Ernexa Therapeutics Inc.
For the period ended Mar 31, 2026. Filed May 11, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 11, 2026
ERNA$1.88+2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0001493152-25-021287
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001493152-26-022276
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 80 current paragraphs.
28 unchanged; 14 reworded; 37 added; 34 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Objectives and Business Strategy
Current report
We have also been accepted as one of only ten global companies for the Japan External Trade Organization acceleration program, which will allow us to receive expert-led mentoring and market-entry guidance focused on Japan’s regulatory, clinical and commercial landscape. The program also provides direct engagement opportunities with leading Japanese research and development organizations to explore potential collaborations across development, manufacturing and clinical execution.
Current report
Recent Developments
Current report
Reverse Stock Split
Current report
As approved on March 27, 2026 by written consent from approximately 53.34% of our stockholders (the “Consenting Stockholders), on May 4, 2026, we effected a reverse stock split of our common stock at a ratio of 1-for-25, as determined by our Board of Directors within the parameters approved by the Consenting Stockholders (the “Reverse Stock Split”).
Current report
Upon the effectiveness of the Reverse Stock Split, every twenty-five shares of the issued and outstanding common stock were automatically combined and reclassified into one issued and outstanding share of common stock. The Reverse Stock Split did not alter the par value of the common stock, and the number of authorized shares of common stock remains unchanged at 150,000,000 shares. No fractional shares were issued in connection with the Reverse Stock Split, and no cash or other consideration was paid in connection with any fractional shares. Stockholders who otherwise would have held a fractional share after giving effect to the Reverse Stock Split instead owned one whole share of the post-reverse stock split common stock. We issued an aggregate of 203 shares for rounding up fractional shares to whole shares.
Current report
All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.
Current report
2026 Public Offering
Current report
On February 6, 2026, we entered into a placement agency agreement (the “Placement Agency Agreement”) with Brookline Capital Markets, a division of Arcadia Securities, LLC (“Brookline” or the “Placement Agent”), pursuant to which we engaged the Placement Agent for the public offering of 0.8 million shares of our common stock (or pre-funded warrants in lieu of common stock) and accompanying warrants to purchase 0.8 million shares of common stock (the “Milestone Warrants”), at a combined offering price of $12.50 per share of common stock and accompanying Milestone Warrant (or a combined offering price of $12.25 per share of pre-funded warrant and accompanying Milestone Warrants) (the “Public Offering”). In connection with the Public Offering, we also entered into a securities purchase agreement (each, a “Purchase Agreement”) with certain investors who purchased shares of common stock and Milestone Warrants in the Public Offering.
Current report
The pre-funded warrants were immediately exercisable (subject to certain ownership limitations) had an exercise price of $0.25 per share and did not expire until exercised in full. On February 11, 2026 and February 18, 2026, we issued 53,000 and 27,000 shares of common stock, respectively, in connection with the exercise of the pre-funded warrants, for a total exercise price of approximately $20,000. There are no remaining pre-funded warrants outstanding related to the Public Offering.
Current report
The Milestone Warrants are tradeable on The Nasdaq Capital Market under the symbol “ERNAW.” The Milestone Warrants are immediately exercisable (subject to certain ownership limitations), have an exercise price of $17.00 per share, and expire on the earlier of (i) the five-year anniversary of the original issuance date or (ii) the 180 th calendar day following our public release of clinical trial data from the first cohort of the Phase 1 study of ERNA-101.
Current report
Pursuant to the Placement Agency Agreement, we paid the Placement Agent an aggregate cash fee of approximately $0.5 million, which was equal to 6.5% of the aggregate purchase price paid by investors in the Offering (or 1.5% with respect to certain existing investors). We will also pay the Placement Agent a cash fee as compensation for gross proceeds we receive from any exercise of any Milestone Warrants sold in connection with the Public Offering, payable quarterly on each January 1, April 1, July 1 and October 1 following the closing of the Public Offering (or the following business day if such day is not a business day), at the same percentage and as calculated in the manner as set forth above. We also issued approximately 9,000 shares of common stock to the Placement Agent, which was equal to 1.5% of the aggregate number of shares of common stock and pre-funded warrants sold in the Public Offering (or 0.5% with respect to sales to certain existing investors). In addition, we reimbursed the Placement Agent for its accountable offering-related legal expenses in an amount of $125,000.
