Genprex, Inc.: Form 10-Q for the period ended Jun 30, 2026

You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) together with our interim condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, in this filing, and in our other SEC filings, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in United States (“U.S.”) dollars, unless otherwise noted.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. Unless the context requires otherwise, references to “Genprex,” the “Company,” “we,” “us” or “our” in this Quarterly Report refer to Genprex, Inc. Any statements in this Quarterly Report about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “would” and similar expressions. For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our product candidates and their respective targeted indications, including estimated or projected size or other expected trends in such markets, and any other statements involving anticipated or expected market or industry projections, statements regarding markets for our common stock and future management and organizational structure and statements about our current or future product candidates and their development, our beliefs regarding their preclinical or clinical profile or efficacy, and the regulatory approval process and pathway and the timing thereof, are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.

Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this Quarterly Report. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:

• Market conditions;
• ● ● ● Our capital position; Our ability to raise additional future financing and possible lack of financial and other resources, and our ability to continue to support and fund our preclinical and clinical development programs and growth of our business; Our ability to continue as a going concern; Our ability to maintain compliance with the continued listing requirements of The Nasdaq Capital Market and maintain the listing of our common stock;
• Our ability to compete effectively and with larger and/or better-financed biotechnology and pharmaceutical companies;
• Our uncertainty of developing marketable products;
• Our ability to develop and commercialize our products;
• Our ability to obtain regulatory approvals;
• Our ability and third-parties’ ability to maintain and protect intellectual property rights;
• The effects and impacts of public health crises such as epidemics or outbreaks, which could significantly disrupt and have a materially adverse effect upon on our business, our clinical trials and our research programs; as well as on healthcare systems or the global economy as a whole;
• The success of our clinical trials through all phases of clinical development, including the ability of our third-party suppliers or manufacturers to supply or manufacture our products on a timely, consistent basis in a manner sufficient and appropriate as is commensurate to meet our clinical trial timing, courses of treatment, and other requisite fulfillment considerations necessary to adequately advance our development programs;
• Our ability to conduct and complete our clinical trials in accordance with projected timelines;
• ● Any delays in regulatory review and approval of our current and future product candidates; The effects of any strategic research and development prioritization initiatives, and any other strategic alternatives or other efforts that we take or may take in the future that are aimed at optimizing and re-focusing our diabetes, oncology and/or other clinical development programs including prioritization of resources, and the extent to which we are able to implement such efforts and initiatives successfully to achieve the desired and intended results thereof, including successful implementation of the separation of our diabetes clinical development program, including the anticipated benefits of the internal reorganization, the expected timing of the reorganization and/or if it is completed as contemplated or at all;
• Our dependence on third-party suppliers or manufacturers to supply or manufacture our key ingredients and/or raw materials, products and/or product components and successfully carry out a sustainable, reproducible and scalable manufacturing process in accordance with specifications or applicable regulations;
• Our ability to control product development costs;
• Our ability to attract and retain key employees;
• Our ability to enter into new strategic collaborations, licensing or other arrangements;
• Changes in government regulation affecting product candidates that could increase our development costs;
• Our involvement in patent, trademark and other intellectual property litigation that could be expensive and divert management’s attention;
• The possibility that there may be no market acceptance for our products; and
• Changes in third-party reimbursement policies which could adversely affect potential future sales of any of our products that are approved for marketing.

The foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements, which speak only as of the date of this Quarterly Report or the date of the document incorporated by reference into this Quarterly Report. Except as required by law, we assume no obligation and expressly disclaim any duty to update any forward-looking statement to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements contained in this Quarterly Report. All forward-looking statements are expressly qualified in their entirety by the cautionary statements contained in this section.

Overview

We are a clinical stage gene therapy company pioneering the development of gene-based therapies for large patient populations with unmet medical needs. Our oncology platform utilizes our systemic, non-viral ONCOPREX® Delivery System which uses lipid-based nanoparticles in a lipoplex form to deliver tumor suppressor gene-expressing plasmids to cancer cells. The product is administered intravenously, where it is taken up by tumor cells that then express tumor suppressor proteins that were deficient in the tumor. Our diabetes technology is designed to work in Type 1 diabetes by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In Type 2 diabetes, our technology is believed to work by replenishing and rejuvenating exhausted beta cells that make insulin.

Oncology Platform

Our lead oncology drug candidate, REQORSA® Gene Therapy (generic name: quaratusugene ozeplasmid), previously referred to as GPX-001, is initially being developed in combination with prominent, approved cancer drugs to treat Non-Small Cell Lung Cancer (“NSCLC”) and Small Cell Lung Cancer (“SCLC”). REQORSA has multimodal effects on cancer cells. It has a mechanism of action whereby it decreases cancer growth by decreasing glucose metabolism, interrupts cell signaling pathways that cause replication and proliferation of cancer cells, re-establishes pathways for apoptosis, or programmed cell death, in cancer cells, and increases the immune response against cancer cells. In preclinical studies, REQORSA has been shown to be complementary with targeted drugs and immunotherapies. Our strategy is to develop REQORSA in combination with currently approved therapies and we believe REQORSA’s unique attributes position it to provide treatments that improve on these current therapies for patients with NSCLC, SCLC, and possibly other cancers.

