual Report on Form 10-K - No significant changes were made to the critical accounting policies from those described in the Annual Report on Form 10-K for the year ended December 31, 2024[146] Item 3. Quantitative and Qualitative Disclosure About Market Risk This item is not required for smaller reporting companies - This item is not required for smaller reporting companies[147] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of information[148] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting were identified during the period - No changes in internal control over financial reporting were identified during the period that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[149] PART II – OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, operating results, or financial condition - The company is not currently a party to any legal proceedings that are believed to have a material adverse effect on its business, operating results, or financial condition, and is unaware of any pending or threatened proceedings[152] Item 1A. Risk Factors Refers to the risk factors discussed in the company's Annual Report on Form 10-K, noting no material changes - Risk factors are discussed in Item 1A 'Risk Factors' of the Annual Report on Form 10-K filed on March 21, 2025, with no material changes to these disclosures[153] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds were reported[154] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - No defaults upon senior securities were reported[155] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[156] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading plans during the three months ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading plans during the three months ended June 30, 2025[157] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL-related documents - Exhibits include Amended and Restated Certificate of Incorporation and Bylaws, Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1), and XBRL Instance, Schema, Calculation, Definition, Labels, and Presentation Linkbase Documents[159] Signatures The report is signed by the President and Chief Executive Officer, Maria Maccecchini, and the Vice President Finance, Andrew Walsh, on August 12, 2025 - The report was signed by Maria Maccecchini, President and Chief Executive Officer, and Andrew Walsh, Vice President Finance, on August 12, 2025[162]