Alpha Cognition Inc(ACOG) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section presents Alpha Cognition Inc.'s unaudited condensed interim consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies for the periods ended June 30, 2025, and December 31, 2024 Condensed Interim Consolidated Balance Sheets | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $39,405,210 | $48,546,210 | | Total current assets | $44,648,207 | $50,251,178 | | Total assets | $45,122,942 | $50,736,938 | | Total current liabilities | $3,039,658 | $3,350,752 | | Total liabilities | $13,226,626 | $9,273,893 | | Total stockholders' equity | $31,896,316 | $41,463,045 | Condensed Interim Consolidated Statements of Operations and Comprehensive Loss | Metric (Three Months Ended June 30) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Product, net revenue | $1,576,411 | $- | | Licensing revenue | $81,276 | $- | | Total revenue | $1,657,687 | $- | | Total costs and expenses | $7,394,688 | $2,421,211 | | Net loss and comprehensive loss | $(10,488,952) | $(2,115,512) | | Net loss per share, basic and diluted | $(0.65) | $(0.35) | | Metric (Six Months Ended June 30) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Product, net revenue | $1,923,340 | $- | | Licensing revenue | $2,663,001 | $- | | Total revenue | $4,586,341 | $- | | Total costs and expenses | $14,009,774 | $6,832,729 | | Net loss and comprehensive loss | $(12,495,495) | $(7,118,223) | | Net loss per share, basic and diluted | $(0.78) | $(1.21) | Condensed Interim Consolidated Statements of Stockholders' Equity (Deficiency) - For the three months ended June 30, 2025, total stockholders' equity decreased from $40,811,875 to $31,896,316, primarily due to a net loss of $10,488,952, partially offset by share-based compensation of $1,547,570 and warrants exercised for $25,823[12] - For the six months ended June 30, 2025, total stockholders' equity decreased from $41,463,045 to $31,896,316, driven by a net loss of $12,495,495, partially offset by share-based compensation of $2,902,943 and warrants exercised for $25,823[13] Condensed Interim Consolidated Statements of Cash Flows | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------- | :-------------- | :-------------- | | Net cash provided by (used in) operating activities | $(8,183,776) | $(3,873,814) | | Net cash (used in) investing activities | $(71,585) | $- | | Net cash provided by (used in) financing activities | $(845,111) | $3,573,424 | | Change in cash and cash equivalents | $(9,100,472) | $(300,390) | | Cash and cash equivalents, end of period | $39,463,610 | $1,194,183 | NOTE 1 – NATURE OF OPERATIONS - Alpha Cognition Inc. is a commercial-stage biopharmaceutical company focused on neurodegenerative diseases, with its common shares trading on NASDAQ under 'ACOG' since November 12, 2024[17] - The company received FDA approval on July 29, 2024, for ZUNVEYL (formerly ALPHA-1062) to treat mild-to-moderate Alzheimer's disease[18] NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES - Revenue from product sales (Zunveyl tablets) is recognized when control transfers to the distributor, typically upon delivery, with deductions for chargebacks, returns, and distributor fees[24][25] - Licensing revenue is recognized based on a five-step model, identifying distinct performance obligations and allocating transaction price, with variable consideration (like milestones and royalties) recognized when probable or when related sales occur[27][28][32][33] - Inventory is valued at the lower of cost or net realizable value, with costs capitalized after regulatory approval (July 2024) when future commercialization is probable[36][37] - Share-based compensation and liability-based awards (bonus rights) are fair valued using the Black-Scholes model, with changes in bonus rights fair value recognized in general and administrative expense[39][41] - Warrant liabilities are measured at fair value using the Black-Scholes option pricing model, with changes recognized in the consolidated statements of operations and comprehensive loss[49][50] - The company adopted ASU 2023-09 (Income Tax Disclosures) effective after December 15, 2024, and is evaluating ASU 2024-03 (Expense Disaggregation Disclosures) effective after December 15, 2026[61][62] NOTE 3 – R&D GRANT - The Company was awarded a $750,000 R&D grant from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on ALPHA-1062 Intranasal for mild Traumatic Brain Injury (mTBI), with funds restricted for specified research and expiring September 30, 2028[63][64] | Metric (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------- | :-------- | :-------- | | Cash received | $174,675 | $290,825 | | Grant income recognized | $71,095 | $272,340 | | Balance Sheet (As of) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Restricted cash | $58,400 | $17,872 | | Deferred income (receivable) | $23,936 | $(79,643) | NOTE 4 – INVENTORY | Inventory Type | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Raw materials | $- | $- | | Work in progress | $- | $615,133 | | Finished goods | $875,852 | $- | | Total | $875,852 | $615,133 | - During the six months ended June 30, 2025, the Company recognized $67,919 in cost of sales, compared to $nil in 2024[67] NOTE 5 – BALANCE SHEET COMPONENTS | Prepaid Expenses and Other Current Assets | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Other receivables | $140,272 | $253,426 | | Prepaid insurance and other expenses | $2,292,953 | $795,141 | | Prepaid legal expenses | $61,824 | $23,396 | | Total | $2,495,049 | $1,071,963 | | Accounts Payable and Accrued Liabilities | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Accounts payable | $752,334 | $872,676 | | Other accrued liabilities | $805,761 | $643,063 | | Accrued payroll and bonuses | $1,249,727 | $923,550 | | Total | $2,807,822 | $2,439,289 | NOTE 6 – INTANGIBLE ASSETS - The Company's intangible assets, primarily licenses, had a net balance of $402,196 as of June 30, 2025, down from $412,969 at December 31, 2024[70] - A new patent granted on January 25, 2025, for 'Coated Tablets for pH-Dependent Release of Benzgalantamine' extended the estimated useful life of the related license from 5 years to 19 years, effective January 1, 2025, resulting in a decrease in amortization expense by approximately $28,700 for the six months ended June 30, 2025[70][71][72] | Year Ending December 31, | Estimated Annual Amortization Expense | | :----------------------- | :------------------------------------ | | 2025 | $10,774 | | 2026 | $21,546 | | 2027 | $21,546 | | 2028 | $21,546 | | 2029 | $21,546 | | Thereafter | $305,238 | | Total | $402,196 | NOTE 7 – PROMISSORY NOTE - The promissory note of $1,400,000 issued to Neurodyn Life Sciences Inc. (NLS) in March 2015 for the ALPHA-1062 Technology was fully repaid on January 29, 2025, with the principal balance outstanding reducing from $911,463 at December 31, 2024, to $nil at June 30, 2025[75][76][77] NOTE 8 – CONVERTIBLE DEBENTURES AND CONVERSION FEATURE LIABILITY - On November 13, 2024, convertible debentures issued on September 24, 2024, automatically converted into 801,413 Common Shares at $5.75 per share following a Qualified Offering[78][79][81] - In connection with the conversion, the Company issued an additional 215,421 warrants and repriced existing 430,805 warrants from $10.55 to $7.19 per share[80][81] NOTE 9 – OTHER LONG-TERM LIABILITIES - The Company's bonus rights liability increased from $102,783 at December 31, 2024, to $187,851 at June 30, 2025, with total compensation expense for bonus rights recognized within general and administrative expenses being $82,598 for the six months ended June 30, 2025 (compared to a recovery of $(23,371) in 2024)[85] - The bonus rights agreements were amended on April 16, 2024, extending the vesting date to April 28, 2027, and reducing the grant price from $39.50 to $29.75[84] | Valuation Assumptions (Weighted Average) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Risk-free interest rate | 3.72% | 4.25% | | Expected life (in years) | 1.84 | 2.33 | | Volatility | 140.89% | 166.95% | | Weighted average fair value per bonus right | $4.33 | $3.30 | NOTE 10 – STOCKHOLDERS' EQUITY - During the six months ended June 30, 2025, the Company issued 3,332 Common Shares for the exercise of warrants, generating $25,823 in proceeds[87] | Warrants Activity | Number of Warrants | Weighted Average Exercise Price (as converted) | Remaining Contractual Term (Years) | | :---------------- | :----------------- | :--------------------------------------------- | :--------------------------------- | | Balance, Dec 31, 2024 | 3,635,962 | $7.37 | 3.30 | | Exercised | (3,332) | $7.75 | - | | Balance, Jun 30, 2025 | 3,632,630 | $7.40 | 2.80 | - Warrant liabilities increased significantly, with the derivative liability for CAD exercise prices rising from $503,129 to $792,893 (a $289,764 loss), Initial and Additional Debenture Warrants from $2,646,843 to $4,514,619 (a $1,867,776 loss), and Agent Warrants from $2,670,386 to $4,537,055 (a $1,866,669 loss) for the six months ended June 30, 2025, primarily due to the fundamental transaction clause linking volatility to Bloomberg's HVT function, causing them to fail the 'fixed-for-fixed' test and be classified as derivative liabilities[91][95][96][98][99] - The 2025 Stock and Incentive Plan was approved on June 19, 2025, reserving 2,000,000 Common Shares for equity-based compensation, with no awards granted as of June 30, 2025[101] | Share-Based Compensation Expense (Six Months Ended June 30) | 2025 | 2024 | | :---------------------------------------------------------- | :---------- | :-------- | | Research and development | $71,835 | $153,541 | | General and administrative | $2,831,108 | $453,867 | | Total share-based compensation | $2,902,943 | $607,408 | - Common Share options outstanding increased from 888,529 at December 31, 2024, to 2,101,696 at June 30, 2025, with 1,213,097 options granted during the period[105] NOTE 11 – CMS LICENSE AND COLLABORATION AGREEMENT - On January 8, 2025, the Company entered into an exclusive license agreement with CMS International Development and Management Limited for ZUNVEYL in the Asia-Pacific region (excluding Japan), Australia, and New Zealand[111] - The Company received a $3.0 million upfront payment and is eligible for up to $11.0 million in development/regulatory milestones and $30.0 million in sales milestones, plus 9% annual royalties on net sales[112] - $3.0 million upfront payment was allocated to two performance obligations: $2,525,900 for the intellectual property license (recognized in Q1 2025) and $474,100 for regulatory, technical, and clinical assistance (recognized over time, with $111,650 recognized as of June 30, 2025)[114][115][116] NOTE 12 – RELATED PARTY TRANSACTIONS AND BALANCES - The CEO's annual base compensation increased to $625,000 and the COO's to $500,000 on February 18, 2025[121][123] - As of June 30, 2025, $397,644 was owing to directors and officers, included in accounts payable and accrued liabilities, down from $799,941 at December 31, 2024[125] | Key Management Personnel Compensation (Six Months Ended June 30) | 2025 | 2024 | | :--------------------------------------------------------------- | :---------- | :---------- | | Management fees and salaries in research and development | $41,680 | $372,786 | | Management fees and salaries in selling, general and administrative expenses | $1,233,828 | $725,279 | | Share-based compensation in research and development | $34,434 | $264,722 | | Share-based compensation in selling, general and administrative expenses | $1,261,617 | $453,868 | | Total related party transactions | $2,571,559 | $1,816,655 | NOTE 13 – COMMITMENTS AND CONTINGENCIES - Under the Memogain Technology License Agreement for ALPHA-1062, the Company has cumulative payment obligations to Galantos Pharma GmbH of up to $17,613,000 (EUR 15,000,000) and royalty payments (3% of net sales, 10% of sublicensing revenue, 25% of upfront/milestone payments from sub-licensees)[130] - As of June 30, 2025, the Company recognized $797,389 in royalty fees for ALPHA-1062, with $755,944 paid[132] - The Company assumed obligations under a Royalty Agreement with Galantos Consulting, with cumulative payments up to $3,523,000 (EUR 3,000,000), and recognized $75,994 in royalty fees as of June 30, 2025, with $63,601 paid[133][134] - For ALPHA-0602 Technology, the Company has a license agreement with NLS involving a 1.5% royalty on commercial sales (capped at $2,000,000) and 10% of upfront payments exceeding $2,000,000, but development of ALPHA-0602 technology was discontinued in 2024[135][136][137][140] NOTE 14 – NET LOSS PER SHARE | Metric (Three Months Ended June 30) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Net loss – basic and diluted | $(10,488,952) | $(2,115,512) | | Weighted average shares | 16,020,702 | 6,009,373 | | Net loss per share | $(0.65) | $(0.35) | | Metric (Six Months Ended June 30) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Net loss – basic and diluted | $(12,495,495) | $(7,118,223) | | Weighted average shares | 16,020,015 | 5,877,006 | | Net loss per share | $(0.78) | $(1.21) | - Potentially dilutive common shares, including 3,632,630 warrants and 2,101,696 common share options as of June 30, 2025, were excluded from diluted net loss per share computation because their effect would have been anti-dilutive[143] NOTE 15 – SUBSEQUENT EVENTS - Subsequent to June 30, 2025, the Company granted 9,600 Common Shares options to employees with exercise prices of $11.24 and $9.11 per share, vesting over three years[144] - The Company issued 9,090 Common Shares on July 23, 2025, for $70,448 and 128,578 Common Shares on August 6, 2025, for $923,190, both from warrant exercises[144] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Alpha Cognition Inc.'s financial condition and results of operations, highlighting the launch of ZUNVEYL, operational challenges, funding strategies, and key financial performance drivers for the periods ended June 30, 2025, and 2024 Overview - Alpha Cognition Inc. is a commercial-stage biopharmaceutical company focused on neurodegenerative diseases, with ZUNVEYL (for mild-to-moderate Alzheimer's disease) launched on March 17, 2025, targeting