The TUSC2 gene, which is the key component of REQORSA and plays a vital role in cancer suppression and normal cell metabolism, is one of a series of genes on the short arm of Chromosome 3 whose therapeutic use is covered by our exclusive worldwide licenses from The University of Texas MD Anderson Cancer Center (“MD Anderson”). We believe that our ONCOPREX Delivery System allows for the delivery of a number of cancer-fighting tumor suppressor genes, alone or in combination with other cancer therapies, to combat multiple types of cancer and we are in early stages of discovery programs to identify other cancer candidates.

Acclaim – 1: The Acclaim-1 study is a Phase 1/2 clinical trial that has three portions - a Phase 1 dose escalation portion, a Phase 2a expansion portion, and a Phase 2b randomized portion. We currently are enrolling and treating patients in the Phase 2a expansion portion of our Phase 1/2 Acclaim-1 clinical trial. The Acclaim-1 trial uses a combination of REQORSA and AstraZeneca’s Tagrisso® (osimertinib) in patients with late-stage NSCLC who have activating epidermal growth factor receptor (“EGFR”) mutations and disease progression on treatment with Tagrisso or Tagrisso-containing regimens. Following the May 2023 completion of the Phase 1 dose escalation portion of the study, the Acclaim-1 Safety Review Committee (“Acclaim-1 SRC”) approved advancement from the Phase 1 dose escalation portion to the Phase 2a expansion portion of the study. Based on a review of safety data which showed no dose limiting toxicities (“DLTs”), the Acclaim-1 SRC determined the recommended Phase 2 dose (“RP2D”) of REQORSA to be 0.12 mg/kg administered every 21 days. This was the highest dose level delivered in the Phase 1 portion of the study and is twice the highest dose level delivered in our prior clinical trial combining REQORSA with Tarceva® (erlotinib) for the treatment of late-stage lung cancer. There were three patients out of the twelve originally enrolled in the Phase 1 dose escalation portion of the study who had prolonged progression-free survival (“PFS”). One patient attained a partial remission after the second course of REQORSA and Tagrisso and maintained this response through 66 courses of treatment but then had disease progression after 47 months. A second patient had stable disease without disease progression through 32 courses of treatment but then had disease progression after 22 months. A third patient had stable disease without disease progression through 14 courses of treatment before disease progression after almost 10 months. The results of the Phase 1 dose escalation portion of the study were published in Clinical Lung Cancer, a peer-reviewed journal covering various aspects of clinical and translational research of lung cancer, in January 2026.

Since not all patients respond to REQORSA, we have been collaborating with researchers at MD Anderson to identify biomarkers that might predict a strong positive response or a lack of response to REQORSA in patients with lung cancer. In April 2026, we entered into a new sponsored research agreement with MD Anderson to study biomarkers. This preclinical effort has led to the identification of two proteins whose expression appears to predict response to REQORSA. This work, titled “TROP2 and PTEN are biomarkers of primary resistance to TUSC2 gene therapy in non-small cell lung cancer” was accepted for a poster presentation at the meeting of the American Association of Cancer Research in April 2026. These findings suggest that TROP2 and PTEN may serve as biomarkers to predict TUSC2 response and guide therapeutic strategies in NSCLC. TROP2 (trophoblast cell-surface antigen 2) is a transmembrane glycoprotein that functions as a cell surface receptor. TROP2 overexpression in adult tissues is a hallmark of many solid tumors, making it a major target for modern cancer therapies. PTEN (phosphatase and tensin homolog) is a tumor suppressor gene that serves as a multi-functional cancer biomarker in a number of cancers, with potential for risk assessment, diagnosis and treatment planning. Validation in specimens from clinical trials will be needed to determine whether these potential biomarkers predict clinical response.

In May 2026, an abstract was published by our research collaborators at the 2026 American Society of Clinical Oncology Annual Meeting which detailed positive clinical data from studies of predictive biomarkers in patients receiving REQORSA. These clinical data suggested that patients whose NSCLC cells expressed high TROP-2 protein levels or low PTEN protein levels had longer PFS with REQORSA treatment. We believe that this clinical signal, derived from patients in the our Acclaim clinical trials, underscores the critical role these biomarkers may play in predicting treatment efficacy. These data advance our understanding of this novel gene therapy and may help to guide patient selection for our clinical trials and optimize clinical outcomes. We plan to further evaluate high (3+) TROP-2 expression as a potential biomarker for REQORSA, which may predict patient response and enable targeted patient selection. We are currently evaluating enrollment criteria based on biomarker identification prior to any potential future interim analysis as we continue to enroll and treat patients in the Phase 2a expansion portion of our Acclaim-1 clinical trial.

In August 2026, we announced our collaboration with Roche Diagnostics to validate biomarkers for patient selection in clinical trials for NSCLC. The collaboration intends to leverage Roche Diagnostics’ expertise in assay development. Roche Diagnostics received U.S. Food and Drug Administration (“FDA”) Breakthrough Device Designation for the first AI-driven companion diagnostic for NSCLC that uses a TROP2 score to evaluate NSCLC specimens, and we will use the same antibody against TROP2 for our validation studies. We anticipate completing these validation studies by approximately the end of 2026, with subsequent integration into our NSCLC clinical program shortly thereafter, dependent on the results of the validation studies.

