FILANA THERAPEUTICS, INC.

Filana Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note1. General and Liquidity

Filana Therapeutics, Inc. and its wholly-owned subsidiary (collectively referred to as the “Company”) discovers and develops proprietary pharmaceutical product candidates that* may*offer significant improvements to patients and healthcare professionals. The Company currently focuses its discovery and product development efforts on disorders of the nervous system.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to the Quarterly Report on Form10-Q and Article10 of Regulation S-X. All intercompany transactions and balances have been eliminated in consolidation. Accordingly, the condensed consolidated financial statements donot include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for thethree andnine months ended* September 30, 2026* arenot necessarily indicative of the results that* maybe expected for any other interim period or for the year2026.* For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form10-K for the year ended* December 31, 2025*.

Liquidity

The Company has incurred significant net losses and negative cash flows since inception, and as a result has an accumulated deficit of $525.7 million at* September 30, 2026*. The Company expects its cash requirements to be significant in the future. The amount and timing of the Company’s future cash requirements will depend on regulatory and market acceptance of its product candidates and the resources it devotes to researching and developing, formulating, manufacturing, commercializing and supporting its products. The Company* mayseek additional funding through public or private financing in the future, if such funding is available and on terms acceptable to the Company. There areno* assurances that additional financing will be available on favorable terms, or at all. However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next12 months.

On* September 17, 2026,the Company received a deficiency letter from Nasdaq Stock Market, LLC (“Nasdaq”) notifying the Company that for the last30* consecutive business days the bid price for the Company’s common stock had closed below the minimum*$1.00* per share requirement for continued inclusion on Nasdaq Capital Market pursuant to Nasdaq Listing Rule5550(a)(2) (the “Bid Price Rule”). The deficiency letter doesnot result in the immediate delisting of the Company’s common stock from Nasdaq Capital Market.

In accordance with Nasdaq Listing Rule5810(c)(3)(A), the Company has been provided an initial period of180 calendar days, or until* March 16, 2027to regain compliance with the Bid Price Rule. If, at any time within this180* day period the bid price for the Company’s common stock closes at*$1.00* or more for a minimum of10 consecutive business days, Nasdaq is expected to provide written notification to the Company that it complies with the Bid Price Rule, unless Nasdaq exercises its discretion to extend this10 day period pursuant to Nasdaq Listing Rule5810(c)(3)(H).

If the Company isnot in compliance with the Bid Price Rule by* March 16, 2027,the Company maybe afforded asecond* 180 calendar day period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq Capital Market, except for the minimum bid price requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the minimum bid price deficiency, which* mayinclude, if necessary, implementing a reverse stock split. If the Company doesnot* regain compliance with the Bid Price Rule during thissecond 180 day compliance period, or if it appears to Nasdaq that the Company willnot be able to cure the deficiency, Nasdaq will provide written notification to the Company that its common stock* maybe delisted. The Company would then be entitled to appeal the determination to a Nasdaq Listing Qualifications Panel and request a hearing. There can beno* assurance that, if the Company does appeal the delisting determination to a Nasdaq Listing Qualifications Panel, such appeal would be successful. The Company intends to monitor the closing bid price of its common stock and* may,if appropriate, consider available options to regain compliance with the Bid Price Rule, which could include effecting a reverse stock split. However, there can beno* assurance that the Company will be able to regain compliance with the Bid Price Rule.

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Note2. Significant Accounting Policies

Use of Estimates

The Company makes estimates and assumptions in preparing its condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of expenses incurred during the reporting period. The Company evaluates its estimates on an ongoing basis, including those estimates related to legal liabilities, stock-based compensation, clinical trials and manufacturing agreements. Actual results could differ from these estimates and assumptions.

Cash and Cash Equivalents and Concentration of Credit Risk

The Company invests in cash and cash equivalents. The Company considers highly liquid financial instruments with original maturities ofthree months or less to be cash equivalents. Highly liquid investments that are considered cash equivalents include money market accounts and funds, certificates of deposit, and U.S. Treasury securities. The Company maintains its cash and cash equivalents atone financial institution.

Restricted Cash—Litigation Settlement Escrow

During the year ended* December 31, 2025,the Company entered into a settlement agreement to resolve the Consolidated Securities Action, which remains subject to approval by the Texas District Court (each as defined in Note10,* Contingencies).

Pursuant to the settlement agreement, the Company transferred $31.25 million into an escrow account on* July 23, 2026.The escrow funds maybe used only to satisfy amounts payable under the settlement agreement, including payments to eligible settlement class members, attorneys’ fees and settlement administration costs, and arenot* available for the Company’s general operating purposes.

The escrow payment is presented as restricted cash on the condensed consolidated balance sheets as of* September 30, 2026*subject to a court approved disposition. The corresponding settlement obligation is included in accounts payable and accrued expenses.

