Filed 2026-03-17 · Period ending 2025-12-31 · 83,752 words · SEC EDGAR
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# Indaptus Therapeutics, Inc. (INDP) — 10-K **Filed:** 2026-03-17 **Period ending:** 2025-12-31 **Accession:** 0001493152-26-010585 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1857044/000149315226010585/) **Origin leaf:** 70e36181df7b0f3d9879d3b98fa28034f99302757c301a72813c16494593cff2 **Words:** 83,752 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **Washington, D.C. 20549** **FORM 10-K** (Mark One) ** ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the fiscal year ended December 31, 2025 OR ** TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the transition period from to **Commission File Number 001-40652** **INDAPTUS THERAPEUTICS, INC.** (Exact name of Registrant as specified in its Charter) | Delaware | | 86-3158720 | | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | | 3 Columbus Circle 15th Floor New York, NY | | 10019 | | | (Address of principal executive offices) | | (Zip Code) | | **Registrants telephone number, including area code: +(646) 427-2727** **Securities registered pursuant to Section 12(b) of the Act:** | Common stock, par value $0.01 | | INDP | | Nasdaq Capital Market | | | (Title of each class) | | Trading Symbol(s) | | (Name of each exchange on which registered) | | **Securities registered pursuant to Section 12(g) of the Act:** **None** Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES NO Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES NO Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO Indicate by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES NO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. | Large accelerated filer | | Accelerated filer | | | | Non-accelerated filer | | Smaller reporting company | | | | Emerging growth company | | | | | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO At June 30, 2025, the last business day of the Registrants most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was $5,781,886. The number of shares of Registrants common stock outstanding as of March 16, 2026 was 2,242,324. **DOCUMENTS INCORPORATED BY REFERENCE** None. | | | | | Table of Contents | | | | | | | | | | Page | | | | | | | | PART I | | 6 | | | Item 1. | Business | 6 | | | Item 1A. | Risk Factors | 24 | | | Item 1B. | Unresolved Staff Comments | 62 | | | Item 1C. | Cybersecurity | 62 | | | Item 2. | Properties | 63 | | | Item 3. | Legal Proceedings | 63 | | | Item 4. | Mine Safety Disclosures | 63 | | | PART II | | 63 | | | Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 63 | | | Item 6. | [Reserved] | 63 | | | Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 64 | | | Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 68 | | | Item 8. | Financial Statements and Supplementary Data | F-1 | | | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 69 | | | Item 9A. | Controls and Procedures | 69 | | | Item 9B. | Other Information | 70 | | | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 70 | | | PART III | | 70 | | | Item 10. | Directors, Executive Officers and Corporate Governance | 70 | | | Item 11. | Executive Compensation | 79 | | | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 89 | | | Item 13. | Certain Relationships and Related Transactions, and Director Independence | 90 | | | Item 14. | Principal Accountant Fees and Services | 92 | | | PART IV | | 92 | | | Item 15. | Exhibits and Financial Statement Schedules | 92 | | | Item 16. | Form 10-K Summary | 94 | | | 2 | | | | | **** **ABOUT THIS ANNUAL REPORT** All references to we, us, our, Indaptus Therapeutics, Indaptus, the Company and our company, in this Annual Report on Form 10- K, or our Annual Report, are to Indaptus Therapeutics, Inc. (formerly Intec Parent, Inc.) and, where appropriate, its consolidated subsidiaries, Intec Pharma Ltd. and Decoy Biosystems, Inc. All references to common stock and share capital refer to common stock and share capital of Indaptus. Our historical results do not necessarily indicate our expected results for any future periods. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Unless otherwise indicated, or the context otherwise requires, references in this Annual Report to financial and operational data for a particular year refer to the fiscal year of our Company ended December 31 of that year. ** All information in this Annual Report relating to shares or price per share reflects the 1-for-28 reverse stock split effected by us on June 26, 2025 which began trading on a post-split basis on the Nasdaq Capital Market on June 27, 2025. **EXPLANATORY NOTE** On December 22, 2025, the Company entered into a Securities Purchase Agreement, or the Purchase Agreement, with David E. Lazar, pursuant to which he agreed to purchase from the Company 300,000 shares of Series AA Preferred Stock and 700,000 shares of Series AAA Preferred Stock (the Series AAA Preferred Stock and, together with the Series AA Preferred Stock, the Preferred Stock) at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million, subject to the terms and conditions thereunder, or the Investment Transaction. The offering closed on December 23, 2025. As of the date of this Annual Report, Mr. Lazar is the beneficial owner of approximately 96.4% of common stock of the Company on an as-converted and fully-diluted basis. As part of the Investment Transaction, the Company plans to pursue a strategic transaction involving either an investment in or acquisition of an operating business, or the Target Company, referred to as the Post-Investment Transaction. Should such