The FDA has granted Fast Track Designation for the Acclaim-1 treatment combination of REQORSA and Tagrisso in NSCLC patients who have progressed on Tagrisso treatment.

The Phase 2a expansion portion of the Acclaim-1 study provides us the advantage of early insight into drug effectiveness in defined and distinct patient populations at the maximum tolerated dose or RP2D in order to better evaluate efficacy and increase the likelihood of a successful randomized Phase 2 trial which will follow the expansion portion of the study.

Acclaim – 3: The Acclaim-3 study has two portions - a Phase 1 dose escalation portion and a Phase 2 expansion portion. We are currently enrolling and treating patients in the Phase 2 expansion portion of our Phase 1/2 Acclaim-3 clinical trial. The Acclaim-3 clinical trial uses a combination of REQORSA and Genentech, Inc.’s Tecentriq® (atezolizumab) as maintenance therapy for patients with extensive stage small cell lung cancer (“ES-SCLC”) who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment. Patients are treated with REQORSA and Tecentriq until disease progression or unacceptable toxicity is experienced. In December 2024, we announced that we had completed the Phase 1 dose escalation portion of the Acclaim-3 clinical trial. Based on full safety data, which showed no DLTs, the Acclaim-3 Safety Review Committee (“Acclaim-3 SRC”) determined that the RP2D of REQORSA will be 0.12 mg/kg administered every 21 days, which was the highest dose level delivered in the Phase 1 portion of the trial, and approved the opening of the Phase 2 expansion portion of the trial. Although decreases in tumor size are not expected during maintenance therapy with atezolizumab alone, there were two patients out of the six enrolled in the Phase 1 dose escalation portion of the study who had marked decreases in measurable disease. We previously reported that the first patient treated in the Phase 1 dose escalation portion of the Acclaim-3 trial had a partial remission, which is defined as at least a thirty percent (30%) decrease in tumor size, from prior to the start of maintenance therapy to the time of the CT scan performed after two cycles of maintenance therapy. A CT scan performed after four cycles of maintenance therapy (three months), confirmed that the patient still had a 30% decrease in tumor size in measurable lesions; however, one lesion not previously measurable had grown in size, thus leading to a conclusion of disease progression at that time. Another patient in the Phase 1 dose escalation portion of the Acclaim-3 trial had a twenty-three percent (23%) decrease in tumor size from prior to the start of maintenance therapy to the time of the CT scan performed after two cycles of maintenance therapy. This patient received seven cycles of study therapy before progressing after 4.2 months. In addition, one patient in the Phase 1 dose escalation portion of the study achieved an unconfirmed partial remission after 24 cycles of therapy and continues to receive study treatment in the trial after more than 19 months. We anticipate that the Phase 2 expansion portion will enroll approximately 50 patients at approximately 10 to 15 U.S sites. Patients will be treated with REQORSA and Tecentriq until disease progression or unacceptable toxicity is experienced. The primary endpoint of the Phase 2 portion is to determine the 18-week progression-free survival rate from the start of maintenance therapy with REQORSA and Tecentriq in patients with ES-SCLC. Patients will also be followed for survival. A Phase 2 futility analysis will be performed after the 25th patient enrolled and treated reaches 18 weeks of follow up. We expect to complete enrollment of the first 25 patients for interim analysis in the Phase 2 expansion portion of the study by the end of 2026 and expect the interim analysis in the first half of 2027.

The Acclaim-3 clinical trial has received FDA Fast Track Designation for this patient population and Acclaim-3 has also received an FDA Orphan Drug Designation.

Diabetes Gene Therapy

In diabetes, we have exclusively licensed from the University of Pittsburgh of the Commonwealth System of Higher Education (“University of Pittsburgh” or “UP”) multiple technologies relating to the development of a gene therapy product for each of Type 1 and Type 2 diabetes. The same novel approach is used in each of Type 1 and Type 2 diabetes whereby an adeno-associated virus (“AAV”) vector containing the Pdx1 and MafA genes is administered directly into the pancreatic duct. In humans, this can be done with a routine endoscopy procedure. Our diabetes product candidates are currently being evaluated and optimized in preclinical studies at the University of Pittsburgh. GPX-002 is being developed for the treatment of both Type 1 diabetes and Type 2 diabetes. GPX-002 for Type 1 diabetes is designed to work by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In a similar approach, GPX-002 for Type 2 diabetes, where autoimmunity is not at play, is believed to work by replenishing and rejuvenating exhausted beta cells that make insulin. In May 2025, following the completion of our August 2022 sponsored research agreement with UP, we entered into a new sponsored research agreement with UP to study Type 1 diabetes and Type 2 diabetes in animal models. The new sponsored research agreement also includes a revised research plan to encompass our most recent technologies to which we originally acquired exclusive rights from UP in July 2023 as amended and restated in the comprehensive New UP License Agreement in February 2025 (as defined and described below). These include a MafB promoter to drive expression of the Pdx1 and MafA transcription factors that can potentially be used for both Type 1 and Type 2 diabetes. In June 2025, our collaboration partners made two presentations at the 2025 American Diabetes Association 85th Scientific Sessions. Our research collaborators from UP were invited to give an oral presentation highlighting their work in non-human primate models of Type 1 diabetes. In addition, our third-party contract development and manufacturing organization (“CDMO”) collaborators presented a poster on a non-viral lipid nanoparticle delivery system that would allow a patient to receive multiple treatments.