The restricted cash balance is included in cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows. If the settlement doesnot become effective or is terminated in accordance with its terms, all or a portion of the escrowed funds* maybe returned to the Company. The Company can provideno* assurance regarding the timing or outcome of the Texas District Court’s approval process.

Fair Value Measurements

The Company recognizes financial instruments in accordance with the authoritative guidance on fair value measurements and disclosures for financial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. The guidance also establishes athree-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The fair value of cash and cash equivalents was based on Level1 inputs at* September 30, 2026* and* December 31, 2025*.

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Business Segments

The Company reports segment information based on how it internally evaluates the operating performance of its business units, or segments. The Company’s operations are confined toone business segment: the development of novel drugs and diagnostics.

The Company’s reportable segment reflects the manner in which its chief operating decision maker (“CODM”) allocates resources and assesses performance. The Company's CODM is the President and Chief Executive Officer. The primary measure used by the Company's CODM for purposes of allocating resources is based on net loss that also is reported on the consolidated statements of operations as consolidated net loss. The measure of segment assets is reported on the condensed consolidated balance sheets as cash and cash equivalents.

The Company hasnot generated any product revenue in the current period and expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances our product candidates through stages of development and clinical trials.

As such, the CODM uses cash forecast models in deciding how to invest in the development of novel drugs and diagnostics. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results, net cash used in operating activities for the period and cash on hand are used in assessing performance of the segment.

The following table summarizes expenses by category regularly reviewed by the CODM (in thousands):

(a) Other segment items include interest income and other income (loss), net.

The following table summarizes assets regularly reviewed by the CODM (in thousands):

For thenine months ended* September**30,* 2026 and2025, the net cash used in operating activities was $18.8 million and $22.5 million, respectively.

Stock-based Compensation



The Company recognizes non-cash expense for the fair value of all stock options and other share-based awards. The Company uses the Black-Scholes option valuation model to calculate the fair value of stock options, using the single-option award approach and straight-line attribution method. This model requires the input of subjective assumptions including expected stock price volatility, expected life and estimated forfeitures of each award. These assumptions consist of estimates of future market conditions, which are inherently uncertain, and therefore, are subject to management's judgment. For all options granted, it recognizes the resulting fair value as expense on a straight-line basis over the vesting period of each respective stock option, generallyone tofour years.

Net Loss per Share



The Company computes basic net loss per share on the basis of the weighted-average number of common shares outstanding for the reporting period. Diluted net loss per share is computed on the basis of the weighted-average number of common shares outstanding plus potential dilutive common shares outstanding using the treasury-stock method. Potential dilutive common shares consist of outstanding common stock options and share-based awards that vest upon achievement of certain performance criteria (“Performance Awards”). There isno difference between the Company’s net loss and comprehensive loss. The numerators and denominators in the calculation of basic and diluted net loss per share were as follows (in thousands, except net loss per share data):

The Company excluded all common stock options and Performance Awards outstanding for thethree andnine months ended* September30,* 2026 and2025 from the calculation of net loss per share, diluted, because the effect of including outstanding options and Performance Awards would have been anti-**dilutive.

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Fair Value of Financial Instruments

Financial instruments include accounts payable, accrued expenses, accrued development expense and other liabilities. The estimated fair value of certain financial instruments* maybe determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value; therefore, the estimates arenot* necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of using different market assumptions and/or estimation methodologies* may*be material to the estimated fair value amounts. The carrying amounts of accounts payable, accrued expenses, accrued development expense and other liabilities are at cost, which approximates fair value due to the short maturity of those instruments.

Research Contracts, Prepaids and Accruals

The Company has entered into various research and development contracts with research institutions and otherthird-party vendors. These agreements are generally cancelable. Related payments are recorded as research and development expenses as incurred. The Company records prepaids and accruals for estimated ongoing research costs. When evaluating the adequacy of prepaid expenses and accrued liabilities, the Company analyzes progress of the studies including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the prepaid and accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical prepaid and accrual estimates havenot been materially different from actual costs.

Incentive Bonus Plan

In2020, the Company established the2020 Cash Incentive Bonus Plan (the “CIB Plan”) to incentivize CIB Plan participants. Awards under the CIB Plan are accounted for as liability awards under ASC718 “Stock-based Compensation”. The fair value of each potential CIB Plan award will be determined once a grant date occurs and will be remeasured each reporting period. Compensation expense associated with the CIB Plan will be recognized over the expected achievement period for each CIB Plan award, when a Performance Condition (as defined below) is considered probable of being met. See Note9 for further discussion of the CIB Plan.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. Owned buildings and related improvements have estimated useful lives of 39 years and approximately 10 years, respectively. Tenant improvements are amortized using the straight-line method over the useful lives of the improvements or the remaining term of the corresponding leases, whichever is shorter.