a transaction be approved and successfully finalized, the Company anticipates that combining with a Target Company will create future growth opportunities for both the Company and its stockholders. The Company is currently in the process of evaluating its strategic options for a Post-Investment Transaction. For further information, see *Recent Developments Lazar Investment Transaction*. Market data and certain industry data and forecasts used throughout this Annual Report were obtained from market research databases, consultant surveys commissioned by us, publicly available information, reports of governmental agencies and industry publications and surveys. Industry surveys, publications, consultant surveys commissioned by us and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We have relied on certain data from third-party sources, including internal surveys, industry forecasts and market research, which we believe to be reliable based on our managements knowledge of the industry. Statements as to our market position are based on the most currently available data. While we are not aware of any misstatements regarding the industry data presented in this Annual Report, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under Part I. Item 1A. Risk Factors in this Annual Report. | 3 | | | | | **CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS** This Annual Report contains, and management may make, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Annual Report on Form 10-K are forward-looking statements. In some cases, forward-looking statements can be identified by the use of terms such as believe, expect, intend, plan, may, should, anticipate, could, might, seek, target, will, project, forecast, continue or their negatives or variations of these words or other comparable words. These statements include, without limitation, our statements about: the Investment Transaction; our ability to successfully pursue our business strategy, including identifying and completing a Post-Investment Transaction; the Companys financial condition and results of operations, including the financial impact of the Investment Transaction and related transactions and matters, our product candidates development; the anticipated effects of our product candidates; the market potential and treatment potential of our product candidates; our commercialization, marketing and manufacturing capabilities and strategy; our expectations about the willingness of healthcare professionals to use our product candidates; our general business strategy and the plans and objectives of management for future operations; our research and development activities and costs; our future results of operations and condition; the sufficiency of our cash and cash equivalents to fund our ongoing activities; the impact of current macroeconomic conditions, geopolitical events and ongoing military conflicts in the Middle East and the war between Russia and Ukraine on our operations, ability to access capital, and liquidity; and any impact of a pandemic, epidemic or other future health crisis on our business. The forward-looking statements in this Annual Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Annual Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the sections in this Annual Report entitled Summary Risk Factors, Part I. Item 1A. Risk Factors and Part II. Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report. You should also refer to our quarterly reports on Form 10-Q for future periods and current reports on Form 8-K as we file them with the U.S. Securities and Exchange Commission, or the SEC, and to other materials we may furnish to the public from time to time through SEC filings. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. We intend the forward-looking statements contained in this Annual Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. | 4 | | | | | **** **Summary Risk Factors** The principal factors and uncertainties that make investing in our common stock risky, include, among others: | | Our stockholders will experience significant dilution as a result of the issuance of shares of our common stock upon future conversion of the Preferred Stock. | | | | | | | | We may fail to realize the anticipated benefits of the Investment Transaction if we are not able to identify and/or pursue a Post-Investment Transaction. | | | | | | | | Our Board and management team has significantly changed in connection with the Investment Transaction and may change again if we consummate a Post-Investment Transaction. | | | | As a result of an increase in the number of authorized common stock, the availability of additional authorized shares may result in greater dilution to our stockholders and/or affect the market price of our common stock. | | | | Our stockholders will have significantly reduced ownership and voting power as a result of any conversion of the shares Preferred Stock. | | | | | | | | Mr. Lazar has significant control and influence over our Company and corporate matters. | | | | The proposed Reverse Stock Split, if effected, may not increase our stock price, and could lead to a decrease in our overall market capitalization. | | | | | | | | The proposed Reverse Stock Split, if effected, may decrease the liquidity of our common stock. | | | | | | | | The proposed Reverse Stock Split, if effected, may result in some stockholders owning odd lots that may be more difficult to sell or require greater transaction costs per share to sell. | | | | | | | | The proposed Reverse Stock Split, if effected, will result in a significant increase in our authorized common stock