On February 17, 2025, we and the University of Pittsburgh entered into an amended and restated Exclusive License Agreement (the “New UP License Agreement”), which updated and consolidated into a single agreement our prior license agreements with UP. Pursuant to the New UP License Agreement, UP granted to us a worldwide, exclusive license for certain patents and related technology, collectively referred to as the “Licensed Technology,” and a worldwide, non-exclusive license to use certain related know-how. The Licensed Technology covered by the New UP License Agreement is based on the same general gene therapy approach as covered under our prior license agreements with UP (less the previously-licensed macrophage technology), whereby an adeno-associated virus vector containing the Pdx1 and MafA genes is administered directly into the pancreatic duct. More specifically, the Licensed Technology covered by the New UP License Agreement is related to a gene therapy for both Type 1 diabetes and Type 2 diabetes using the genes of the Pdx1 and MafA transcription factors controlled by insulin, glucagon and MafB promoters. See also “Note 6 – Commitments and Contingencies” to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

We are currently working with the University of Pittsburgh on species analyses for the animal models as well as other regulatory and clinical strategic planning, including the initiation of research in Type 2 diabetes animal models. As previously disclosed, in December 2025 we submitted a request to meet with the FDA to discuss the necessary Investigational New Drug (“IND”)-enabling preclinical studies for our Type 1 diabetes gene therapy program, an important step before potentially initiating clinical trials in humans. On February 19, 2026, we met with the FDA and received feedback which we believe aligned with our expectations and plans. Following the FDA meeting and receipt of the official meeting minutes, we are continuing with preclinical animal studies, as expected, which will allow us to finalize the design and initiate future toxicology studies. Subsequent data from toxicology studies are expected to enable IND filing. Toxicology studies are a required step of drug development, ensuring that new treatments are evaluated in animal models before human use in order to identify potential risks, determine safe dosages and monitor for side effects. Additionally, we plan to begin clinical scale production in a current Good Manufacturing Practices (“cGMP”) compliant facility, allowing us to accelerate our manufacturing processes necessary for IND-enabling preclinical studies and clinical trials. We are also continuing work with CDMOs and research partners to optimize constructs and evaluate alternative second-generation approaches including different AAV and non-viral constructs.

Recent Developments

Reverse Stock Split

At our 2026 Annual Meeting of Stockholders held on July 18, 2026 (the “Annual Meeting”), our stockholders adopted and approved an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of common stock, at a specific ratio, ranging from one-for-five (1:5) to one-for-fifty (1:50), with such ratio to be determined by our Board of Directors in its discretion.

Pursuant to the authorization and approval granted by our stockholders at the Annual Meeting, on July 13, 2026, we filed a Certificate of Amendment (the “Certificate of Amendment”) to our Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a reverse stock split of our issued and outstanding common stock at a ratio of one-for-twenty-two (1:22) (the “2026 Reverse Split”). The 2026 Reverse Split became effective in accordance with the terms of the Certificate of Amendment at 12:01 a.m. Eastern Time on July 16, 2026. The 2026 Reverse Split did not change the number of authorized shares of our common stock or the par value. All share and per share amounts in this Quarterly Report on Form 10-Q have been appropriately adjusted on a retroactive basis to reflect the 2026 Reverse Split.

At-the-Market Offering Program

On December 13, 2023, we entered into an At The Market (“ATM”) Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC, serving as agent (the “Agent”) with respect to an ATM offering program (the “2023 ATM Facility”) under which we may offer and sell through the Agent, from time to time at our sole discretion, up to such number or dollar amount of shares (the “Shares”) of our common stock, as registered on the prospectus supplement covering the 2023 ATM Facility offering, as may be amended or supplemented from time to time, including pursuant to any new or successor registration statement that we may file and have declared effective and such applicable prospectuses and prospectus supplements forming a part thereof. We have agreed to pay the Agent a commission equal to three percent (3%) of the gross sales proceeds of any Shares sold through the Agent under the Sales Agreement, and also have provided the Agent with customary indemnification and contribution rights. From July 1, 2026 through the date of filing of this Quarterly Report on Form 10-Q, we have sold 241,000 Shares of our common stock for net proceeds to us totaling approximately $1.53 million through the Agent under the Sales Agreement.

NASDAQ Compliance

As previously disclosed, on July 29, 2026, the Nasdaq Hearings Panel (the “Panel”) notified Genprex that the Panel had granted the Company’s request to continue the Company’s listing on The Nasdaq Capital Market (“Nasdaq”) and grant an exception to demonstrate compliance with the $1.00 Minimum Bid Price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).