Current report
The Public Offering closed on February 10, 2026, for aggregate gross proceeds of approximately $10.5 million before deducting Placement Agent fees and other offering expenses payable by us. We are using the net proceeds from the Public Offering to support the advancement of our development programs and for working capital and general corporate purposes.
Current report
The Placement Agency Agreement and the Purchase Agreements contain customary representations, warranties and agreements by us, customary conditions to closing, indemnification obligations of us, the Placement Agent, or the investors, as the case may be, and other obligations of the parties.
Current report
Pursuant to the terms of the Purchase Agreements and the Placement Agency Agreement, we have agreed that for a period of ninety (90) days from the closing of the Public Offering, that neither we nor any subsidiary may (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents or (ii) file any registration statement or prospectus, or any amendment or supplement thereto, in each case, subject to certain exceptions, unless waived by the Placement Agent. We have also agreed not to effect or enter into an agreement to effect any issuance of common stock or common stock equivalents involving a Variable Rate Transaction, as defined in the Purchase Agreements, for a period of ninety (90) days following the closing of the Public Offering, subject to certain exceptions, unless waived by the Placement Agent. In addition, as part of the Purchase Agreement, subject to certain exceptions, our officers and directors entered into lock-up agreements, pursuant to which they agreed not to sell or otherwise dispose of any of the common stock for a period of ninety (90) days following the date of closing of the Public Offering.
Current report
Universal Shelf and ATM
Current report
On March 13, 2026, we filed a Registration Statement on Form S-3 with the SEC to offer and sell up to $50.0 million of our common stock from time to time in one or more offerings (the “Universal Shelf”), which became effective on March 30, 2026. The Universal Shelf includes a prospectus supplement providing for sales of up to $9.2 million of common stock pursuant to an At-the-Market (“ATM”) program under a sales agent agreement we entered into with Brookline.
Current report
We are subject to General Instruction I.B.6 of Form S-3 (the “baby shelf” rules), which limits the aggregate market value of securities we may sell under the Universal Shelf to no more than one-third of our public float in any 12-month period while our public float remains below $75.0 million. As of the filing of the Universal Shelf, one-third of our public float was approximately $9.2 million, representing the maximum amount to be sold under the ATM. As of March 31, 2026, we have not sold any securities under the ATM.
Current report
Nasdaq Compliance
Current report
Our common stock is listed on The Nasdaq Capital Market (“Nasdaq”). Nasdaq requires that listed companies satisfy certain continued listing requirements, including Listing Rule 5550(a)(2), which requires that listed companies maintain a minimum bid price of their common stock of at least $1.00 per share (the “Bid Price Rule”).
Current report
On March 18, 2026, we received written notice from Nasdaq indicating that our common stock failed to maintain the Bid Price Rule for 30 consecutive business days. While companies are typically afforded a 180-calendar day compliance period, as specified under Nasdaq Listing Rule 5810(c)(3)(A), to comply with the Bid Price Rule, Nasdaq concluded that we are not eligible for the compliance period pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv) due to the fact that we effected a reverse stock split over the prior one-year period. Accordingly, we requested a hearing before the Nasdaq Hearing Panel (the “Panel”), which automatically stayed any suspension or delisting action pending the hearing and the expiration of any additional extension period granted by the Panel following the hearing. Our hearing was held on April 28, 2026, during which we requested an extension for continued listing on Nasdaq through May 15, 2026, the date we expected to demonstrate compliance with the Bid Price Rule (as discussed further below).
Current report
On May 5, 2026, the Panel granted our request for continued listing on Nasdaq, subject to the following conditions: (i) on or before May 15, 2026, we shall demonstrate compliance with the Bid Price Rule; (ii) from the date of the Panel decision until September 14, 2026 (the end of the Panel’s jurisdiction in this matter), we shall maintain compliance with all Nasdaq Listing Rules; and (iii) we will be subject to a mandatory panel monitor for a period of one year from the date of this determination pursuant to Rule 5815(d)(4)(B). If we do not maintain compliance with all Nasdaq Listing Rules through September 14, 2026, the Panel will immediately delist our securities from Nasdaq. Additionally, should we become deficient again with the Bid Price Rule during the one-year period ending May 5, 2027, Nasdaq will immediately issue us a delisting determination
Current report
On May 4, 2026, we effected the Reverse Stock Split and our stock price has since been closing above the minimum bid price of $1.00 per share. To regain compliance with the Bid Price Rule, we must achieve a closing bid price of at least $1.00 for a minimum of 10 consecutive business days, or through May 15, 2026, and we expect to regain compliance with the Bid Price Rule as of such date.
