Ernexa Therapeutics Inc.

Previous 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.

Current wording

We are a pre-clinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell-derived mesenchymal stromal 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 bring new treatment possibilities to people facing difficult-to-treat cancers.

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 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.

Current wording

Our lead product candidate ERNA-101 is allogeneic pro-inflammatory cytokines 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

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.

Current wording

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 thefirst half of 2027.

Previous wording

Additionally, to expand our developmental opportunities and raise non-dilutive capital, we are actively seeking strategic partnerships to co-develop or out-license therapeutic assets and engage with potential collaborators, and we are currently applying for research grants, some of which will be used for research conducted at our Texas subsidiary, Ernexa TX2, Inc.

Current wording

Additionally, to expand our developmental opportunities and raise non-dilutive capital, we are actively seeking strategic partnerships to co-develop or out-license therapeutic assets and engage with potential collaborators, and we are currently applying for research grants (e.g. Small Business Innovation Research (SBIR) funding).

Previous wording

In July 2026, an independently conducted study conducted by an independent contract research organization successfully reproduced earlier findings generated at MD Anderson Cancer Center, demonstrating complete tumor clearance and durable long-term survival in a substantially larger study. The results further strengthen confidence in ERNA-101's mechanism of action and provide important third-party validation as the Company advances toward its planned Investigational New Drug (IND) submission in the third quarter of 2026 and anticipated first-in-human Phase 1 clinical trial in the fourth quarter.

Current wording

ERNA-101 in combination with PD-1 checkpoint inhibitor exhibited complete tumor clearance and long-term survival in 10 out of 15 (67%) immunocompetent ID8luc-ova syngeneic ovarian cancer mice models. No complete tumor clearance or durable survival was observed in animals treated with anti-PD-1 or ERNA-101 alone. This study was conducted by an independent contract research organization successfully reproduced earlier findings generated at MD Anderson Cancer Center, demonstrating complete tumor clearance and durable long-term survival in a substantially larger study. The results further strengthen confidence in ERNA-101’s mechanism of action and provide important third-party validation as the Company advances toward its planned Investigational New Drug (IND) submission in the third quarter of 2026 and anticipated first-in-human Phase 1 clinical trial in the fourth quarter.

Previous wording

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. To date, we have sold approximately 463,000 shares of common stock for net proceeds of approximately $3.7 million under the ATM.

Current wording

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. To date, we have sold approximately 520,000 shares of common stock for net proceeds of approximately $3.9 million under the ATM.

Previous wording

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 wording

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) The Company satisfied the applicable conditions and maintained compliance with all Nasdaq Listing Rules through September 14, 2026. Accordingly, the Panel’s jurisdiction over this matter ended on September 14, 2026. The Company remains subject to the mandatory Panel monitor through May 5, 2027. During this one-year monitoring period, should the Company become deficient with respect to the Bid Price Rule, Nasdaq will immediately issue a delisting determination.

Previous wording

On May 4, 2026, we effected the Reverse Stock Split and on May 29, 2026, we received notice from Nasdaq that we have regained compliance with the Bid Price Rule. The Panel maintains jurisdiction over the Company until September 14, 2026 with respect to all Nasdaq Listing Rules, and the Company must continue to remain compliant with the Bid Price Rule through May 5, 2027 to avoid delisting.

Current wording

On May 4, 2026, we effected the Reverse Stock Split and on May 29, 2026, we received notice from Nasdaq that we have regained compliance with the Bid Price Rule. The Company must continue to remain compliant with the Bid Price Rule through May 5, 2027 to avoid delisting.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

We had no revenues or cost of revenues for the three and six months ended June 30, 2026 or 2025.

Current wording

We had no revenues or cost of revenues for the three and nine months ended September 30, 2026 or 2025.

Previous wording

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, our research and development expenses increased by approximately $2.3 million primarily due to fees recognized for services under Statement of Work 1 with Cellipont for development and manufacturing services, increased study fees related to ERNA-101 as well as increased payroll due to an increase in research and development headcount. These increases were partially offset by a reduction in expenses under professional fees due to the amendment of W02 starting during March 2026.

Current wording

For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, our research and development expenses increased by approximately $3.1 million primarily due to fees recognized for services under Statement of Work 1 with Cellipont (now Kincellis) for development and manufacturing services, increased study fees related to ERNA-101 as well as increased payroll due to an increase in research and development headcount. These increases were partially offset by a decrease in MSA/License fees due to the amendment of Work Order No. 2 with Factor Bioscience Inc. starting during March 2026 and a reduction in expenses under professional fees.

Previous wording

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, our general and administrative expenses increased by approximately $0.1 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 six months ended June 30, 2026 compared to the six months ended June 30, 2025, as well as decreased other expenses for occupancy costs, depreciation and amortization, and reduced insurance premiums.

Current wording

For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, our general and administrative expenses increased by approximately $0.4 million primarily due to increases in payroll related to certain accrued bonuses and in professional fees related to certain legal matters as well as increased other expenses for occupancy costs, depreciation, and amortization, offset by reduced insurance premiums and a reduction in stock based compensation due to a reduction in the fair values of the equity awards that are amortizing during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Previous wording

During the six months ended June 30, 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 June 30, 2026, there was no remaining goodwill balance. We did not recognize a similar expense during the six months ended June 30, 2025.

Current wording

During the nine months ended September 30, 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 September 30, 2026, there was no remaining goodwill balance. We did not recognize a similar expense during the nine months ended September 30, 2025.

Previous wording

During the six months ended June 30, 2025, we recognized expense of $5.8 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 six months ended June 30, 2026.

Current wording

During the nine months ended September 30, 2025, we recognized expense of $5.8 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 nine months ended September 30, 2026.