On August 4, 2026, the Company was formally notified that the Panel determined that the Company has regained compliance with the Bid Price Requirement. The Panel further informed the Company that until December 7, 2026, which represents the full extent of the Panel’s discretion in this matter with respect to the Bid Price Requirement, the Company must maintain a closing bid price at or above $1.00 for each trading day; and the Panel will maintain jurisdiction over the Company until December 7, 2026. In the event the Company becomes non-compliant with any other Listing Rule between now and December 7, 2026, the Company will be allowed seven calendar days to advise the Panel on its plan to cure the deficiency. The Panel will, at that time, determine whether to grant the Company an exception to cure the deficiency or delist the Company.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed below and in Note 2 to our unaudited condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“US GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that the following accounting policies and estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

Critical accounting estimates include the determination of the fair value of derivative liabilities. The fair value of derivative liabilities and other complex financial instruments, may require the use of valuation models such as Monte Carlo simulations, lattice models, or modified Black-Scholes methodologies. These valuation models incorporate significant unobservable inputs, including expected volatility, risk-free interest rates, expected term, probability-weighted financing or liquidity events, market yield assumptions, and the likelihood and timing of contractual settlement or conversion events. Changes in these assumptions could result in material adjustments to the recorded fair value of derivative liabilities and related gains or losses recognized in the condensed consolidated statements of operations.

Research and Development Costs

We record accrued expenses for costs invoiced from research and development activities conducted on our behalf by third-party service providers, which include the conduct of preclinical studies and clinical trials and contract research, manufacturing, and testing activities. We record the costs of research and development activities based upon the amount of services provided, and we include these costs in accrued liabilities in the unaudited condensed consolidated balance sheets and within research and development expense in the unaudited condensed consolidated statements of operations. These costs are a significant component of our research and development expenses. Purchased materials to be used in future research are valued at cost and capitalized and included in research and development supplies. The costs of materials that were acquired for a particular research and development activity and have no alternative future use are expensed in the period acquired.

We estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. We make significant judgments and estimates in determining the accrued balance in each reporting period. As actual costs become known, we adjust our accrued estimates. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed, the number of patients enrolled and the rate of patient enrollment in any of our clinical trials may vary from our estimates and could result in our reporting amounts that are too high or too low in any particular period. Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from contract research organizations (“CROs”) and other third-party service providers.

Income Taxes

Deferred tax assets or liabilities are recorded for temporary differences between financial statement and tax basis of assets and liabilities, using applicable rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded if it is more likely than not that a deferred tax asset will not be realized. We have provided a full valuation allowance on our deferred tax assets, which primarily consist of cumulative net operating losses from April 1, 2009 (inception) to June 30, 2026. Due to our history of operating losses since inception and losses expected to be incurred in the foreseeable future, a full valuation allowance was considered necessary.

Impairment of Long-Lived Assets

Management evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable or at a minimum annually during the fourth quarter of the year. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying value to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value based upon discounted cash flows.

Components of our Results of Operations and Financial Condition

Operating expenses

We classify our operating expenses into three categories: research and development, general and administrative, and depreciation.

Research and development. Research and development expenses consist primarily of:

• costs incurred to conduct research, such as the discovery and development of our current and potential product candidates;
• costs related to the production and storage of supplies for engineering purposes and storage and usage of clinical supplies, including waste created in the process of producing clinical materials, spoilage, and testing of clinical materials;
• costs related to the use of contract manufacturers, manufacturing consultants, testing organizations, cold-storage facilities, and logistics service providers;
• fees paid to clinical consultants, clinical trial sites and vendors, including CROs in conjunction with implementing and monitoring our clinical trials and acquiring and evaluating clinical trial data, including all related fees, such as patient screening fees, laboratory work, and statistical compilation and analysis;
• costs related to compliance with drug development regulatory requirements; and
• costs related to staffing and personnel associated with research and development activities, including wages, taxes, benefits, leases, overheads, supplies, and share-based compensation.

We recognize all research and development costs as they are incurred except those capitalized with alternative further use. Clinical trial costs, contract manufacturing and other development costs incurred by third-parties are expensed as the contracted work is performed.

We expect our research and development expenses to increase in the future as we (i) advance our current and future product candidates into and through clinical trials, (ii) transition some of our manufacturing activities to new vendors for a variety of reasons, such as to incorporate more advanced processes and scale production, including any additional work that has been or may be required to successfully adapt our process to these new processes, (iii) pursue regulatory approval of our current and potential product candidates in the U.S. and Europe, and (iv) expand our research programs to include new therapies and new therapy combinations. The process of conducting the necessary pre-clinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our current and potential product candidates may be affected by a variety of factors including the quality of our current and potential product candidates, early clinical data, investment in our clinical program, competition, manufacturing capability and commercial viability, and limited contracted partners. We may never succeed in achieving regulatory approval for any of our current or future product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if at all. However, we continue to evaluate ways to optimize our clinical and research programs and operational strategies, as part of our ongoing prioritization initiative. Additionally, we are considering various strategic alternatives and opportunities to enhance stockholder value.

General and administrative. General and administrative expense consists of personnel related costs, which include administrative and executive salaries, as well as the costs of professional services, such as accounting and legal, travel, facilities, information technology and other administrative expenses. We expect our general and administrative expense to increase in future periods due to the anticipated growth of our business and related infrastructure as well as accounting, insurance, investor relations, and other costs associated with being a public company.

Results of Operations

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

The following summarizes our results of operations for the three and six months ended June 30, 2026 and 2025.