Current report
Revenues and Cost of Revenues
Current report
We are a pre-clinical stage company and do not currently have any revenues from product sales or cost of revenues. We will not have revenues from product sales or cost of revenues until such time as we receive regulatory approval of our product candidates and successfully commercialize our products.
Current report
Revenues and Cost of Revenues
Current report
We had no revenues or cost of revenues for the three months ended March 31, 2026 or 2025.
Current report
Total research and development expenses increased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to increased study fees related to ERNA-101 as well as increased payroll due to an increase in our research and development headcount and increased other expenses, which includes travel, supplies and allocated rent. These increases were offset by a reduction in expenses related to our Master Service Agreement (“MSA”) and the license and collaboration agreement (“the Factor L&C Agreement”) with Factor Bioscience Limited (“Factor Limited”). Pursuant to the Factor L&C Agreement, we paid Factor Bioscience approximately $0.2 million per month from September 2024 through August 2025, and we paid approximately $0.1 million per month from September 2024 through May 2025. The Company will also pay certain milestone payments, royalty payments on net sales of commercialized products and sublicensing fee payments, when applicable.
Current report
Our general and administrative expenses for the three months ended March 31, 2026 increased by approximately $0.2 million primarily due to increases in payroll related to certain accrued bonuses and in professional fees related to certain legal matters, offset by a reduction in stock based compensation due to a reduction in the fair values of the equity awards that are amortizing during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, as well as decreased other expenses for occupancy costs, depreciation and amortization, and reduced insurance premiums.
Current report
Impairment of Goodwill
Current report
During the three months ended March 31, 2026, we recognized a $2.0 million impairment charge of the goodwill we had on our balance sheet from a 2018 acquisition because we concluded that the fair value of the reporting unit was less than the carrying value as of March 31, 2026, and the goodwill was considered fully impaired. As of March 31, 2026, there was no remaining goodwill balance. We did not recognize a similar expense during the three months ended March 31, 2025.
Current report
For the three months ended March 31, 2026, we recognized approximately $39,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the three months ended March 31, 2025.
Current report
Benefit (provision) for Income Taxes
Current report
On February 10, 2026, we received approximately $9.5 million in net proceeds from the Public Offering. On March 13, 2026, we filed the Universal Shelf, which included a prospectus for a $9.2 million ATM. The Universal Shelf is subject to the baby shelf rules, and as of the filing of the Universal Shelf, one-third of our public float was approximately $9.2 million, representing the maximum amount to be sold under the ATM. As of March 31, 2026, we have not sold any securities under the ATM.
Current report
In connection with preparing the financial statement as of and for the three months ended March 31, 2026, we evaluated whether there are conditions and events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
Current report
As of April 30, 2026, we had approximately $8.3 million in cash, which is less than that needed to effect our current operating plan and forecasted cash requirements for the next twelve months. However, we expect that our ability to access capital under our ATM will cover shortfalls in our cash resources over the next twelve months from the issuance date of these financial statements.
Current report
If our cash is not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce operational cash uses or raise capital on terms that are not as favorable to us as they otherwise might be. Any actions we may undertake to reduce planned capital purchases or reduce expenses may be insufficient to cover shortfalls in available funds. If we require additional capital, we may be unable to secure additional financing on terms that are acceptable to us, or at all.
Removed paragraphs (34)
Previous report
Revenue
Previous report
Revenue is related to an exclusive option and license agreement we had with a customer, under which we granted the customer an option (the “Option Right”) to obtain an exclusive sublicense to certain of our technology for preclinical, clinical and commercial purposes in exchange for a non-refundable up-front payment to us of $0.3 million. We also began developing certain induced pluripotent stem cell lines in exchange for a cell line customization fee. The customer paid us $0.4 million towards the customization fee, which we were recognizing ratably over the customization period.