Property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying amount of an asset* may**not* be recoverable. If property and equipment are considered to be impaired, an impairment loss is recognized.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted to reflect tax rates based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. The Company has accumulated significant deferred tax assets that reflect the tax effects of net operating loss and tax credit carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. The Company is uncertain about the timing and amount of any future earnings. Accordingly, the Company offsets these deferred tax assets with a valuation allowance.

The Company accounts for uncertain tax positions in accordance with ASC740, “Income Taxes”, which clarifies the accounting for uncertainty in tax positions. These provisions require recognition of the impact of a tax position in the Company’s condensed consolidated financial statements only if that position is more likely thannot of being sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected as a component of income tax expense.

Recently Issued Accounting Pronouncements

In* November 2024,the FASB issued ASU2024*-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" (Subtopic220-40): "Disaggregation of Income Statement Expenses". This ASU includes amendments that require entities to bifurcate specified expense line items on the income statement into underlying components, including employee compensation, depreciation, and intangible asset amortization, as applicable. Qualitative descriptions of the remaining components are required. These enhanced disclosures are required for both interim and annual periods. In* January 2025,the FASB subsequently issued ASU2025*-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" (Subtopic220-40): "Clarifying the Effective Date", to provide clarification on the ASU's effective date. The new standard is effective for fiscal years beginning after* December 15, 2026on a prospective basis with the option to apply it retrospectively, and for interim periods within fiscal years beginning after December 15, 2027.*Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced disclosures around income statement expenses.

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Note3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at* September 30, 2026* and* December 31, 2025* consisted of the following (in thousands):

Contract research organization and other deposits represent cash payments made to vendors in excess of expenses incurred.

Note4. Real Property and Other Income, Expense

The Company owns atwo-building office complex in Austin, Texas, a portion of which serves as its corporate headquarters. Maintenance, physical facilities, leasing, property management and other key responsibilities related to property ownership are outsourced to professional real-estate managers. The office complex has approximately 90,000 square feet of rentable space. At* September 30, 2026*, the Company occupied approximately 25% of the property with the remainder either leased or available for lease tothird parties.

The Company records the net income (loss) from building operations and leases as other income (loss), net, as leasing isnot core to the Company’s operations. Building depreciation and amortization for spacenot occupied by the Company is included in general and administrative expense. Building depreciation and amortization for space occupied by the Company is allocated between general and administrative expense and research and development expense. Components of other income (loss), net, for the periods presented were as follows (in thousands):

The Company had accrued property taxes related to the building totaling $0.1 million and $0.2 million at* September**30,* 2026 and* December 31, 2025,*respectively, included in other current liabilities.

Gross rental income under existingthird-party leases at* September**30,* 2026 is as follows (in millions):

Note5. Property and equipment

The components of property and equipment, net, as of* September 30, 2026* and* December 31, 2025* were as follows (in thousands):

Depreciation expense for property and equipment was $0.2 million for each of thethree months ended* September 30, 2026and2025*.

Depreciation expense for property and equipment was $0.7 and $0.6 million for thenine months ended* September 30, 2026and2025,* respectively.

Note6. Stockholders’** Equity and Stock-Based Compensation Expense**

Stock Option and Performance Award Activity in2026

During thenine months ended* September 30, 2026*, stock options and unvested Performance Awards outstanding under the Company’s stock option plans changed as follows:

The weighted average exercise price per share of options outstanding at* September 30, 2026* was $14.92. As outstanding options vest over the current remaining vesting period of 2.2 years, the Company expects to recognize stock-based compensation expense of $10.1 million.

During thethree andnine months ended* September**30,* 2026, there wereno stock options exercised.

Stock-based Compensation Expense in2026

During thethree andnine months ended* September 30, 2026and2025*, the Company’s stock-based compensation expense was as follows (in thousands):

The Company estimates forfeitures for each award in determining stock-based compensation expense. There wereno estimated forfeitures during thethree andnine months ended* September 30, 2026or2025.*

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2018 Equity Incentive Plan

The Company’s Board of Directors (the “Board”) or a designated committee of the Board is responsible for administration of the Company’s2018 Omnibus Incentive Plan, as amended in* June 2026 (the“2018* Plan”) and determines the terms and conditions of each option granted, consistent with the terms of the2018 Plan. The Company’s employees, directors, and consultants are eligible to receive awards under the2018 Plan, including grants of stock options and Performance Awards. Share-based awards generally expire 10 years from the date of grant. The2018 Plan provides for issuance of up to 9,000,000 shares of common stock, par value $0.001 per share, subject to adjustment as provided in the2018 Plan.