Research and Development Expense

Research and development (“R&D”) expense for the three months ended June 30, 2026 was $2,683,471, compared to $2,499,495 for the three months ended June 30, 2025, an increase of $183,976, or 7%. This increase was primarily due to an increase in pre-clinical and research related expenses associated with our diabetes program and our biomarker research during the three months ended June 30, 2026.

R&D expense for the six months ended June 30, 2026 was $5,429,416, compared to $5,039,489 for the six months ended June 30, 2025, an increase of $389,927, or 8%. This increase was primarily due to an increase in pre-clinical and research related expenses associated with our diabetes program and our biomarker research during the six months ended June 30, 2026.

General and Administrative Expense

General and administrative (“G&A”) expense for the three months ended June 30, 2026 was $1,800,513, compared to $2,182,289 for the three months ended June 30, 2025, a decrease of $381,776, or 17%. This decrease was primarily due to the reduction in professional services and related expenses in the three months ended June 30, 2026.

G&A expense for the six months ended June 30, 2026 was $3,548,752, compared to $3,611,586 for the six months ended June 30, 2025, a decrease of $62,834, or 2%. The slight period-over-period decrease in 2026 from 2025 in G&A expenses was primarily due to adherence of expense reduction strategies implemented by leadership in the year ended December 31, 2024 and maintained through the six months ended June 30, 2026.

Other Income. Other income was $37,290 and $6,881 for the three months ended June 30, 2026 and 2025, respectively, representing an increase of $30,409. The increase was primarily due to larger cash balances held in interest bearing accounts for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Other income was $69,038 and $11,652 for the six months ended June 30, 2026 and 2025, respectively, representing an increase of $57,386. The increase was primarily due to larger cash balances held in interest bearing accounts for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Net Loss. We had a net loss of $4,447,219 and $4,674,901 for the three months ended June 30, 2026 and 2025, respectively, representing a decrease of $227,682, or 5%. The decrease in net loss between these periods was primarily due to the reduction in professional services and related expenses and equity-based compensation in the three months ended June 30, 2026.

We had a net loss of $8,909,114 and $8,639,502 for the six months ended June 30, 2026 and 2025, respectively, representing an increase of $269,612, or 3%. The difference in net loss between the respective periods was mostly flat primarily due to adherence of expense reduction strategies implemented by leadership in the year ended December 31, 2024 and maintained through the six months ended June 30, 2026.

Liquidity and Capital Resources

From inception through June 30, 2026, we have never generated revenue from product sales and have incurred net losses in each year. As of June 30, 2026, we had an accumulated deficit of $179,937,510. We have funded our operations primarily through the sale and issuance of capital stock and securities exercisable for capital stock.

During the six months ended June 30, 2026, we sold 353,095 shares of common stock for aggregate gross proceeds of approximately $16.1 million (resulting in aggregate net proceeds of approximately $15.6 million after offering expenses), pursuant to our 2023 ATM Facility. From July 1, 2026 through the date of filing of this Quarterly Report on Form 10-Q, we sold 241,000 Shares of common stock for aggregate gross proceeds of approximately $1.58 million (resulting in aggregate net proceeds of approximately $1.53 million after offering expenses), pursuant to our 2023 ATM Facility.

For the year ended December 31, 2025, we sold (i) 72,879 Shares of common stock for net proceeds of approximately $10.8 million pursuant to our 2023 ATM Facility, (ii) 35,162 shares of common stock (inclusive of the 1,079 commitment shares issued pursuant to the Purchase Agreement (as defined below)) for aggregate net proceeds of approximately $5.3 million, pursuant to our 2025 ELOC Facility (as defined below), (iii) completed a registered direct offering in which we sold (x) 11,074 shares of our common stock, and (y) warrants exercisable for up to an aggregate of 22,151 shares of our common stock (“October 2025 Private Warrant Shares I”), for net proceeds of approximately $2.5 million, and (iv) completed a registered direct offering in which we sold (x) 17,172 shares of our common stock, and (y) warrants exercisable for up to an aggregate of 34,345 shares of our common stock (“October 2025 Private Warrant Shares II”), for net proceeds of approximately $3.1 million. See also “Note 4 - Equity - Registered Direct Offerings” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

On June 11, 2025, we entered into an equity line of credit (“ELOC”) purchase agreement, dated June 11, 2025 (the “Purchase Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase from us up to $12.5 million in shares of our common stock (subject to certain conditions and limitations contained in the Purchase Agreement) from time to time at our sole discretion over the 24-month term of the Purchase Agreement (the “2025 ELOC Facility”). Sales of shares of common stock to Lincoln Park under the Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and our determination as to the appropriate sources of funding for our operations. See also “Note 4 - Equity – Equity Line of Credit” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

On December 13, 2023, we entered into an At The Market (“ATM”) Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC, serving as agent (the “Agent”) with respect to an at-the-market offering program (our “2023 ATM Facility”) under which we may offer and sell through the Agent, from time to time at our sole discretion, up to such number or dollar amount of shares of our common stock (the “Shares”) as registered on the prospectus supplement covering the 2023 ATM Facility offering, as may be amended or supplemented from time to time, including any new or successor registration statement that we may file and have declared effective and such applicable prospectuses and prospectus supplements forming a part thereof. We have agreed to pay the Agent a commission equal to three percent (3%) of the gross sales proceeds of any Shares sold through the Agent under the Sales Agreement, and also have provided the Agent with customary indemnification and contribution rights. See also “Note 4 - Equity - At-The-Market Offering” to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

As of June 30, 2026, we had $15,154,203 in cash and cash equivalents.