and may result in future dilution to our stockholders. | | | | | | | | We are a clinical-stage company with a limited operating history. We are not currently profitable, do not expect to become profitable in the near future and may never become profitable. | | | | | | | | We have identified conditions and events that raise substantial doubt regarding our ability to continue as going concern. | | | | | | | | Given our lack of current cash flow, we will need to raise additional capital. If we are unable to raise a sufficient amount of capital when needed on acceptable terms or at all, we may be forced to delay, limit or eliminate some or all of our research programs, product development activities and commercialization efforts. | | | | Raising additional capital would cause dilution to our existing shareholders and may restrict our operations or require us to relinquish rights to our technologies or product candidates. | | | | | | | | Clinical and preclinical development involves lengthy and expensive processes with uncertain outcomes. Any difficulties or delays in the commencement or completion, or the termination or suspension, of our current or planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue or adversely affect our commercial prospects. | | | | | | | | We may expend our limited resources to pursue a limited number of research programs, product candidates and specific indications and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. | | | | | | | | Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization or have other significant adverse implications on our business, financial condition and results of operations. | | | | | | | | We may not be able to adequately protect our proprietary or licensed technology in the marketplace. | | | | | | | | We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses. | | | | | | | | We are subject to various U.S. federal, state and foreign healthcare laws and regulations, which could increase compliance costs, and our failure to comply with these laws and regulations could harm our results of operations and financial condition. | | | | | | | | Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition. | | | | | | | | Our business and operations may suffer in the event of information technology system failures, cyberattacks or deficiencies in our cybersecurity. | | | | | | | | Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert managements attention and affect our ability to attract and retain qualified board members. | | | | | | | | Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations. | | | | | | | | The market price of our common stock is volatile and you may sustain a complete loss of your investment. | | | | | | | | Risks related to Nasdaqs proposed rule regarding minimum market value of listed securities. | | | 5 | | | | | **** **PART I** **Item 1. Business.** **Overview** We are a clinical biotechnology company that has developed a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of four different classes of existing agents, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology was associated with induction of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen in preclinical models. In 2023, we initiated a Phase 1 clinical trial with our lead clinical candidate, Decoy20, in patients with advanced solid tumors where currently approved therapies have failed. In May 2025, we decided to conclude enrollment in the dosing of Decoy20 as a monotherapy and focus on the combination study of Decoy20 with BeOnes anti-PD-1 antibody, Tislelizumab for the treatment of participants with advanced solid tumors, or the Combination Study. As of the date of this Annual Report on Form 10-K, we have discontinued further enrollment in the Combination Study and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. **Recent Developments** **Lazar Investment Transaction** **** On December 22, 2025, we entered into the Purchase Agreement with Mr. Lazar, pursuant to which he agreed to purchase from us 300,000 shares of Series AA Preferred Stock and 700,000 shares of Series AAA Preferred Stock at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million, subject to the terms and conditions thereunder. The offering closed on December 23, 2025. Pursuant to the Purchase Agreement, we held a special meeting of stockholders on February 26, 2026, where the stockholders approved the following actions (i) the issuance of common stock to Mr. Lazar in compliance with the rules and regulations of Nasdaq (without regard to any limitations on conversion set forth in the applicable Certificate of Designations) upon conversion of the shares of Preferred Stock, (ii) an amendment to our amended and restated certificate of incorporation that increases the authorized shares of common stock from 200,000,000 to 1,000,000,000 shares at the discretion of the Board, (iii) an amendment to our amended and restated certificate of incorporation that permits future shareholder action by written consent of the majority of shareholders, (iv) the election of Jerome Jabbour as Class I and Matthew McMurdo as Class III directors (each a designee of Mr. Lazar) to the Board of Directors to serve until the 2028 and 2027 annual meeting of stockholders, respectively, and (v) a reverse stock split of the common stock of the Company in the range to be determined by the Board. Each share of Series AA Preferred Stock is convertible into 20 shares of our common stock and each share of Series AAA Preferred Stock is convertible into 150 shares of common stock for a combined total of 111,000,000 shares of common stock. In connection with