When stock options or Performance Awards are exercised net of the exercise price and taxes, the number of shares of stock issued is reduced by the number of shares equal to the amount of taxes owed by the award recipient and that number of shares are cancelled. The Company then uses its cash to pay tax authorities the amount of statutory taxes owed by and on behalf of the award recipient.

At-the-Market (ATM) Common Stock Issuance

On* November 12, 2025,the Company entered into an at-the-market offering program ("ATM") with Cantor Fitzgerald and Co. to sell, from time to time, shares of our common stock having an aggregate offering price of up to $50 million in common stock in transactions pursuant to a shelf registration statement that was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on December 5, 2025.The Company is obligated to pay a commission of up to 3.0% of the gross proceeds from the sale of shares of common stock in the offering. The Company isnot* obligated to sell any shares in the offering.

During thethree months ended* September 30, 2026,*the Company sold 1,760,000 shares of its common stock under its ATM at a weighted-average price of $1.16 per share. The sales generated aggregate gross proceeds of approximately $2.0 million and net proceeds of approximately $1.6 million, after deducting sales commissions and deferred offering expenses.

There wereno common stock sales under the ATM during the year ended* December 31, 2025**.As of September 30, 2026,*there was approximately $48 million of availability under the ATM program.

Note7. Income Taxes*** ***

The Company didnot provide for income taxes during thethree andnine months ended* September 30, 2026* because it has projected a taxable net loss for the full year2026 for which any benefit will be offset by an increase in the valuation allowance. There was alsono provision for income taxes for thethree andnine months ended* September 30, 2025*.

Note8. Commitments

The Company conducts its product research and development programs through a combination of internal and collaborative programs that include, among others, arrangements with universities, contract research organizations and clinical research sites. The Company has contractual arrangements with these organizations that are cancelable. The Company’s obligations under these contracts are largely based on services performed. The Company also had non-cancellable commitments for the manufacture of simufilam's active pharmaceutical ingredient totaling approximately $0.4 million recorded in prepaid expenses and other current assets at* September 30, 2026.*The Company is dependent on contract development and manufacturing organizations for the manufacture of all its materials for clinical studies.

In* February**2025,* the Company entered into a License Agreement (the “License Agreement”) with Yale University (“Yale”) pursuant to which the Company was granted exclusive worldwide rights, with rights to sublicense, to Yale’s interest in certain patent and other intellectual property rights that could be useful or necessary to the development and commercialization of simufilam for the treatment of Tuberous Sclerosis Complex (TSC)-related epilepsy and other potential indications. Pursuant to the License Agreement, the Company has agreed to use reasonable commercial efforts to implement a plan that it has designed for such development and commercialization. In exchange for the rights acquired pursuant to the License Agreement, the Company paid Yale (i) a nominal upfront license fee, and agreed to pay (ii) payments upon the achievement of specified clinical, regulatory and commercial milestones, totaling up to $4.5 million and (iii) upon transfer to athird party of a regulatory priority review voucher, if issued, a low- to mid- double digit percentage of any consideration received for such transfer. The Company also agreed to pay Yale tiered royalties, ranging from a low- to mid- single digit percentage, on aggregate net sales of licensed products, subject to tiered minimum annual royalty payments ranging from the low- to mid- hundreds of thousands of dollars. There wereno License Agreement payments made, other than the nominal upfront license fee, during thethree andnine months ended* September 30, 2026and the year ended December 31, 2025.*

Unless earlier terminated, the License Agreement will continue on a country-by-country basis until the later of (i) the date on which the last valid claim of the licensed patents expires or otherwise lapses, (ii) the end of any government or regulatory exclusivity period, and (iii)10 years following the date offirst sale of licensed product in such country.

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Note 9. ** 2020 Cash Incentive Bonus Plan**

In* August 2020,the Board approved the CIB Plan. The CIB Plan was subsequently amended in March**2025,* as described below . The CIB Plan was established as an “at-risk” cash bonus program that would reward CIB Plan participants with additional cash compensation in lockstep with significant increases in the Company’s market valuation (as measured by market capitalization or potential merger consideration). The CIB Plan is considered “at-risk” because CIB Plan participants willnot receive a cash bonus unless the Company’s market valuation increases significantly and certain other conditions specified in the CIB Plan are met. Specifically, CIB Plan participants willnot be paid any cash bonuses unless (1) the Company completes a merger or acquisition transaction that constitutes a sale of ownership of the Company or its assets (a Merger Transaction) or (2) the Compensation Committee of the Board (the Compensation Committee) determines the Company has sufficient cash on hand, as defined in the CIB Plan. CIB Plan participants will be paid all earned cash bonuses allocated under the CIB Plan in the event of a Merger Transaction.