We do not expect to generate revenue from product sales unless and until we successfully complete development of, obtain regulatory approval for and begin to commercialize one or more of our current or future product candidates, which we expect will take a number of years and which is subject to significant uncertainty. Accordingly, we anticipate that we will need to raise additional capital to fund our future operations, which include conducting our Acclaim-1 and Acclaim-3 clinical trials (of which both are currently enrolling) and completing preclinical work for potential other oncology candidates and completing preclinical work and conducting clinical trials for our diabetes program. We expect interim enrollment in the Phase 2 dose expansion portion of the Acclaim-3 trial to be completed by the end of 2026. Until such time as we can generate substantial revenue from product sales, if ever, we expect to finance our operating activities through a combination of equity offerings, drawdowns on our 2023 ATM Facility pursuant to our Sales Agreement with the Agent, sales pursuant to our 2025 ELOC Facility, and debt financings and we may seek to raise additional capital through strategic collaborations or transactions. However, we may be unable to raise additional funds or enter into such arrangements when needed on favorable terms, or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our research and development programs or commercialization efforts or grant rights to others to develop or market product candidates that we would otherwise prefer to develop and market ourselves. Failure to receive additional funding could cause us to curtail or cease our operations. Furthermore, even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital due to favorable market conditions or strategic considerations. As a result of our recurring losses from operations and the need for additional financing to fund our operating and capital requirements, there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively over the next 12 months, which raises substantial doubt as to our ability to continue as a going concern.

Based on our current cash, we estimate that we will be able to fund our expenditure requirements for our current operations and planned clinical trial activities into the second half of 2027. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently plan due to incorrect assumptions or due to a decision to expand our activities beyond those currently planned. We have experienced delays in clinical trial enrollment as a result of competition for patients and previously experienced delays due to additional time required in connection with transitions to new third party CDMOs and the manufacture of final drug product. Delays in the conduct of our trials could result in utilizing our capital resources sooner without advancing our clinical trials as anticipated.

The following table sets forth the primary sources and uses of cash during the six months ended June 30, 2026, and 2025:

Cash used in operating activities

Net cash used in operating activities was $8,277,156 and $8,025,661 for the six months ended June 30, 2026, and 2025, respectively, an increase of $251,495, or 3%. The slight period-over-period increase was primarily due to adherence of expense reduction strategies implemented by leadership in the year ended December 31, 2024 and maintained through the six months ended June 30, 2026.

Cash provided by investing activities

We had no net cash provided by or used in investing activities for the six months ended June 30, 2026, and 2025.

Cash provided by financing activities

Net cash provided by financing activities was $15,600,504 and $7,770,844 during the six months ended June 30, 2026, and 2025, respectively. This increase of $7,829,660 was primarily due to differences in amounts raised by sales of our securities in capital raising activities conducted during the six months ended June 30, 2026, and 2025.

The Company is not required to provide the information called for by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. 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 a 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 SEC’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 a company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2026, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting related to a lack of segregation of duties between accounting and other functions and the absence of sufficient depth of in-house accounting personnel with the ability to properly account for complex transactions.

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Our size and nature also do not allow for our accounting staff to have depth of expertise in all areas that might be desirable, such as expertise in accounting for a variety of complex transactions. Management evaluated the impact of our failure to maintain effective segregation of duties and sufficient depth of personnel on our assessment of our internal control over financial reporting and has concluded that these control deficiencies represent material weaknesses.

In response to the material weaknesses described above, during the quarter ended June 30, 2026, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with US GAAP. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Remediation Plans

Management is actively engaged in remediation efforts to address the material weaknesses identified in management’s evaluation of internal controls and procedures. The remediation efforts, which have been or are in the process of being implemented, are intended to address the identified material weaknesses, and include:

• new accounting software, processes, and workflows to further segregate duties among limited accounting staff;
• specific review procedures, including the added involvement of our legal department to review certain accounting transactions following a given period in an effort to enhance accuracy of reporting;
• specific review procedures, including the added involvement of our manufacturing staff to enhance controls associated with the tracking and reporting of inventory values in our supply chain;
• a formal Disclosure Committee that has oversight responsibility for the accuracy and timeliness of disclosures made by the Company through controls and procedures and the monitoring of their integrity and effectiveness;
• additional hiring of staff and development of accounting processes and policies to further segregate accounting responsibilities and increase the depth of our expertise in accounting for a variety of complex transactions; and
• additional training, testing, and certification of key accounting, finance, IT, and legal team members.

During the quarter ended June 30, 2026, we took actions to remediate the material weaknesses relating to our internal controls over financial reporting including: (i) continued evaluation and documentation of policies, processes, and controls, both manual and automated; (ii) identification and implementation of improvements to information technology and security controls and supporting control documentation; and (iii) evaluation of and updates to software workflows to further segregate duties, enhance accuracy of vendor billing, and ensure transparency and oversight from vendor or project managers, department leaders, legal team members, and finance team members.

