Alaunos Therapeutics, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial information and related notes included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or the SEC, on March 31, 2025, or the Annual Report.

Except for the historical financial information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to contain forward-looking statements that reflect our plans, estimates and beliefs. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as “may,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.

Our actual results could differ materially from those contained in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include those risks identified under Part II, Item 1A. Risk Factors of our 2024 Annual Report and Part II Item 1.A of our Quarterly Reports for the quarters ended March 31, 2025 and June 30, 2025.

Overview

On October 10, 2024, we announced our continued progress and evaluation of our internally developed small molecule oral obesity program. The aim of this program is to develop a drug for obesity and metabolic disorders with a differentiated profile relative to currently marketed and in development oral and injectable products.

We have also operated as a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell therapy, designed to treat multiple solid tumor types in large cancer patient populations with unmet clinical needs. On August 14, 2023, we announced a strategic reprioritization of our business and wind down of our TCR-T Library Phase 1/2 Trial.

In connection with the reprioritization, we reduced our workforce during the third and fourth quarters of 2023, and we continue working to reduce costs in order to extend our cash runway. We continue to explore strategic alternatives, including, but not limited to, an acquisition, merger, reverse merger, sale of assets, strategic partnerships, capital raises or other transactions.

We have not generated any product revenue and have incurred significant net losses in each year since our inception. For the nine months ended September 30, 2025, we had a net loss of $3.3 million, and as of September 30, 2025, we have incurred approximately $923.7 million of accumulated deficit since our inception in 2003. We expect to continue to incur significant operating expenditures and net losses for the foreseeable future.

Small Molecule Oral Obesity Program

We are advancing our internally developed, preclinical small molecule program for the treatment of obesity and related metabolic disorders. This program focuses on discovering and developing novel, orally administered therapeutics with the potential for a differentiated and complementary profile compared to currently available therapies. While other pipeline therapies for obesity explore alternative hormonal pathways such as amylin or dual GIP/GLP-1 receptor agonism, our approach is focused on a non-hormonal mechanism of action. The program seeks to develop an oral therapeutic with the potential to address certain limitations of existing hormonal therapies, including the potential for preservation of lean muscle mass during weight loss and an improved tolerability profile.

During the fourth quarter of 2024, we engaged a contract development and manufacturing organization (CDMO) to synthesize active pharmaceutical ingredients (APIs) for our product candidates. We have since initiated a portfolio of preclinical studies to evaluate these product candidates. Initial in vitro characterization studies conducted by a contract research organization (CRO) encountered methodological issues related to the assay, which prevented the generation of conclusive data. This CRO has since completed the necessary method development to resolve these issues, and these studies are being repeated. In parallel, we have conducted an in vivo pharmacokinetic (PK) study of our product candidate ALN1003 and have initiated two pilot in vivo proof-of-concept (PoC) studies of ALN1003 in a diet-induced obesity (DIO) mouse model.

Collectively, these ongoing studies are designed to assess our candidates’ effects on key biological pathways implicated in metabolic disease, including receptor binding, lipid accumulation, food consumption, weight loss, and the expression of genes related to thermogenesis and energy expenditure. We anticipate initial data from these ongoing in vitro and in vivo studies will be available no later than the fourth quarter of 2025. These data are intended to inform the future development strategy for our product candidates and guide indication selection.

The advancement of this program is subject to numerous risks and uncertainties inherent in early-stage drug development. Subject to favorable data from these preclinical studies and our ability to secure additional capital, we plan to advance a selected development candidate into formal investigational new drug (IND)-enabling studies. We intend to actively explore strategic financing and collaboration opportunities to fund the continued development of this program.

Historical Development and Achievements in Cancer Therapeutics

While our primary focus has shifted to our preclinical small-molecule obesity and metabolic disorder program, with ongoing preclinical in vitro and in vivo studies, we previously focused on developing TCR-T cell therapies for solid tumors using our non-viral Sleeping Beauty platform and hunTR® TCR discovery platform. Key milestones included:

• TCR-T Library Phase 1/2 Trial (2022-2023): Treated eight patients with solid tumors (e.g., pancreatic, colorectal, lung). The trial showed TCR-T cells were well-tolerated, with no dose-limiting toxicities or neurotoxicity. Cytokine release syndrome (grades 1-3) resolved with standard care. One non-small cell lung cancer patient achieved a partial response (13% response rate), and six others had stable disease (87% disease control rate), establishing proof-of-concept that Sleeping Beauty TCR-T cells can result in objective clinical responses an recognize established tumors in vivo.
• hunTR® Platform: Identified proprietary TCRs targeting driver mutations (KRAS, TP53, others) and various HLAs, expanding the TCR library for potential patient treatment.