Because of the inherent discretion and uncertainty regarding the CIB Plan requirements, the Company has concluded that a CIB Plan grant date hasnot occurred as of* September 30, 2026.*

The Company’s market valuation for purposes of the CIB Plan is determined based on either (1) the closing price ofone share of the Company's common stock on Nasdaq Capital Market multiplied by the total issued and outstanding shares and options to purchase shares of the Company, or (2) the aggregate consideration payable to security holders of the Company in a Merger Transaction. This constitutes a market condition under applicable accounting guidance.

The CIB Plan (as amended in* March**2025*) triggers a potential cash bonus each time the Company’s market valuation increases significantly, up to a maximum $5 billion in market capitalization (or up to a maximum $8 billion in merger consideration). The CIB Plan specifies incremental amounts between $200 million and $5 billion in market capitalization (or $8 billion in merger consideration) (each increment, a “Valuation Milestone”). Each Valuation Milestone triggers a potential cash bonus award in a pre-set amount defined in the CIB Plan. Each Valuation Milestone based on market capitalization must be achieved and maintained forno less than 20 consecutive trading days for CIB Plan participants to be eligible for a potential cash bonus award (the “Market Capitalization Conditions”).

Payment of cash bonuses is deferred until such time as (1) the Company completes a Merger Transaction, or (2) the Compensation Committee determines the Company has sufficient cash on hand to render payment (each, a “Performance Condition”), neither of which* mayever occur. Accordingly, CIB Plan participants may*never be paid a cash bonus that is awarded under the CIB Plan, even if the Company’s market capitalization increases significantly.

The CIB Plan is accounted for as a liability award. The fair value of each Valuation Milestone award will be determined once a grant date occurs and will be remeasured each reporting period. Compensation expense associated with the CIB Plan will be recognized over the expected achievement period for each of the Valuation Milestones, when a Performance Condition is considered probable of being met.

In* October 2020,the Company achieved thefirst* Valuation Milestone based on market capitalization. Subsequently in2020, the Compensation Committee approved a potential cash bonus award of $6.5 million in total for all CIB Plan participants (after taking into account a* March 2023CIB Plan amendment), subject to future satisfaction of a Performance Condition. There isno* continuing service requirement for CIB Plan participants once the Compensation Committee approves a cash bonus award.

During the year ended* December 31, 2021,the Company achieved 11 additional Valuation Milestones based on market capitalization. The achievement of these 11 milestones in2021* triggered a non-discretionary potential Company obligation to the Company’s Chairman, President and CEO (assuming such person holds allthree such offices) of $74.3 million (after taking into account a* March 2023CIB Plan amendment) and contingent upon future satisfaction of a Performance Condition. However,no compensation expense has been recorded andno* payments have been made sinceno grant date has occurred andno Performance Conditions are considered probable of being met.

No Valuation Milestones were achieved during thenine months ended* September 30, 2026and the years ended December 31, 2025,*2024, 2023 and2022.

In* February**2025,* the Compensation Committee concluded thatno discretionary cash bonus amounts would be awarded for the 11 Valuation Milestones achieved in2021 nor for any remaining CIB Plan Valuation Milestones which havenot been achieved. Thus, the only CIB Plan participant who could be eligible for cash bonus amounts based on future Valuation Milestone achievement is the Chairman, President and CEO (assuming such person holds allthree such offices), providing that, other than in connection with a Merger Transaction,no bonus payments will be made to such person unless and until the U.S. Food and Drug Administration has approved simufilam for any indication.

In* January2025,* the Delaware Court of Chancery entered a Final Order and Judgment dismissing an action related to the CIB Plan with prejudice. The Final Order and Judgment required the Company to further amend the CIB Plan which was completed in* March2025.* The* March**2025* Amendment specifies that upon the occurrence of a Merger Transaction, the Chairman, President and CEO (assuming such person holds allthree such offices) willnot be entitled to any payments in respect of any Market Capitalization Conditions, but will instead be entitled to receive a bonus payment based upon the Merger Transaction only. Cash bonuses to the Chairman, President and CEO (assuming such person holds allthree offices) arenot subject to discretionary allocation under the CIB Plan.No person currently holds allthree offices of Chairman, President and CEO.

No actual cash payments were authorized or made to participants under the CIB Plan through* September 30, 2026and the date of filing of this Quarterly Report on Form10*-Q.

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Note10. Contingencies

The Company is, and from time to time, the Company* maybecome, involved in litigation or other legal proceedings and claims, including U.S. government inquiries, investigations and Citizen Petitions submitted to the U.S. Food and Drug Administration (“FDA”). In addition, the Company has received, and from time to time may*receive, inquiries from government authorities relating to matters arising from the ordinary course of business. The outcome of these proceedings is inherently uncertain. Regardless of outcome, legal proceedings can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. At this time,no assessment can be made as to their likely outcome or whether the outcome will be material to the Company other than as disclosed below. The Company believes that its total provisions for legal matters are adequate based upon currently available information.