Previous report
On September 24, 2024, we entered into an agreement with Factor Bioscience Limited (“Factor Limited” and together with Factor Bioscience Inc. and its other affiliates, “Factor Bioscience”) whereby we assigned the customer contract to Factor Bioscience (the “Assignment Agreement”). The Assignment Agreement with Factor Bioscience assigned all our rights and obligations under the customer contract to Factor Bioscience. Payments to us related to the customer contract will now be subject to the Assignment Agreement, which provides for Factor Bioscience paying us thirty percent (30%) of all amounts it receives from the customer in the event that the customer obtains a sublicense from Factor Bioscience. Upon receipt of future payments for the customization activities set forth in the customer contract, Factor Bioscience will pay us twenty percent (20%) of all amounts Factor Bioscience receives from the customer.
Previous report
Prior to the Assignment Agreement, we were recognizing the non-refundable $0.4 million customization fee equally over the development period. However, as a result of the Assignment Agreement, we accelerated the recognition of the remaining $0.2 million non-refundable customization fee and the $0.3 million non-refundable payment related to the Option Right, both of which were in deferred revenue, during the three months ended September 30, 2024. During the nine months ended September 30, 2024, we recognized approximately $0.6 million in revenue related to this customer contract for the customization activities and Option Right, including the accelerations of revenue recognition discussed above. There was no such revenue recognized for the three and nine months ended September 30, 2025. For additional information, see Note 3 to the accompanying condensed consolidated financial statements. We have no other revenue generating contracts at this time.
Previous report
Cost of Revenues
Previous report
We recognize direct labor and supplies associated with generating our revenue as cost of revenues. We were also obligated to pay Factor Bioscience 20% of any amounts we received from the customer contract discussed above under a previous license agreement we had with Factor Bioscience, which has since been terminated, and such costs were also recognized as cost of revenues.
Previous report
Revenue
Previous report
As a result of the Assignment Agreement, for the three and nine months ended September 30, 2024, we fully accelerated the revenue recognition of approximately $0.5 million related to non-refundable payments we received from the customer. For additional information on this customer contract, see Note 3 to the accompanying condensed consolidated financial statements. We did not have any revenue generating contracts during the three and nine months ended September 30, 2025.
Previous report
Cost of Revenue
Previous report
During the nine months ended September 30, 2024, our cost of revenues included direct labor and materials to perform the customization cell line activities. During the three months ended September 30, 2024, we recognized a credit for amounts previously accrued related to customization cell line activities that were no longer due as a result of entering into the Assignment Agreement. There was no such cost recognized for the three and nine months ended September 30, 2025.
Previous report
Total research and development expenses increased slightly for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to increased use of consulting services and increase in headcount, offset by a reduction in the Factor Bioscience license fee arrangement for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Previous report
Total research and development expenses increased slightly for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to increased use of consulting services and costs associated with our ERNA-101 and ERNA-201 studies, offset by a reduction in the Factor Bioscience license fee arrangement and reductions in payroll-related costs due to a decrease in average headcount for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
Previous report
Our general and administrative expenses for the three months ended September 30, 2025 decreased by approximately $2.4 million primarily due to decreases in (i) rent expense due to a sublease we terminated in August 2024, (ii) professional fees primarily related to a reduction in legal fees for licensed intellectual property and prior litigation matters, and (iii) stock-based compensation due to equity awards becoming fully vested prior to the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Previous report
For the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, our general and administrative expenses decreased $7.8 million primarily due to the termination of the sublease, reduction in professional fees for licensed intellectual property and prior litigation legal fees as well as a reduction in certain consulting expenses, decreased insurance premiums and a reduction in payroll related expenses. We will continue to focus on finding operational efficiencies that result in cost savings.
Previous report
Gain on Lease Termination
Previous report
In August 2024, we entered into a sublease termination agreement, effective August 31, 2024, for a facility we were subleasing. Pursuant to the sublease termination agreement, we agreed to surrender and vacate the premises, all of our right, title and interest in all furniture, fixtures and laboratory equipment at the premises became the property of the sublessor, and both parties were released of their obligations under the sublease. As a result of the sublease termination, we recognized a gain on lease termination of approximately $1.6 million for the three and nine months ended September 30, 2024 in the accompanying condensed consolidated statement of operations. There was no similar transaction during the three or nine months ended September 30, 2025.