In August 2023, however, due to substantial development costs and a challenging financing environment, we announced a strategic reprioritization, including the wind-down of our TCR-T Library Phase 1/2 Trial and cessation of further clinical development of TCR-T programs. This involved:

• Workforce reductions (approximately 95% by the end of 2023) and cost-cutting measures to extend cash runway.
• Termination of key licenses and agreements:
• NCI patent license (effective December 26, 2023), after internally developing proprietary TCRs via hunTR targeting similar mutations.
• NCI CRADA (effective October 13, 2023).
• Precigen exclusive license (fully terminated October 4, 2024, following an amendment in April 2023 that eliminated royalty/milestone obligations).
• Trial close-out activities, including internal processes, with ongoing costs for long-term follow-up and regulatory obligations.

We are actively exploring strategic alternatives to maximize stockholder value, including but not limited to acquisitions, mergers, reverse mergers, asset sales, strategic partnerships, or capital raises. These may involve monetizing cancer-related assets, such as out-licensing the TCR library or hunTR platform. We engaged Cantor Fitzgerald & Co. as a strategic advisor for this process. However, there are no assurances that any transaction will be consummated, and failure to do so could lead to further operational curtailment or dissolution.

Nasdaq Shareholders Equity Deficiency Notice

On April 7, 2025, the Company received a notice (the “Notice”) from the Listing Qualifications staff of Nasdaq notifying the Company that the Company’s stockholders equity, as reported in its 2024 Annual Report, did not satisfy the continued listing requirements under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company’s stockholder equity be at least $2.5 million. In its 2024 Form 10-K, the Company reported stockholders’ equity of $2.1 million, and, as a result, does not currently satisfy Nasdaq Listing Rule 5550(b)(1).

The Notice had no immediate effect on the Company’s listing on the Nasdaq Capital Market. In accordance with Nasdaq rules, the Company had 45 calendar days from the date of the notification to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). On May 22, 2025, The Company submitted its compliance plan to Nasdaq.

On August 19, 2025, Nasdaq notified the Company that it had regained compliance with the continued listing requirements of the Nasdaq Capital Market. Based on the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2025, evidencing stockholders’ equity of $3.66 million, the Listing Qualifications staff determined that the Company now complies with the Nasdaq Listing Rules and confirmed that the matter is closed. As of September 30, 2025, we had $2.82 million in stockholder’ equity resulting in compliance with the Nasdaq rule. However, due to the Company’s limited cash runway and ongoing operating losses, there can be no assurance that the Company will maintain compliance with Nasdaq’s continued listing requirements in the future.

Results of Operations

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Royalty Revenue

Royalty revenue during the three months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

Research and Development Expenses

Research and development expenses during the three months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

Research and development expenses for the three months ended September 30, 2025 increased by $326 thousand when compared to the three months ended September 30, 2024, primarily due to an increase in stock based compensation, salary expense and consulting fees incurred in pursuit of our obesity program.

General and Administrative Expenses

General and administrative expenses during the three months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

General and administrative expenses for the three months ended September 30, 2025 decreased by $289 thousand as compared to the three months ended September 30, 2024, primarily due to a decrease in salary expense, insurance costs, filing fees, bank fees and travel costs due to our downsized operations.

Other Income

Other income during the three months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

Other income, net, for the three months ended September 30, 2025 increased by $5 thousand as compared to the three months ended September 30, 2024, primarily due to interest earned on cash reserves.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Royalty Revenue

Royalty revenue during the nine months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

Research and Development Expenses

Research and development expenses during the nine months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

Research and development expenses for the nine months ended September 30, 2025 increased by $554 thousand when compared to the nine months ended September 30, 2024, primarily due to an increase in increase in stock based compensation, salary expense and consulting fees incurred in pursuit of our obesity program and the remainder of the increase is related to regulatory submissions and close out fees as part of our wind-down clinical activities

General and Administrative Expenses

General and administrative expenses during the nine months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

General and administrative expenses for the nine months ended September 30, 2025 decreased by $1.30 million as compared to nine months ended September 30, 2024, primarily due to a $0.43 million decrease in consulting expenses and a $0.58 million decrease in insurance cost and a decrease in employee-related expenses, insurance cost, filing fees, bank fees and travel costs and bank fees due to our downsized operations.

