Alaunos Therapeutics, Inc.

Organization

Overview

Alaunos Therapeutics, Inc., which is referred to herein as “Alaunos,” or the “Company,” is a pre-clinical stage obesity and metabolic disorders company with a current focus on developing oral small molecules for obesity and other metabolic disorders. The Company was historically involved in the development of adoptive TCR therapies, designed to treat multiple solid tumor types in large cancer patient populations with unmet clinical needs.

The Company’s operations to date have consisted primarily of conducting research and development and raising capital to fund those efforts.

As of June 30, 2026, there were 2,486,140 shares of common stock outstanding,500 Series A-1 shares of preferred stock outstanding,850 Series A-2 shares of preferred stock outstanding and an additional 327,098 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants. The Company also has 601,774 shares available for issuance under its 2020 Equity Incentive Plan.

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

Liquidity and Going Concern

The Company has operated at a loss since its inception in 2003 and has no recurring revenue from operations. The Company anticipates that losses will continue for the foreseeable future. As of June 30, 2026, the Company had approximately $0.12 million of cash and cash equivalents. The Company’s accumulated deficit at June 30, 2026 was approximately $926.6 million. The Company’s ability to continue operations after its current cash resources are exhausted depends on future events including its ability to obtain additional financing or to achieve profitable results, as to which no assurances can be given. If adequate additional funds are not available when required, management may need to curtail its development efforts and planned operations to conserve cash until sufficient additional capital is raised. There can be no assurances that such a plan would be successful.

Based on the current cash forecast and the Company's dependence on its ability to obtain additional financing to fund its operations after the current resources are exhausted, about which there can be no certainty, management has determined that the Company's present capital resources will not be sufficient to fund its planned operations for at least one year from the issuance date of the financial statements which raises substantial doubt as to the Company's ability to continue as a going concern. This forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of expenses could vary materially and adversely as a result of a number of factors.

Basis of Presentation

The accompanying unaudited interim condensed financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair presentation of the financial position of the Company and its results of operations and cash flows for the periods presented. The unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 31, 2026 and as amended by Amendment No. 1 filed with the SEC on April 30, 2026. (collectively, the “2025 Annual Report”)

The results disclosed in the condensed statements of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the full fiscal year 2026.

Use of Estimates

The preparation of condensed financial statements in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

Nasdaq Stockholders' Equity Deficiency Notice

On April 9, 2026, the Company received a notice (the “Notice”) from the Listing Qualifications staff of Nasdaq notifying the Company that the Company’s stockholders equity, as reported in its 2025 Annual Report, did not satisfy the continued listing requirements under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company’s stockholder equity be at least $2.5 million. In its 2025 Form 10-K, the Company reported stockholders’ equity of $2.2 million, and, as a result, does not currently satisfy Nasdaq Listing Rule 5550(b)(1).

The Notice had no immediate effect on the Company’s listing on the Nasdaq Capital Market. In accordance with Nasdaq rules, the Company had 45 calendar days from the date of the notification to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). The Company has submitted its plan to regain compliance and is actively working with Nasdaq as it reviews and responds to the Company’s plan.

In the event that the Company’s plan is not accepted, or that the plan is granted by the staff at Nasdaq but the Company is unable to regain compliance, the Company would have the right to request a hearing before an independent Nasdaq hearings panel. The request for a hearing would result in a stay of any suspension or delisting action pending the conclusion of the hearing process. See Part II, Item 1A. “Risk Factors” for additional information regarding risks associated with the Company’s continued listing on Nasdaq.

Nasdaq Minimum Market Value Requirement

On July 22, 2026, the SEC’s Division of Trading and Markets, acting pursuant to delegated authority, approved a Nasdaq rule change that would require companies listed on the Nasdaq Capital Market to maintain a market value of listed securities (“MVLS”) of at least $5.0 million. Under the approved rule, a company whose MVLS remains below $5.0 million for 30 consecutive business days would be subject to an immediate staff delisting determination without an automatic compliance period. On July 29, 2026, following the filing of notices of intention to petition for review, the SEC automatically stayed the approval order pending further Commission action. As of the date these condensed financial statements were issued, the stay remained in effect. The Company cannot predict the timing or outcome of the SEC’s review, whether or when the rule will become operative, or the implementation and measurement procedures that may apply if the stay is lifted.

Summary of Significant Accounting Policies

Certain of our accounting estimates are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Management believes that clinical trial expenses and other research and development expenses, collaboration agreements, fair value measurements of share based arrangements, and income taxes are its most critical accounting estimates. Our accounting policies are discussed in detail in Note 2 – Summary of Significant Accounting Policiesin the audited financial statements included in the Company’s 2025 Annual Report. There have been no material changes in those policies since the filing of the 2025 Annual Report.