Previous report
Gain (Loss) on Extinguishment of Debt
Previous report
During the three and nine months ended September 30, 2025, we recognized a gain on extinguishment of debt of approximately $0.7 million related to liabilities that have been deemed to be time-barred from collection under the respective state laws. See Note 6,*Accounts Payable and Accrued Expenses,*to the accompanying condensed consolidated financial statements for more information.
Previous report
We recognized a $22.4 million loss on extinguishment of debt for the three and nine months ended September 30, 2024 related to (i) agreements to exchange certain convertible notes and warrants into shares of our common stock and (ii) a common stock private placement entered into on September 24, 2024. See Note 12,Equity Transactions – 2024 Exchange TransactionandCommon Stock Private Placement to the accompanying condensed consolidated financial statements for more information on these transactions.
Previous report
Fair Value Adjustments to Bridge Notes Derivative Liability
Previous report
We recognized expense of $1.6 million related to the initial measurement at September 24, 2024 of the incremental fair value of the bridge notes derivative liability over the carrying value due to bifurcation of a conversion feature from convertible bridge notes issued in September 2024. This was offset by a $0.6 million credit for the change in fair value of the bridge notes derivative liability due to remeasuring the liability as of September 30, 2024. There was no similar transaction during the three or nine months ended September 30, 2025. See Note 8 to the accompanying condensed consolidated financial statements for more information on the bridge notes.
Previous report
We recognized credits of approximately $0.8 million and $0.9 million for the three and nine months ended September 30, 2024 for the change in the fair value of warrant liabilities, which includes certain warrants that were reclassified to a liability on September 24, 2024. The credits were due to a decrease in the market price of our common stock as of September 30, 2024. See Note 12 –2024 Exchange Transaction to the accompanying condensed consolidated financial statements for more information on the reclassification of the warrants.
Previous report
Change in Fair Value of Contingent Consideration
Previous report
As of September 30, 2024, we remeasured a contingent liability and recognized a credit of less than $0.1 million for the nine months ended September 30, 2024 due to a decrease in the fair value of the contingent consideration liability. There were no amounts recognized for the three months ended September 30, 2024 or the three and nine months ended September 30, 2025.
Previous report
For the three months ended September 30, 2025, we recognized $1.7 million less in interest expense due to a reduction in interest-bearing debt compared to the three months ended September 30, 2024.
Previous report
For the Nine months ended September 30, 2025, we recognized $3.3 million less in interest expense due to a reduction in interest-bearing debt, and we also recognized approximately $0.1 million less in interest income due to having reduced cash balances when compared to the nine months ended September 30, 2024.
Previous report
Provision for Income Taxes
Previous report
In July 2025, the One Big Beautiful Bill Act (the “Tax Act”) was enacted, introducing a series of corporate tax changes in the U.S., including 100% bonus depreciation on qualified property and full expensing for research and development expenditures. The impacts of the Tax Act are reflected in our results for the three and nine months ended September 30, 2025, and there was no material impact to our income tax expense or effective tax rate.
Previous report
On March 11, 2025 and March 20, 2025, we received $1.5 million and $0.8 million, respectively, for the issuance of two promissory notes with an aggregate principal amount of $2.3 million to an investor. The promissory notes had a maturity date of the earlier of (i) June 15, 2025 or (ii) upon us receiving greater than $5 million in aggregate proceeds from a subsequent capital raise. Interest accrued at a rate of 5.0% per annum, payable at maturity. During the nine months ended September 30, 2025, the Company repaid the notes in full for $2.3 million, including accrued interest. See Note 8 to the accompanying condensed consolidated statement of operations for more information on the promissory notes.
Previous report
During the nine months ended September 30, 2025, we raised $7.2 million in gross proceeds from the sale of shares of our common stock and prefunded warrants. We used a portion of the proceeds from this financing to repay the notes, as discussed above. See Note 12,Equity Transactions – 2025 Private Placement, to the accompanying condensed consolidated statement of operations for additional information regarding this financing.