Previous wording

The change in the fair value of the warrant liabilities for the three and six months ended June 30, 2025 wasde minimis. There was no change in the fair value of the warrant liabilities recognized for the three and six months ended June 30, 2026.

Current wording

The change in the fair value of the warrant liabilities for the three and nine months ended September 30, 2025 wasde minimis. There was no change in the fair value of the warrant liabilities recognized for the three and nine months ended September 30, 2026.

Previous wording

For the three months ended June 30, 2026, we recognized approximately $55,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the three months ended June 30, 2025.

Current wording

For the three months ended September 30, 2026, we recognized approximately $18,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the three months ended September 30, 2025.

Previous wording

For the six months ended June 30, 2026, we recognized approximately $94,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the six months ended June 30, 2025.

Current wording

For the nine months ended September 30, 2026, we recognized approximately $112,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the nine months ended September 30, 2025.

Previous wording

For the three and six months ended June 30, 2026, we recognized approximately $41,000 due to the extinguishment of the contingent consideration liability during the three months ended June 30, 2026.

Current wording

For the nine months ended September 30, 2026, we recognized approximately $41,000 due to the extinguishment of the contingent consideration liability during the nine months ended September 30, 2026 .

Previous wording

During the three and six ended June 30, 2025, we recognized approximately $0.1 million and $0.3 million of expenses related to the 2025 SPA transaction entered into on March 31, 2025. There was no comparable expense for the three and six months ended June 30, 2026.

Current 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, and other expense, net, for the three months ended September 30, 2025 wasde minimis.. During the nine months ended September 30, 2026, we recognized approximately $0.1 million of other income, primarily attributable to sublease income.

Previous wording

As of June 30, 2026, we had cash of approximately $5.0 million, and we had an accumulated deficit of approximately $255.2 million. We have to date incurred operating losses, and we expect these losses to continue in the future. For the three and six months ended June 30, 2026, we incurred a net loss of $4.0 million and $9.5 million, respectively, which includes the $2.0 million non-cash goodwill impairment charge. For the six months ended June 30, 2026, and we used $6.4 million of cash in operating activities.

Current wording

As of September 30, 2026, we had cash of approximately $5.6 million, and we had an accumulated deficit of approximately $258.1 million. We have to date incurred operating losses, and we expect these losses to continue in the future. For the three and nine months ended September 30, 2026, we incurred a net loss of $2.9 million and $12.5 million, respectively, which includes the $2.0 million non-cash goodwill impairment charge. For the nine months ended September 30, 2026, we used $9.6 million of cash in operating activities.

Previous wording

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 June 30, 2026, we received approximately $6,000 in net proceeds from the sale of common stock under the ATM. To date, we have sold approximately 463,000 shares of common stock for net proceeds of approximately $3.7 million under the ATM, and we have approximately $5.4 million of shares remaining to sell under this facility.

Current wording

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 September 30, 2026, we received approximately $3.7 million in net proceeds from the sale of common stock under the ATM. To date, we have sold approximately 520,000 shares of common stock for net proceeds of approximately $3.9 million under the ATM, and we have approximately $5.3 million of shares remaining to sell under this facility.

Previous wording

In connection with preparing the financial statement as of and for the three and six months ended June 30, 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 wording

In connection with preparing the financial statement as of and for the three and nine months ended September 30, 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.

Previous wording

As of August 4, 2026, we had approximately $7.4 million in cash, which is less than that needed to affect our current operating plan and forecasted cash requirements for the next twelve months. However, we expect that our ability to access additional capital under our ATM will cover shortfalls in our cash resources over the next twelve months from the issuance date of these financial statements. Subsequent to the balance sheet date of June 30, 2026, the Company sold an additional 461,851 shares for net proceeds of $3.7 million in cash under the ATM.

Current wording

As of September 30, 2026, we had approximately $5.6 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 additional capital under our ATM facility will cover a significant portion of the shortfall in our cash resources over the twelve months from the issuance date of these financial statements. Management is also actively pursuing other additional financing opportunities to raise capital. Subsequent to the balance sheet date of September 30, 2026, the Company sold an additional 43,700 shares for net proceeds of $0.1 million in cash under the ATM.

Previous wording

There was an increase of approximately $1.8 million, respectively, in cash used in operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This change was due to a $2.3 million increase in net loss, after giving effect to adjustments made for non-cash transactions, offset by an increase of $0.5 million in cash used in operating assets and liabilities for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025.

Current wording

There was $9.6 million in cash used in operating activities for the nine months ended September 30, 2026 compared to $5.9 million for the nine months ended September 30, 2025. This change was due to $3.3 million increase in adjustments made for non-cash transactions, with an additional increase of $0.4 million in cash used in operating assets and liabilities for the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025.

Previous wording

We used approximately $5,000 in cash for the purchases of property and equipment during the six months ended June 30, 2026, and we made no purchases of property and equipment during the six months ended June 30, 2025.

Current wording

We used approximately $5,000 in cash for the purchases of property and equipment during the nine months ended September 30, 2026, compared to approximately $22,000 during the nine months ended September 30, 2025.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 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 six months ended June 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 First Closing and Second Closing under the SPA.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2026 includes gross proceeds of $10.5 million received from the Public Offering, including proceeds from the exercise of prefunded warrants issued in the Public Offering and $3.7 million in net proceeds from the sale of common stock under the ATM. 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 3 separate closings under the SPA. (See Note 8)

Previous wording

There were no significant changes in our critical accounting estimates during the three and six months ended June 30, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2025 10-K.

Current wording

There were no significant changes in our critical accounting estimates during the three and nine months ended September 30, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2025 10-K.