Government Investigations

Beginning in* August 2021,*the Company received subpoenas and other requests for documents and information from the Department of Justice Fraud Section (the "DOJ Fraud Section”), document requests from the SEC, and a Civil Investigative Demand from the Civil Division of the Department of Justice (the “DOJ Civil Division”). These requests sought corporate information and documents concerning the research and development of simufilam and/or SavaDx, and the Company cooperated fully with each.

On* September 26, 2024,the Company announced that it had reached a settlement with the SEC resolving the SEC investigation of the Company’s disclosures regarding its Phase2b* clinical trial of simufilam for the treatment of Alzheimer’s disease (the “Phase2b Study”) and related matters. The SEC also agreed to a settlement withtwo former senior employees of the Company. Pursuant to these settlements, the U.S. District Court for the Western District of Texas (the “Texas District Court”) entered a final consent judgment on* October 18, 2024,on a complaint filed by the SEC against the Company and itstwo* former senior employees. The Company has neither admitted nor denied the allegations of the complaint. The SEC’s complaint alleged that certain disclosures by the Company regarding the Phase2b Study violated certain federal securities laws and SEC rules, including negligence-based disclosure violations of Sections17(a)(2) and17(a)(3) of the Securities Act of1933, as amended (the “Securities Act”), as well as recordkeeping and reporting requirements under the Securities Exchange Act of1934, as amended (the “Exchange Act”). The complaint alleged that the Company’s SEC reports and other public statements regarding the Phase2b Study negligently contained materially misleading statements and omissions. The SEC’s allegations with respect to the Company’stwo former employees relate to these employees’ roles in such disclosures. Under its settlement, the Company consented to a permanent injunction against future violations of Section17(a) of the Securities Act, Section13(a)(1) of the Exchange Act and Rules12b-20, 13a-1, 13a-11 and13a-13 under the Exchange Act. In addition, the Company paid a civil monetary penalty of*$40* million in* November 2024.*

On* February 18, 2026,the DOJ Fraud Section notified the Company that it had closed its inquiry into the Company regarding allegations of research misconduct as described in the indictment inUnited States* v. Wang,8:24-cr-000211-TDC (D. Md.). As previously disclosed, that indictment was dismissed with prejudice on* October 23, 2025.*

These outcomes end the previously disclosed investigations of the Company by the DOJ Fraud Section and the SEC. The Company is aware, however, that the DOJ Civil Division continues to seek information concerning the research and development of simufilam and SavaDx.

Consolidated Securities Class Actions

Between* August 27, 2021and October 26, 2021,*four putative class action lawsuits were filed in the Texas District Court alleging violations of the federal securities laws by the Company and certain named officers and employees. The complaints rely on allegations contained in Citizen Petitions submitted to FDA and allege that various statements made by the defendants regarding simufilam were rendered materially false and misleading. The Citizen Petitions were all subsequently denied by FDA. The complaints seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities.

In* June 2022,the Texas District Court consolidated thefour class action lawsuits intoone case (the “Consolidated Securities Action”) and appointed a lead plaintiff and a lead counsel. Lead plaintiff thereafter filed a consolidated amended complaint on behalf of a putative class of purchasers of the Company’s securities between September 14, 2020and July 26, 2022.In May 2023,*the Texas District Court dismissed with prejudice plaintiffs’ claims against defendant Nadav Friedmann, PhD, MD, our former Chief Medical Officer and a Company director, who is now deceased, but otherwise denied defendants’ motion to dismiss.

In* June**2024,* plaintiffs filed a supplemental complaint extending the putative class period through* October 12, 2023.*

In* February 2024,a putative class action lawsuit was filed in the U.S. District Court for the Northern District of Illinois (“Illinois District Court”) alleging violations of the federal securities law by the Company and certain named officers. The complaint relies on an October 12, 2023,*article that describes a purported leaked report of alleged scientific misconduct by a scientific collaborator of the Company at City University of New York (the “CUNY Article”). The complaint alleges that various statements made by the defendants regarding simufilam were rendered materially false and misleading by this article. This action was subsequently transferred to the Texas District Court and consolidated into the Consolidated Securities Action.

In* May 2025,plaintiffs in the Consolidated Securities Action filed asecond* supplemental complaint. The Texas District Court granted plaintiffs’ motion for class certification in* August 2025,*and Defendants filed an interlocutory appeal with the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) challenging that order.