Previous report
Based on our current financial condition and forecasts of available cash, we will not have sufficient capital to fund our operations for the 12 months following the issuance date of the accompanying condensed consolidated financial statements. We can provide no assurance that we will be able to obtain additional capital when needed, on favorable terms, or at all. If we cannot raise capital when needed, on favorable terms or at all, we will need to reevaluate our planned operations and may need to reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations. If we become unable to continue as a going concern, we may have to liquidate our assets and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. See the risk factor in Item 1A of Part I of our 2024 10-K titled, “We will require substantial additional capital to fund our operations and execute our business strategy, and we may not be able to raise adequate capital on a timely basis, on favorable terms, or at all.”
Previous report
Historically, the cash used to fund our operations has come from a variety of sources and predominantly from sales of shares of our common stock and convertible notes. We will continue to evaluate and plan to raise additional funds to support our working capital needs through public or private equity offerings, debt financings, strategic partnerships, out-licensing our intellectual property, grants or other means. There can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders. Our ability to raise capital through sales of our common stock will depend on a variety of factors including, among others, market conditions, the trading price and volume of our common stock, and investor sentiment. In addition, macroeconomic factors and volatility in the financial market, which may be exacerbated in the short term by concerns over inflation, interest rates, impacts of the wars in Ukraine and the Middle East, strained relations between the U.S. and several other countries, and social and political discord and unrest in the U.S., among other things, may make equity or debt financings more difficult, more costly or more dilutive to our stockholders.
Previous report
In addition, equity or convertible debt financings may have a dilutive effect on the holdings of our existing stockholders, and debt financings may subject us to restrictive covenants, operational restrictions and security interests in our assets. If we raise capital through collaborative arrangements, we may be required to relinquish some rights to our technologies or grant sublicenses on terms that are not favorable to us.
Previous report
We prepared the accompanying condensed consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. As discussed above, there is substantial doubt about our ability to continue as a going concern because we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.
Reworded paragraphs (14)
Previous wording
We are a preclinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell (“iPSC”)-derived mesenchymal stem cells. We envision a future where cell therapies powered by synthetic iMSCs can offer new options for patients with limited treatment paths and our mission is to transform the treatment of cancer and autoimmune disease by developing scalable, affordable, off-the-shelf cell therapies that restore hope.
Current wording
We are a pre-clinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell-derived mesenchymal stem cells. We envision a future where cell therapies powered by synthetic iMSCs can offer new options for patients with limited treatment paths, and our mission is to transform the treatment of cancer and autoimmune disease by developing scalable, affordable, off-the-shelf cell therapies that restore hope.
Previous wording
Our lead product candidate ERNA-101 is allogenic IL-7 and IL-15-secreting iMSCs. ERNA-101 capitalizes on the intrinsic tumor-homing ability of MSCs to slip through the tumor’s defenses and to deliver potent pro-inflammatory factors directly to the tumor microenvironment (“TME”), limiting systemic exposure and potential toxicity while unleashing potent anti-cancer immune responses including enhancement of T-cell anti-tumor activity. Our initial focus is to develop ERNA-101 in platinum-resistant, ovarian cancer. We collaborated with the University of Texas MD Anderson Cancer Center to investigate the ability of ERNA-101 to induce and modulate antitumor immunity in an ovarian cancer model. In preclinical study, ERNA-101 exhibited reduction of tumor growth and statistically significant survival advantage in the ovarian cancer model as compared to the control group. We expect to complete the Investigational New Drug (“IND”) enabling studies and IND submission by 2026 and to subsequently enter a Phase I investigator sponsored clinical trial in the same year.