As management continues to evaluate and work to improve its internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify certain of the remediation measures described above. While remediation efforts are active, management requires additional time to demonstrate the operating effectiveness of our remediation efforts. The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Except as described above, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Internal Control over Financial Reporting

Because of their inherent limitations, our disclosure controls and procedures and our internal control over financial reporting may not prevent material errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to risks, including that the controls may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate.

The Company is including the below update to its risk factors, for the purpose of supplementing and updating the “Risk Factors” disclosure contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission on March 30, 2026, and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, filed with the Securities and Exchange Commission on May 13, 2026, as further supplemented and updated in the Company’s other periodic and current reports filed from time to time since such Annual Report on Form 10-K.

Our common stock is currently listed on The Nasdaq Capital Market. If we fail to maintain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

Our common stock is currently listed for trading on Nasdaq. On June 10, 2026, we received a letter from Nasdaq indicating that, based upon our lack of compliance with the with the requirement under Nasdaq Listing Rule 5550(a)(2) to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq (the “Bid Price Requirement”) and our ineligibility for a 180 calendar day compliance period, the Listing Qualifications Staff of Nasdaq (the “Staff”) had determined to delist our securities from Nasdaq unless we timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”). Accordingly, we did so request a hearing before the Panel (which request stayed any suspension or delisting action by the Staff), and the Panel hearing was held on July 21, 2026. At the Panel hearing, we requested an extension within which to demonstrate compliance with the Bid Price Requirement, and on July 29, 2026, the Panel granted our request for an exception to demonstrate compliance with the Bid Price Requirement (the “Exception”). On August 4, 2026, the we were formally notified that the Panel determined that we have regained compliance with the Bid Price Requirement. The Panel further informed us that until December 7, 2026, which represents the full extent of the Panel’s discretion in this matter with respect to the Bid Price Requirement, the Company must maintain a closing bid price at or above $1.00 for each trading day; and the Panel will maintain jurisdiction over the Company until December 7, 2026. In the event the Company becomes non-compliant with any other listing rule at any time prior to December 7, 2026, we will be allowed seven calendar days to advise the Panel on our plan to cure the deficiency, with the Panel, at that time, to determine whether to grant the Company an exception to cure the deficiency or delist the Company.

Pursuant to the Exception, we are required to, and fully intend to, provide the Panel with prompt notification of any significant events that occur that may affect our compliance with Nasdaq requirements, including any event that may call into question our ability to meet the terms of the Exception. The Panel has reserved the right to reconsider the terms of the Exception based on any event, condition or circumstance that exists or develops that would, in the Panel’s opinion, make continued listing of our securities on Nasdaq inadvisable or unwarranted. There can be no assurance that we will be able to satisfy the terms of the Exception, or that we will be able to demonstrate or maintain compliance with the Bid Price Requirement or the other Nasdaq continued listing requirements for the duration of the Exception or for any future time period.

We intend to continue to monitor the closing bid price of our common stock and take such definitive steps as deemed appropriate to evidence and maintain compliance with the Bid Price Requirement, including by implementing effective July 16, 2026 the one-for-twenty-two (1:22) reverse stock split of our common stock. However, the implementation of the reverse stock split could continue to negatively affect the price of our common stock, and there is no guarantee that our having implemented the reverse stock split will result in our maintaining compliance with the Bid Price Requirement, or that we will continue to satisfy the terms of the Exception. We cannot assure you that the market price of our common stock after the reverse stock split will be maintained for any period of time or at any particular level. There is also the possibility that liquidity in our common stock may continue to be adversely affected by the reduced number of shares issued and outstanding which occurred as of the effective time of the reverse stock split.

We must evidence and maintain compliance with Nasdaq’s Bid Price Requirement of $1.00 per share (and must continue to maintain compliance with Nasdaq’s other continued listing requirements, including, among other things, a minimum stockholders’ equity of $2.5 million), or risk delisting, which could have a material adverse effect on our business. In addition, upon approval of the Securities and Exchange Commission, Nasdaq amended its listing rules on July 22, 2026 to provide that where a listed company fails to meet the continued listing requirement for market value of listed securities of at least $5 million for 30 consecutive business days, such deficiency will result in immediate suspension and delisting, bypassing typical grace periods and restricting appeal rights (the “MVLS Requirement”). On July 29, 2026, the SEC’s Division of Trading and Markets confirmed that it had received notices of intention to petition the full SEC for review of the approval, which automatically stayed the order implementing the rule pending further action from the SEC. This process is pending as of the filing date of this Quarterly Report on Form 10-Q with no prescribed timeline for SEC action. As of the time of this filing, our market value of listing securities is currently below $5 million. Because we are currently below the $5 million threshold, if and when the MVLS Requirement becomes effective, we may become subject to immediate suspension and delisting, without any opportunity to cure, if our market value of listed securities remains below $5 million for 30 consecutive business days. If our common stock is delisted from Nasdaq, it could result in a corresponding material reduction in the price of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, contractual counterparties and employees and fewer business development opportunities. If our common stock were delisted, it could be more difficult to buy or sell our common stock or to obtain accurate quotations, and the price of our common stock could suffer a material decline. Delisting could also impair our ability to raise capital on acceptable terms, if at all.