Beginning in* May 2025,the parties to the Consolidated Securities Action engaged in mediation with David M. Murphy of Phillips Alternative Dispute Resolutions Enterprises. In December 2025,plaintiffs filed a Final Alternative Dispute Resolution Report with the Texas District Court as required by Local Rule CV-88(g) stating that the Company andone* of its officers (the “Settling Defendants”) and plaintiffs had entered a binding term sheet to settle the Consolidated Securities Action.

In* October**2025,* the Fifth Circuit agreed to hear Defendants’ interlocutory appeal challenging the District Court order granting class certification.

On* June 18, 2026,the Settling Defendants and plaintiffs filed a stipulation of settlement (the “Stipulation”), and plaintiffs filed a motion for preliminary approval of a settlement, pursuant to which the Settling Defendants agreed to pay plaintiffs $31.25 million to achieve a complete settlement of all claims and causes of action that have been or could be asserted by Plaintiffs in exchange for full and complete releases from the plaintiffs. Although defendants Remi Barbier and Lindsay Burns (the “Non-Settling Defendants”) arenot* parties to the settlement, these individuals are indemnified by the Company and are entitled to receive full and complete releases along with Settling Defendants upon final approval of a settlement by the Texas District Court. The settlement isnot an admission of fault or wrongdoing by the Company or any of the other defendants. The Stipulation didnot stay the pending Fifth Circuit appeal.

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On* July 23, 2026,*the Company transferred $31.25 million into an escrow account as required by the Stipulation. If the settlement were approved by the Texas District Court in accordance with the Stipulation and the settlement funds are released, the plaintiffs and the class would grant full and complete releases in favor of the Settling Defendants and the Non-Settling Defendants of all of their claims that were or could have been asserted in the Consolidated Securities Action and would dismiss with prejudice the claims asserted against the Non-Settling Defendants.

On* October 16, 2026,*the Fifth Circuit vacated the District Court order granting class certification and remanded the case to the Texas District Court for further proceedings consistent with the Fifth Circuit’s opinion.

The Company recorded a loss contingency of $31.25 million in accounts payable and accrued expenses in the Company's Condensed Consolidated Balance Sheets at* September 30, 2026and December 31, 2025relating to the Consolidated Securities Action. The $31.25 million escrow deposit is presented as restricted cash on the Company's condensed consolidated balance sheets at September 30, 2026*subject to a court approved disposition.

Shareholder Derivative Actions

On* November 4, 2021,a shareholder derivative action related to the initialfour* class action lawsuits filed in the Texas District Court was filed, purportedly on behalf of the Company, in the Texas District Court, asserting claims under the U.S. securities laws and state fiduciary duty laws against certain named officers and the members of the Company’s Board. This complaint relies on the allegations made in Citizen Petitions that were submitted to (and subsequently denied by) FDA. The complaint alleges, among other things, that the individual defendants exposed the Company to unspecified damages and securities law liability by causing it to make materially false and misleading statements, in violation of the U.S. securities laws and in breach of their fiduciary duties to the Company. The derivative case seeks, among other things, to recover unspecified compensatory damages on behalf of the Company arising out of the individual defendants’ alleged wrongful conduct. Although the plaintiff in this derivative case doesnot seek relief against the Company, the Company has certain indemnification obligations to the individual defendants. Between* November 2021and November 2023,five additional shareholder derivative actions were filed alleging substantially similar claims, three in the Texas District Court, one in Texas state court (Travis County District Court) (the “Texas State Court Derivative Action”) andone in the Delaware Court of Chancery (the “Delaware Derivative Action”). As of November 2025,*thefour actions in the Texas District Court were consolidated into a single action (the “Texas Federal Court Derivative Action”).

Beginning on* March 18, 2024,two shareholder derivative actions related to the February 2024class action lawsuit originally filed in the Illinois District Court were filed, purportedly on behalf of the Company, in the Illinois District Court, asserting claims under the U.S. securities laws and state fiduciary duty laws against certain named officers and the members of the Company’s Board. The complaints rely on the CUNY Article. The complaints allege, among other things, that the individual defendants exposed the Company to unspecified damages and securities law liability by causing it to make materially false and misleading statements, in violation of the U.S. securities laws and in breach of their fiduciary duties to the Company. The derivative cases seek, among other things, to recover unspecified compensatory damages on behalf of the Company arising out of the individual defendants’ alleged wrongful conduct. Although the plaintiffs in these derivative cases donot* seek relief against the Company, the Company has certain indemnification obligations to the individual defendants. On* September 6, 2024,thesetwo cases (the “Illinois Federal Court Derivative Actions”) were consolidated and stayed pending further developments in the shareholder class action initially filed in the Illinois District Court in February 2024.*