long-term care facilities[146][147] - ZUNVEYL's Wholesale Acquisition Cost (WAC) is set at $749 per month, aiming to balance patient access with innovative healthcare value[147] - The Company has three additional pre-clinical development programs: ZUNVEYL in combination with memantine, ALPHA-1062 sublingual formulation, and ALPHA-1062 intranasal (ALPHA-1062IN) for mTBI. ALPHA-0602, ALPHA-0702 & ALPHA-0802 (Progranulin and GEMs) are pre-clinical assets that the Company will seek to out-license[147][148][149] - The Company's common shares commenced trading on The Nasdaq Capital Market under 'ACOG' on November 12, 2024, following delisting from the CSE[150] Operations - As of June 30, 2025, the Company had a deficit of $88,780,533 (compared to $76,285,038 at December 31, 2024) and $39,463,610 in cash and cash equivalents[151] - Management believes it has sufficient working capital but will need to raise additional capital for planned R&D, ZUNVEYL commercialization, and operating costs, exploring dilutive and non-dilutive strategic sources[151][152] - A 1-for-25 reverse stock split of common shares was completed on November 5, 2024[152][153] Components of our Results of Operations - Research and development expenses include costs for clinical supplies, non-clinical materials, contract manufacturers, employee-related expenses (salaries, benefits, stock-based compensation), travel, and consulting services[154][158] - General and administrative expenses cover personnel costs, professional services (legal, HR, audit, accounting), consulting, pre-commercialization expenses (selling and marketing), and public company compliance costs[155] Results of Operations | Metric (Three Months Ended June 30) | 2025 | 2024 | Dollar Change | Percentage Change | | :---------------------------------- | :------------ | :------------ | :------------ | :---------------- | | Total revenue | $1,657,687 | $- | $1,657,687 | 100% | | Total costs and expenses | $7,394,688 | $2,421,211 | $4,973,477 | 205% | | Net loss and comprehensive loss | $(10,488,952) | $(2,115,512) | $(8,373,440) | 396% | | Net loss per share | $(0.65) | $(0.35) | $(0.30) | 86% | | Metric (Six Months Ended June 30) | 2025 | 2024 | Dollar Change | Percentage Change | | :---------------------------------- | :------------ | :------------ | :------------ | :---------------- | | Total revenue | $4,586,341 | $- | $4,586,341 | 100% | | Total costs and expenses | $14,009,774 | $6,832,729 | $7,177,045 | 105% | | Net loss and comprehensive loss | $(12,495,495) | $(7,118,223) | $(5,377,272) | 76% | | Net loss per share | $(0.78) | $(1.21) | $0.43 | (36)% | - Research and development expenses decreased by 67% ($650,080) for the three months and 62% ($1,159,285) for the six months ended June 30, 2025, primarily due to lower product development costs and reduced management/employee time allocated to R&D after FDA approval in July 2024[161][162] - General and administrative expenses increased by 356% ($5,103,834) for the three months and 143% ($6,995,273) for the six months ended June 30, 2025, driven by expansion in commercial operations, ZUNVEYL launch, and increased share-based compensation, partially offset by a decrease in consulting fees for capital raising[163][164] - Interest income significantly increased by 19,577% ($422,866) for the three months and 6,194% ($881,472) for the six months ended June 30, 2025, reflecting higher interest earned on the Company's cash[165] - Grant income decreased to $nil for the three months ended June 30, 2025 (from $138,561 in 2024) and to $71,095 for the six months ended June 30, 2025 (from $272,340 in 2024)[166] - The Company recorded a loss of $5,172,091 on warrant liabilities for the three months ended June 30, 2025 (compared to a gain of $187,056 in 2024), and a loss of $4,024,209 for the six months ended June 30, 2025 (compared to a loss of $432,933 in 2024), primarily due to additional derivatives from the convertible debenture conversion and US IPO in November 2024, and stock price fluctuations[168] Liquidity and Capital Resources - The Company relies on external financing (debt, equity offerings, collaborations) to fund operations and commercialization of ZUNVEYL, as it does not yet generate substantial product revenue[169][173] - Expenses are expected to increase substantially with ZUNVEYL commercialization, R&D, clinical trials, personnel hiring, and public company costs[170] - Existing cash, cash equivalents, and marketable securities are estimated to fund operations and initial ZUNVEYL commercialization costs for at least the next 24 months, but additional capital will be needed to further advance commercialization plans[172] - On September 24, 2024, the Company closed a $4.545 million bridge financing through convertible