Current wording
Our lead product candidate ERNA-101 is allogenic IL-7 and IL-15-secreting iMSCs. ERNA-101 capitalizes on the intrinsic tumor-homing ability of MSCs to slip through the tumor’s defenses and to deliver potent pro-inflammatory factors directly to the tumor microenvironment (“TME”), limiting systemic exposure and potential toxicity while potentially unleashing potent anti-cancer immune responses including enhancement of T-cell anti-tumor activity. Our initial focus is to develop ERNA-101 in platinum-resistant ovarian cancer. We collaborated with the University of Texas MD Anderson Cancer Center (“MDACC”) to investigate the ability of ERNA-101 to induce and modulate antitumor immunity in an ovarian cancer model. In preclinical study, ERNA-101 exhibited reduction of tumor growth and a statistically significant survival advantage in the ovarian cancer model as compared to the control group, and as announced in May 2026, preclinical data demonstrates that when ERNA-101 is used in combination with PD-1 blockade, it drives complete tumor clearance and 100% long-term survival in syngeneic ovarian cancer models. We have filed Patent Application No. 63/991,024 related to the use of ERNA-101 in combination with PD-1 blockade, which remains pending. It is possible that the pending application, and any that may be filed in the future, will not lead to an issued patent. Additionally, MDACC has filed a patent application based on research conducted under our collaboration agreement (the “MDACC Application”), and we were informed that none of our employees were identified as inventors on the MDACC Application. We have not yet received the MDACC Application and have not evaluated inventorship, ownership or assignment rights as of the filing of this Quarterly Report.
Previous wording
We are also investigating anti-inflammatory cytokine (e.g. IL-10)-secreting iMSCs in inflammatory/auto-immune disorders like rheumatoid arthritis, which we refer to as ERNA-201. MSCs have an intrinsic ability to home to inflamed tissue and have been shown to dampen inflammation and drive/healing/regeneration through multiple secreted mediators and cell-cell interactions. We are investigating the ability of ERNA-201 to turbocharge these anti-inflammatory and regenerative effects.
Current wording
We are also investigating anti-inflammatory cytokine (e.g., IL-10)-secreting iMSCs in autoimmune disorders like rheumatoid arthritis, which we refer to as ERNA-201. MSCs have an intrinsic ability to home to inflamed tissue and have been shown to dampen inflammation and drive healing through multiple secreted mediators and cell-cell interactions. We are investigating the ability of ERNA-201 to turbocharge these anti-inflammatory and regenerative effects.
Previous wording
The major components of research and development costs include salaries and employee benefits, stock-based compensation expense, supplies and materials, preclinical study costs, expensed licensed technology, consulting, scientific advisors and other third-party costs, as well as allocations of various overhead costs related to our product development efforts.
Current wording
The major components of research and development costs include preclinical study costs, salaries and employee benefits, stock-based compensation expense, supplies and materials, expensed licensed technology, consulting, scientific advisors and other third-party costs, as well as allocations of various overhead costs related to our product development efforts.
Previous wording
Our general and administrative expenses consist primarily of salaries, benefits and other costs, including equity-based compensation, for our executive and administrative personnel, legal and other professional fees, travel, insurance, and other corporate costs.
Current wording
Our general and administrative expenses consist primarily of salaries, benefits and other costs, including stock-based compensation, for our executive and administrative personnel, legal and other professional fees, travel, insurance, and other corporate costs.
Previous wording
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Current wording
Comparison of the Three Months Ended March 31, 2026 and 2025
Previous wording
For the nine months ended September 30, 2025, we recognized $5.8 million related to the forward sales contract, $5.3 million of which was initially recognized at the contract inception date because the fair value of the shares that were expected to be issued under a securities purchase agreement entered into in March 2025 (the “2025 SPA”) exceeded the proceeds, and the remaining $0.5 million loss was related to the change in fair value that was remeasured immediately prior to the respective settlement of the shares issued under the 2025 SPA. See Note 12,Equity Transactions – 2025 Private Placement, to the accompanying condensed consolidated statement of operations for more information on this 2025 SPA. There was no similar transaction for the three months ended September 30, 2025 or the three and nine months ended September 30, 2024.
Current wording
During the three months ended March 31, 2025, we recognized expense of $5.3 million related to a forward sales contract because the fair value of the shares that were expected to be issued under a securities purchase agreement entered into on March 31, 2025 (the “2025 SPA”) exceeded the expected proceeds. There was no similar transaction for the three months ended March 31, 2026.
Previous wording
The change in the fair value of the warrant liabilities for the three and nine months ended September 30, 2025 wasde minimis.