On* July 21, 2026,the Company and all individual defendants entered into a settlement term sheet (the “Derivative Term Sheet”) agreeing to resolve the Texas State Court Derivative Action, the Texas Federal Court Derivative Action, the Delaware Derivative Action, and the Illinois Federal Court Derivative Actions (collectively, the “Derivative Actions”). Under the Derivative Term Sheet, the parties agreed to work in good faith to negotiate and execute a final settlement stipulation and related settlement documents, subject to approval by the Company’s Board of Directors and the court. The Derivative Term Sheet provides for the implementation and maintenance of specified corporate governance enhancements for a period offour* years. The Derivative Term Sheet also provides for customary mutual releases and dismissal with prejudice of the Derivative Actions following final approval. The Derivative Term Sheet isnot an admission of fault or wrongdoing by the Company or any of the other defendants.

2024 Securities Class Action

On* December 13, 2024,a putative class action lawsuit (the“2024* Securities Class Action”) was filed in Texas District Court alleging violations of the federal securities law by the Company and certain named officers. The complaint alleged that various statements made by the defendants regarding simufilam were revealed to be materially false and misleading by the release of top-line results for the Company’s RETHINK-ALZ Phase3 clinical trial on* November 25, 2024.The complaint sought unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities between February 7, 2024,and November 24, 2024.*

In* May 2025,the Court appointed a lead plaintiff and lead counsel for the2024* Securities Class Action. Lead plaintiff filed an amended complaint in* August 2025,on behalf of a putative class of purchasers of the Company’s securities between October 13, 2023,and March 25, 2025.The amended complaint added new officer defendants and additional allegations that various statements made by the defendants regarding simufilam were revealed to be materially false and misleading by disclosures between June 2024and September 2024.*

On* September 19, 2025,defendants filed a motion to consolidate the2024* Securities Class Action into the Consolidated Securities Action based upon the allegations made in the amended complaint. On* June 29, 2026,the magistrate judge assigned to the matter denied the motion to consolidate. On July 13, 2026,*defendants filed an objection to the order with the Texas District Court.

On* November 6, 2025,Defendants moved to dismiss the2024* Securities Class Action. On* July 24, 2026,*the Texas District Court denied the pending motions to dismiss without prejudice, with leave to refile. The Texas District Court further directed the parties to propose a schedule for the briefing and disposition of the pending matters that account for the resolution of the then-pending Fifth Circuit appeal, the interrelated matters before the court, and any refiled motions to dismiss.

Due to the stage and procedural posture of the2024 Securities Class Action, the Company is unable to predict the likelihood of an unfavorable outcome in the2024 Securities Class Action. It is reasonably possible, however, that the Company* may*incur a loss. The Company is unable to reasonably estimate the amount or range of potential loss at this time.

Subject to the Stipulation in the Consolidated Securities Action and the Derivative Term Sheet, the Company intends to defend all pending shareholder derivative actions and securities class actions vigorously.

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Anti-SLAPP Lawsuit

On* August 6, 2024,a lawsuit was filed in the District Court for the Southern District of New York which, as amended and as joined by intervenor plaintiffs, asserts claims, including a claim under the New York Anti-SLAPP Law, against the Company and againsttwo former officers to whom the Company has certain indemnification obligations. The amended complaint and the complaint in intervention seek costs and damages relating to a defamation action filed by the Company against the plaintiffs and subsequently dismissed voluntarily by the Company. The Company and itstwo* former officers named as defendants have entered comprehensive settlement agreements with the intervenor plaintiffs and another potential plaintiff under which the parties provided mutual releases and the Company paid approximately $2.5 million in* October 2025.*The Company intends to defend vigorously the claims brought by the remaining plaintiffs.

Litigation Contingencies

In connection with ongoing litigation, the Company has reserved an amount of $34.8 million, including the $31.25 million loss contingency for the Consolidated Securities Action, for potential settlements at* September 30, 2026which was recorded in accounts payable and accrued expenses. The Company recorded loss contingencies totaling $2.1 million during thethree* andnine months ended* September 30, 2026.*

The Company transferred $31.25 million into a plaintiff's escrow account on* July 23, 2026for the potential settlement of the Consolidated Securities Action pursuant to the terms of the Stipulation discussed above. The escrow funds maybe used only to satisfy amounts payable under the settlement agreement, including payments to eligible settlement class members, attorneys’ fees and settlement administration costs, and arenot* available for the Company’s general operating purposes. The escrowed amount is presented as restricted cash on the Company's condensed consolidated balance sheets as of* September 30, 2026*subject to a court approved disposition.

The Company believes that the likelihood of an unfavorable outcome is probable and has accrued this amount as the best estimate of potential loss. The final outcome of the litigation in which the Company is involved* maydiffer from the reserved amount, and additional losses may*be incurred.