Net earnings per share

Basic earnings per share of common stock is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is computed using the weighted-average number of shares of common stock outstanding during the period, plus the dilutive effect of outstanding options and warrants, using the treasury stock method, unless the effect on net earnings per share is antidilutive. The following have been excluded from the calculation of dilutive earnings per share, as the effect was antidilutive:

The following table show the net loss attributable to common shareholders after including undeclared cumulative preferred dividends used to calculate the basic and diluted earn ings per share, as shown on the statement of operations (See Note 5. Equity - Series A-1 and A-2 Preferred Stock Cumulative Dividends):

Commitments and Contingencies

License Agreements

License Agreement and Research and Development Agreement —The University of Texas MD Anderson Cancer Center

In 2015, the Company, together with Precigen, entered into a license agreement, or the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN). Pursuant to the MD Anderson License, the Company, together with Precigen, holds an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR T-cell therapies, non-viral gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs.

In 2015, the Company, Precigen and MD Anderson entered into the 2015 R&D Agreement to formalize the scope and process for the transfer by MD Anderson, pursuant to the terms of the MD Anderson License, of certain existing research programs and related technology rights, as well as the terms and conditions for future collaborative research and development of new and ongoing research programs.

As provided under the MD Anderson License, the Company provided funding for research and development activities in support of the research programs under the 2015 R&D Agreement. At various times, the Company amended the 2015 R&D Agreement to extend the term until December 31, 2026 and in 2019 entered into the 2019 R&D Agreement, pursuant to which the Company agreed to collaborate with respect to the TCR program.

The 2019 R&D Agreement will terminate on December 31, 2026 and either party may terminate the 2019 R&D Agreement following written notice of a material breach. The 2019 R&D Agreement also contains customary provisions related to indemnification obligations, confidentiality and other matters.

During the reporting period, the Company continued to engage with The University of Texas M.D. Anderson Cancer Center (“MD Anderson”) to wind down the TCR trials. The parties completed the final reconciliation of amounts due under the related R&D agreements, and the Company received the final invoice during the second quarter of 2025. Amounts due to MD Anderson and recorded in accounts payable were $0 and $143 as of June 30, 2026 and December 31, 2025, respectively.

On November 4, 2025, the Office of the Attorney General of Texas, on behalf of MD Anderson, issued a demand for payment. On December 17, 2025, the Company entered into a Settlement and Release Agreement with MD Anderson to resolve the matter. Pursuant to the agreement, the Company agreed to pay $285 in six installments through May 30, 2026, in full satisfaction of the outstanding invoices. The agreement also provides for mutual general releases, subject to customary exceptions, including for breach of the settlement agreement and certain ongoing matters such as Protocol 2006-0676.

As of June 30, 2026, the Company had paid the aggregate settlement amount of $285, all required installments had been satisfied, andno amounts remained outstanding to MD Anderson under the settlement agreement.

Patent and Technology License Agreement—The University of Texas MD Anderson Cancer Center and the Texas A&M University System

In August 2004, the Company entered into a patent and technology license agreement with MD Anderson and the Texas A&M University System, which the Company refers to, collectively, as the Licensors. Under this agreement, the Company was granted an exclusive, worldwide license to rights (including rights to U.S. and foreign patent and patent applications and related improvements and know-how) for the manufacture and commercialization of two classes of organic arsenicals (water- and lipid-based) for human and animal use. The class of water-based organic arsenicals includes darinaparsin.

Under the terms of the agreement, the Company may be required to make payments to the Licensors upon achievement of certain milestones in varying amounts which, on a cumulative basis could total up to an additional $4.5 million. In addition, the Licensors are entitled toreceive low single digit royalties on net sales from a licensed product and will also be entitled to receive a portion of any fees that the Company may receive from a possible sublicense under certain circumstances. During the three and six months ended June 30, 2026 and 2025, the Company didnot incur any milestone expenses or royalty expenses under this agreement.

Collaboration Agreement with Solasia Pharma K.K.

In 2011, the Company entered into a License and Collaboration Agreement with Solasia Pharma K. K., or Solasia, which was amended in 2014 to include an exclusive worldwide license and further amended in 2021 to revise certain payment schedule details, or, as so amended, the Solasia License and Collaboration Agreement. Pursuant to the Solasia License and Collaboration Agreement, the Company granted Solasia an exclusive license to develop and commercialize darinaparsin in both intravenous and oral forms and related organic arsenic molecules, in all indications for human use.

As consideration for the license, the Company is eligible to receive from Solasia development- and sales-based milestones, a royalty on net sales of darinaparsin, once commercialized, and a percentage of any sublicense revenue generated by Solasia.