Other Income

Other income during the nine months ended September 30, 2025 and 2024 were as follows:

($ in thousands)

Other income, net, for the nine months ended September 30, 2025 decreased be $54 thousand as compared to the nine months ended September 30, 2024, primarily due to reduced interest income from our cash reserves, as our reduced cash reserves period over period, partially offset by a gain in the change of fair value of our warrant liability.

Liquidity and Capital Resources

Liquidity

Sources of Liquidity

We have not generated any revenue from product sales and have only generated nominal royalty revenue. Since inception, we have incurred net losses and negative cash flows from our operations.

To date, we have financed our operations primarily through public offerings of our common stock, private placements of our convertible and preferred equity securities, term debt and collaborations.

Given our current development plans and cash management efforts, we anticipate that our cash resources will be sufficient to fund operations into the first quarter of 2026. Our current monthly cash burn rate is approximately $0.28 million (based on the nine months ended September 30, 2025). At this rate, our $1.9 million in cash and cash equivalents as of September 30, 2025, is expected to fund operations through approximately March 2026. This estimate excludes any potential costs related to strategic transactions, wind-down, or unforeseen liabilities. Subsequent to September 30, 2025, the Company issued 53,832 shares of common stock to settle $199 thousand of accounts payable. This non-cash transaction had no impact on cash runway but reduced current liabilities.

We have operated at a loss since inception in 2003 and have no significant recurring revenue from operations. We anticipate that losses will continue for the foreseeable future. As of September 30, 2025, our accumulated deficit was approximately $923.7 million. Our working capital as of September 30, 2025 was $1.8 million, consisting of $2.7 million in current assets and $0.9 million in current liabilities. Our actual cash requirements may vary materially from those planned because of a number of factors, including changes in the focus, direction and pace of our development programs.

As of September 30, 2025, we had approximately $1.9 million of cash and cash equivalents. In light of our 2023 announced strategic reprioritization and the ensuing streamlining and cost efficiency efforts, we anticipate our cash resources will be sufficient to fund our operations into the first quarter of 2026. In order to continue our operations beyond our forecasted runway, including, if necessary, to continue to explore strategic alternatives, we will need to raise additional capital. Aside from the equity line of credit, we have no committed sources of additional capital at this time. The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors. We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate. Management does not know whether additional financing will be on terms favorable or acceptable to us when needed, if at all. If adequate additional funds are not available when required, we may be unable to persist as a going concern for sufficient time to identify or execute on any strategic alternatives.

Based on the current cash forecast, management has determined that our present capital resources will not be sufficient to fund our planned operations for at least one year from the issuance date of the condensed financial statements, which raises substantial doubt as to our ability to continue as a going concern. This forecast of cash resources and planned operations is forward-looking information that involves risks and uncertainties, and the actual amount of expenses could vary materially and adversely as a result of a number of factors.

Series A-1 Preferred Stock

In April 2025, we entered into a Subscription Agreement, with an accredited investor, pursuant to which we sold 500 shares of Series A-1 Convertible Preferred Stock, par value of $0.001 per share (the “Series A-1 Preferred Stock”), at a price per share of $1,000 (the “Preferred Offering”) for an aggregate purchase price of $0.5 million. The Preferred Offering also relates to the offering of the shares of our common stock (the "Common Stock") issuable upon the conversion of or otherwise pursuant to the terms of the Series A-1 Preferred Stock).

In connection therewith, we filed with the Secretary of State of the State of Delaware the Certificate of Designation of Series A-1 Convertible Preferred Stock, designating 1,000 shares of preferred stock as our Series A-1 Preferred Stock.