notes and warrants, which automatically converted into common shares and additional warrants upon the November 13, 2024, public offering[175][176][178][179] - On November 13, 2024, the Company completed a public offering of 8,695,653 common shares at $5.75 per share, raising approximately $50 million in gross proceeds ($46.15 million net)[177][199] - As of June 30, 2025, approximately $5.59 million of the net proceeds from the public offering were spent on ZUNVEYL commercialization, $1.33 million on CMC activities, $0.91 million on loan repayment, and $4.02 million for working capital, with $34.3 million remaining[200] | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | Dollar Change | Percentage Change | | :-------------------------------------------- | :-------------- | :-------------- | :-------------- | :---------------- | | Cash used in operating activities | $(8,183,776) | $(3,873,814) | $(4,309,962) | 111% | | Cash used in investing activities | $(71,585) | $- | $(71,585) | 100% | | Net cash provided by (used in) financing activities | $(845,111) | $3,573,424 | $(4,418,535) | (124)% | Contractual Obligations and Other Commitments - The Company has existing license agreements for ALPHA-1062 and ALPHA-0602 technology and expects to enter into additional agreements for R&D, manufacturing, and collaborations, which may involve upfront payments and long-term capital commitments[185] Critical Accounting Estimates - There have been no significant changes to the Company's critical accounting estimates since December 31, 2024[188] Emerging Growth Company Status and Smaller Reporting Company Status - The Company qualifies as an emerging growth company and has elected to use the extended transition period for new or revised accounting standards, adopting them at the same time as private companies[189] - The Company is also a smaller reporting company, allowing it to take advantage of scaled disclosures[190] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, Alpha Cognition Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[191] ITEM 4. CONTROLS AND PROCEDURES Alpha Cognition Inc.'s management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, and there have been no material changes in internal control over financial reporting during the period - As of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[192] - There have been no material changes in internal control over financial reporting during the six months ended June 30, 2025[193] PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Alpha Cognition Inc. is not currently a party to any material legal proceedings, though it may be involved in various legal claims in the normal course of business - The Company is not currently a party to any material legal proceedings[195] ITEM 1A. RISK FACTORS There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[196] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Alpha Cognition Inc. did not engage in any unregistered sales of equity securities or repurchase any equity securities during the six months ended June 30, 2025. The Company has utilized approximately $11.85 million of the net proceeds from its November 2024 public offering for commercialization, CMC activities, loan repayment, and working capital, with $34.3 million remaining - The Company did not repurchase any of its equity securities during the six months ended June 30, 2025[198] - Approximately $5.59 million of the net proceeds from the November 2024 public offering were spent on ZUNVEYL commercialization, $1.33 million on CMC activities, $0.91 million on loan repayment, and $4.02 million for working capital and general corporate purposes[200] - As of June 30, 2025, the Company has approximately $34.3 million of the net proceeds remaining[200] ITEM 3. DEFAULTS UPON SENIOR SECURITIES Alpha Cognition Inc. reported no defaults upon senior securities - There were no defaults upon senior securities[201] ITEM 4. MINE SAFETY DISCLOSURE This item is not applicable to Alpha Cognition Inc. - This item is not applicable[202] ITEM 5. OTHER INFORMATION During the quarter ended June 30, 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - During the quarter ended June 30, 2025, none of the Company's directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[204] ITEM 6. EXHIBITS This section lists all exhibits filed as part of the report, including organizational documents, specimen share certificates, warrant forms, convertible note forms, certifications, and XBRL taxonomy extensions SIGNATURES The report is duly signed on behalf of Alpha Cognition Inc. by Michael McFadden, Chief Executive Officer, on August 14, 2025 - The report was signed by Michael McFadden, Chief Executive Officer of Alpha Cognition Inc., on August 14, 2025[207]