Current wording
The change in the fair value of the warrant liabilities for the three months ended March 31, 2025 wasde minimis. There was no change in the fair value of the warrant liabilities recognized for the three months ended March 31, 2026.
Previous wording
During the nine months ended September 30, 2025, we recognized approximately $0.3 million of expenses related to the 2025 SPA transaction entered into on March 31, 2025. See Note 12, 2025Private Placement, to the accompanying condensed consolidated statement of operations for more information on the 2025 SPA. Other expense, net, for the three months ended September 30, 2025 wasde minimis. There was no comparable expense for the three and nine months ended September 30, 2024.
Current wording
During the three months ended March 31, 2025, we recognized approximately $0.1 million of expenses related to the 2025 SPA transaction entered into on March 31, 2025. There was no comparable expense for the three months ended March 31, 2026.
Previous wording
As of September 30, 2025, we had cash of approximately $3.0 million, and we had an accumulated deficit of approximately $244.1 million. We have to date incurred operating losses, and we expect these losses to continue in the future. We incurred a net loss of $1.2 million for the three months ended September 30, 2025, and for the nine months ended September 30, 2025, we incurred a net loss of $12.6 million, which includes a $5.8 million non-cash expense related to the forward sales contract. For the nine months ended September 30, 2025, we used $5.9 million of cash in operating activities.
Current wording
As of March 31, 2026, we had cash of approximately $9.2 million, and we had an accumulated deficit of approximately $251.1 million. We have to date incurred operating losses, and we expect these losses to continue in the future. For the three months ended March 31, 2026, we incurred a net loss of $5.5 million, which includes the $2.0 million non-cash goodwill impairment charge, and we used $2.3 million of cash in operating activities.
Previous wording
There was a decrease of approximately $6.4 million in cash used in operating activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This change was due a $5.9 million decrease in net loss, after giving effect to adjustments made for non-cash transactions, primarily due to a decrease in occupancy expense and professional fees, and by a decrease of $0.5 million in cash used in operating assets and liabilities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily related to terminating our facility sublease and accelerating the recognition of deferred revenue.
Current wording
There was an increase of approximately $0.2 million in cash used in operating activities for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This change was due a $0.8 million increase in net loss, after giving effect to adjustments made for non-cash transactions, offset by a decrease of $0.6 million in cash used in operating assets and liabilities for the three months ended March 31, 2026 when compared to the three months ended March 31, 2025.
Previous wording
We used less than $0.1 Million and approximately $0.3 million to pay for the purchases of property and equipment during the nine months ended September 30, 2025 and 2024, respectively.
Current wording
We used approximately $2,000 in cash for the purchases of property and equipment during the three months ended March 31, 2026, and we made no purchases of property and equipment during the three months ended March 31, 2025.
Previous wording
Net cash provided by financing activities for the nine months ended September 30, 2025 includes $2.3 million of gross proceeds received from the issuance of two promissory notes and $4.9 million of proceeds received from the 2025 SPA, net of offsetting $2.3 million of a receivable related to 2025 SPA due from a related party with the outstanding notes payable, including accrued interest, due to the same related party. Net cash provided by financing activities for the nine months ended September 30, 2024 includes $5.3 million of gross proceeds received from (i) the issuance of convertible notes in January 2024 and the fees related to such issuance and (ii) proceeds received from the bridge note financing in September 2024.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2026 includes net proceeds of $9.5 million received from the Public Offering, including proceeds from the exercise of prefunded warrants issued in the Public Offering. Net cash provided by financing activities for the three months ended March 31, 2025 includes $2.3 million of gross proceeds received from the issuance of two promissory notes as well as an immaterial amount received from the exercise of prefunded warrants.
Previous wording
There were no significant changes in our critical accounting estimates during the three and nine months ended September 30, 2025 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2024 10-K.
Current wording
There were no significant changes in our critical accounting estimates during the three months ended March 31, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2025 10-K.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
During the fourth quarter of 2025, we had a successful pre-Investigational New Drug (“IND”) meeting with the Food and Drug Administration (“FDA”), which resulted in regulatory alignment with our development approach. We expect to complete the Investigational New Drug (“IND”) enabling studies and IND submission in 2026 and to subsequently enter a Phase I investigator sponsored clinical trial in the second half of 2026.