Series A-1 Preferred Stock together with the aggregate accrued or accumulated and unpaid dividends thereon, is convertible, at any time at option of the holder, into shares of Common Stock at initial fixed “Conversion Price” of $2.76 per share, subject to customary anti-dilution provisions. Prior thereto, the holders of Series A-1 Preferred Stock are entitled to receive dividends at a rate of 10% per annum, payable in shares of Series A-1 Preferred Stock, if and when declared by the Board of Directors. In addition, to the extent any other dividends or distributions are declared for holders of the common stock, the holders of Series A-1 Preferred Stock have participation rights on an as-converted basis. The holders of Series A-1 Preferred Stock are entitled to vote, together as a single class, on any and all matters presented to our stockholders for their action on an as-converted basis, a number of votes equal to the number of shares of common stock into which the shares of Series A-1 Preferred Stock are convertible under the terms of the Certificate of Designation.

Securities Purchase Agreement for Registered Direct Offering

In June 2025, we entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which we agreed to sell (i) 338,725 shares of common stock at a purchase price of $3.36 per share and (ii) 271,674 pre-funded warrants to purchase common stock at a purchase price of $3.359 per warrant share, in a registered direct offering. In connection therewith, we received net proceeds totaling $1,911,000 after deduction of transaction related expenses. Subsequent thereto and through June 30, 2025, a total of 96,500 the prefunded warrants were exercised at $0.001 per share, resulting in the issuance of 96,500 shares of common stock. Subsequent to June 30, 2025, an aggregate of 112,875 prefunded warrants were exercised resulting in the issuance of an additional 112,875 shares of common stock.

Series A-2 Preferred Stock

In June 2025, we entered into a subscription agreement with certain accredited investors, pursuant to which we sold, in a private placement, 850 shares of Series A-2 Convertible Preferred Stock, par value $0.001 per share, at a price of $1,000 per share, for aggregate gross proceeds of $0.85 million.

In connection therewith, we filed with the Secretary of State of the State of Delaware the Certificate of Designation of Series A-2 Convertible Preferred Stock, designating 1,000 shares of preferred stock as our Series A-2 Preferred Stock.

Series A-2 Preferred Stock, together with the aggregate accrued or accumulated and unpaid dividends thereon, is convertible, at any time at the option of the holder, into shares of Common Stock at an initial fixed “Conversion Price” of $4.49 per share, subject to customary anti-dilution provisions. Prior thereto, the holders of Series A-2 Preferred Stock are entitled to receive dividends at a rate of 10% per annum, payable in shares of Series A-2 Preferred Stock, if and when declared by the Board of Directors. In addition, to the extent any other dividends or distributions are declared for holders of the Common Stock, the holders of Series A-2 Preferred Stock have participation rights on an as-converted basis. The holders of Series A-2 Preferred Stock are entitled to vote, together as a single class, on any and all matters presented to our stockholders for their action on an as-converted basis, a number of votes equal to the number of shares of Common Stock into which the shares of Series A-2 Preferred Stock are convertible under the terms of the Certificate of Designation.

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

Cumulative dividends on the Company’s Series A-1 and Series A-2 Convertible Preferred Stock accrue at 10% per annum and compound quarterly by increasing the liquidation preference. Undeclared cumulative dividends are not recorded as a liability. Because the Company reported a net loss for the periods presented, cumulative preferred dividends increased the net loss attributable to common stockholders in the earnings-per-share calculation. As of September 30, 2025, undeclared cumulative dividends totaled $39 thousand for Series A-1 and $23 thousand for Series A-2. For the three and six months ended September 30, 2025, cumulative preferred dividends across both series were $42 thousand and $62 thousand, respectively.

Cash Flows

The following table summarizes our net decrease in cash and cash equivalents for the nine months ended September 30, 2025 and 2024:

($ in thousands)

Net cash flows used in operating activities for the nine months ended September 30, 2025 was $2.5 thousand, as compared to net cash used in operating activities of $4.38 million for the nine months ended September 30, 2024. The decrease in net cash used in operating activities was primarily related to reductions in our net loss, offset by an increase in timing of accounts payable and accrued expenses.

The net cash flows used in investing activities for the nine months ended September 30, 2025 was $97 thousand as compared to $0 for the nine months ended September 30, 2024. The increase in net cash used in investing activities was directly attributed to an equipment purchase made during the period to be used in our obesity program.

The net cash flows from financing activities for the nine months ended September 30, 2025 was $3.26 million as compared to $0 for the nine months ended September 30, 2024. The financing activity was directly attributable to proceeds from the issuance of common stock and prefunded warrants, the sale of Series A-1 Preferred Stock, and the sale of Series A-2 Preferred Stock.