During the three and six months ended June 30, 2026, the Company earnedno collaboration revenue under this agreement. During the three and six months ended June 30, 2025, the Company earned collaboration revenue of $0 and $2, respectively under this agreement.

Insurance Contract

During 2023, the Company entered into an insurance arrangement covering certain risks, for which the premium had been fully prepaid, with coverage effective over a six-year period. Accordingly, the Company began amortizing the prepaid expense related to the contract. The Company has classified the prepaid contract between its current portion and long term-portion. As of June 30, 2026, $222 is included in prepaid expenses and other current assets and $776 is included in prepaid expense and other non-current assets in the accompanying condensed consolidated balance sheet.

Equity

Equity Incentive Plan and Share Registration

On July 6, 2026, the Company registered an additional 1,000,000 shares of common stock for issuance under the Alaunos Therapeutics, Inc. 2020 Equity Incentive Plan by filing a Registration Statement on Form S-8. The increase in shares available for issuance under the plan from 130,745 shares to 1,130,745 shares was previously approved by the Company’s stockholders on July 3, 2025.

Shares issued for Services

During the six months ended June 30, 2026, the Company issued an aggregate of 106,532 shares of its common stock, par value $0.001 per share, to members of the board of directors, an employee and consultants in lieu of cash consideration for services rendered. The aggregate fair value of the shares issued was approximately $273.

Series A-1 and A-2 Preferred Stock Cumulative Dividends

Cumulative dividends on the Company’s Series A-1 and Series A-2 Convertible Preferred Stock accrue at 10% per annum and compound quarterly by increasing the liquidation preference. Undeclared cumulative dividends are not recorded as a liability. Because the Company reported a net loss for the periods presented, cumulative preferred dividends increased the net loss attributable to common stockholders in the earnings-per-share calculation. As of June 30, 2026, undeclared cumulative dividends totaled $64 for Series A-1 and $89 for Series A-2.

Equity Line of Credit

In May 2025, the Company entered into an equity purchase agreement with Mast Hill Fund, L.P. establishing an equity line of credit (the “Equity Line of Credit”), pursuant to which the Company has the right, but not the obligation, to sell up to $25.0 million of shares of its common stock over a period of up to 24 months, subject to certain conditions and limitations. The purchase price for shares sold under the Equity Line of Credit is generally based on 97% of the applicable volume-weighted average price of the Company’s common stock, subject to the terms, volume limitations, minimum pricing provisions and beneficial ownership limitations set forth in the underlying equity purchase agreement.

During the three and six months ended June 30, 2026, the Company sold an aggregate of 30,598 shares of common stock under the Equity Line of Credit for gross proceeds of approximately $74. The Company incurred approximately $4 of transaction costs and fees associated with these sales, resulting in net cash proceeds of approximately $70. All sales under the Equity Line of Credit during the six months ended June 30, 2026 occurred during the three months ended June 30, 2026.

Transaction costs directly attributable to the issuance of the shares were recorded as a reduction of additional paid-in capital. In addition, a proportionate amount of previously deferred issuance costs associated with the Equity Line of Credit was recognized as a reduction of the proceeds from the shares issued under the facility.

Stock-Based Compensation

The following table presents share-based compensation expense on all employee and non-employee awards included in the accompanying condensed statements of operations as follows:

The grant date fair value of stock options was estimated on the date of grant using a Black-Scholes option valuation model with the following assumptions:

Stock option activity under the Company’s stock option plans for thesix months ended June 30, 2026 was as follows:

At June 30, 2026, total unrecognized compensation costs related to unvested stock options outstanding amounted to $323 and is expected to be recognized over a weighted-average period of 2 years.

Warrants

The following is a summary of the Company's warrant activity for thesix months ended June 30, 2026:

Segment Information

The Chief Operating Decision Maker (“CODM”) for the Company is the Chief Executive Officer (the "CEO"). The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. This decision-making process reflects the way in which financial information is regularly reviewed and used by the CODM to evaluate performance, set operational targets, forecast future financial results, and allocate resources. Accordingly, the Company has determined that it has a single reportable and operating segment related to biopharmaceutical research and development.

The Company’s CODM assesses financial performance and allocates resources based on operating results which are also reported on the accompanying condensed statements of operations. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM utilizes consolidated operating results by comparing actual results against budgeted amounts. As part of this process, consolidated net loss is a critical performance measure used to evaluate the Company’s operating performance and guide strategic decisions and resource allocations, including additional investments in research and development.

Subsequent Events

Subsequent to June 30, 2026, the Company issued an aggregate of 54,340 shares of its common stock, par value $0.001 per share, to members of the Board of Directors, consultants and an employee in consideration for board service fees, services rendered and salary compensation, respectively, with an aggregate fair value of approximately $105.