Capital Resources

Operating Leases

As of September 30, 2025, we have no lease commitments, other than a short-term lease.

Royalty and License Fees

In June 2022, Solasia Pharma K. K., or Solasia, announced that darinaparsin had been approved for relapsed or refractory Peripheral T-Cell Lymphoma by the Ministry of Health, Labor and Welfare in Japan. During the nine months ended September 30, 2025 and 2024, the Company earned $2 thousand and $6 thousand, respectively, in royalty revenues on net sales under the Solasia License and Collaboration Agreement. No such royalty revenues were earned in the three months ended September 30, 2025 and September 30, 2024.

As a smaller reporting company, as defined by Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are not required to provide the information under this item.

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our principal executive officer and principal accounting officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of September 30, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our principal executive officer and principal financial officer has concluded that as of September 30, 2025, our disclosure controls and procedures were not effective.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act) that occurred during the nine months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our business faces significant and evolving risks, many of which are described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025, as amended by Amendment No. 1 filed on April 30, 2025, and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 (filed May 15, 2025), June 30, 2025 (filed August 14, 2025), and September 30, 2025 (this Quarterly Report). These risks are compounded by external events beyond our control, including the ongoing U.S. government shutdown (effective October 1, 2025), which has introduced new and material risks related to SEC registration statement effectiveness, Nasdaq compliance, and our ability to execute strategic alternatives.

The risks described in our prior and current filings may not be exhaustive. Additional risks of which we are currently unaware, or that we presently deem immaterial, may also emerge or intensify and materially impair our business, financial condition, results of operations, cash flows, or prospects. If any of the events or circumstances described in these risk factors occur — including, without limitation, a prolonged government shutdown, SEC stop order, or Nasdaq delisting — our operations may be curtailed, our strategic process may fail, and we may be forced to pursue dissolution or bankruptcy, resulting in a total loss of your investment. Investors and prospective investors must carefully consider the risks detailed in our Annual Report, Quarterly Reports, and this Form 10-Q, along with the “Forward-Looking Statements” section and all other information herein, before making any investment decision.

The Ongoing U.S. Government Shutdown and Its Impact on SEC and FDA Operations Pose Existential Risks to Our Business.

The federal government shutdown, effective October 1, 2025, has furloughed non-essential personnel at the SEC, severely disrupting operations critical to our survival as a pre-clinical biotech with $1.9 million in cash and a runway into Q1 2026. While EDGAR remains operational for filings, the absence of agency staff creates material risks across capital raising, regulatory advancement, Nasdaq compliance, and strategic alternatives.

SEC Registration Statement Risks

Our Form S-1, filed October 22, 2025, became automatically effective on November 11, 2025 — the 20th calendar day after the deemed filing date pursuant to SEC Rule 473. Our Form S-3, filed November 7, 2025, is scheduled for automatic effectiveness on November 27, 2025 (Thanksgiving Day), with the 20-calendar-day clock unaffected by weekends or federal holidays. The shutdown does not suspend this automatic effectiveness but eliminates pre-effectiveness review, comment resolution, and acceleration. Upon resumption of SEC operations, a post-effectiveness stop order under Section 8(d) of the Securities Act could be issued if material deficiencies are identified in backlog reviews. Such an order would suspend all sales under our $25 million equity line of credit and follow-on offerings, blocking the capital necessary to extend our runway beyond March 2026.

Nasdaq Delisting and Strategic Transaction Risks

Filing deadlines remain in force. Any inability to resolve SEC comment backlogs on future 10-Qs/10-Ks risks Nasdaq delisting under Rule 5250(c)(1). Our stockholders’ equity, at $2.82 million on September 30, 2025, is vulnerable to erosion from operating losses (~$0.28 million/month), potentially triggering a deficiency notice. The shutdown also freezes SEC review of proxy statements and Form S-4 filings, stalling our Cantor Fitzgerald-led strategic process (e.g., reverse merger, asset sale). Historical data from the 2018–19 shutdown shows 40% of micro-cap biotechs in similar positions faced delisting or dissolution within 12 months due to funding and regulatory gridlock. If the shutdown extends beyond 30 days, or if SEC backlogs persist post-resumption, we may be forced to curtail operations, pursue dissolution, or file for bankruptcy. These outcomes could result in a total loss for stockholders and materially adversely affect our business, financial condition, results of operations, cash flows, and prospects.