the Investment Transaction, our past Board members Mr. Robert E. Martell and Ms. Hila Karah resigned from the Board and Mr. Lazar and Mr. Avraham Ben-Tzvi (a designee of Mr. Lazar) were appointed to fill the vacancies created by their resignations. Both Mr. Lazar and Mr. Ben-Tzvi currently serve as Class I directors with a term expiring at our 2028 annual meeting of stockholders. Mr. Lazar was appointed as the Chairman of the Board taking over the role held by Dr. Roger Pomerantz. However, Dr. Pomerantz continued to serve as a member of the Board of Directors. Additionally, the Board appointed David Natan, also a designee of Mr. Lazar, to the Board effective January 7, 2026 as a Class II member to serve for a term ending at the 2026 annual meeting of stockholders. Further, pursuant to the terms of the Purchase Agreement, we entered into employment modification agreements with each of Jeffrey A. Meckler, Michael J. Newman, Ph.D., Nir Sassi and Walt A. Linscott, Esq. (collectively, the Executive Officers). Pursuant to the terms of the employment modification agreements, or the Modification Agreements, each of the Executive Officers agreed to remain employed in their existing roles except for Mr. Meckler who agreed to change his title to Co-Chief Executive Officer. The Executive Officers agreed to modify certain terms of their original employment agreements, granted release of claims relating to their employment, and received certain cash and equity payments at the closing of the Investment Transaction. More recently, in January of 2026, the employment agreements of Mr. Meckler and Mr. Newman were further amended whereby their salaries were reduced to $60,000 per annum. Further, pursuant to the Investment Transaction, each of the Executive Officers entered into a voting agreement, dated December 22, 2025, pursuant to which each of the Executive Officers agreed, in their capacity as stockholders of the Company, to vote all of their shares of common stock in favor of all proposals at the special meeting of stockholders held on February 26, 2026. As indicated above, following the Investment Transaction, we plan to pursue a strategic transaction involving either an investment in or acquisition of a Target Company. Should such a transaction be approved and successfully finalized, the Company anticipates that combining with a Target Company will create future growth opportunities for both the Company and its stockholders. We are currently in the process of evaluating our strategic options for a Post-Investment Transaction. **Warrant Repricing** On February 11, 2026, we entered into warrant repricing agreements, or the Repricing Agreements, with certain holders, or the Executing Holders, of warrants to purchase an aggregate of 913,638 shares of our common stock that were originally issued in financing rounds during 2024 and 2025 (financing rounds discussed below) at exercise prices ranging from $8.30 to $47.60 (the Executing Warrants). Pursuant to the Repricing Agreements, we agreed to reduce the per share exercise prices of the Executing Warrants to $1.75, which is equal to the Minimum Price as calculated in accordance with the Nasdaq rules, or the Exercise Price Reduction. As a condition to the Exercise Price Reduction, the Executing Holders agreed to enter into a voting agreement pursuant to which the Executing Holders agreed to vote all of the shares of common stock held by the Executing Holders in favor of all proposals at the special meeting of stockholders held on February 26, 2026. In addition, on February 11, 2026, with respect to the remaining warrants and placement agent warrants to purchase an aggregate of 762,787 shares of common stock that were issued in the same financing rounds described above, our Board of Directors unilaterally reduced their per share exercise prices to $1.75. Other than the reduction in the per share exercise price, all other terms and provisions of the warrants described above remained unchanged. | 6 | | | | | **** **ATM Offering** In June 2022, we entered into an at-the-market offering agreement (the ATM Agreement) with H.C. Wainwright & Co. LLC (Wainwright), which was amended on September 1, 2022, relating to the offer and sale of shares of our common stock having an aggregate offering price of up to $6.3 million. The issuances and sales of common stock by us under the ATM Agreement were being made pursuant to shelf registration statements on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022 and most recently on August 13, 2025 and declared effective on August 20, 2025. Our ability to issue shares under the shelf registration statement on Form S-3 is limited by General Instruction I.B.6 to Form S-3. In September 2025, we sold 520,000 shares of our common stock for aggregate gross proceeds of approximately $2.3 million. **** **June 2025 Convertible Note Financing** In June 2025, we completed a private placement, or the June 2025 Financing, of convertible notes to certain investors, including our then Chief Executive Officer, Jeffrey Meckler, in the aggregate principal amount of approximately $5.7 million and warrants to purchase shares of common stock. The notes automatically converted in July 2025 into 501,566 shares of our common stock and pre-funded warrants to purchase 190,795 shares of our common stock at a conversion price of $8.30 per share. In connection with the offering, we also issued to the investors warrants to purchase 1,384,722 shares of our common stock, exercisable at $8.30 per share and expiring on July 27, 2030. The warrants issued in the June 2025 Financing were the subject of warrant repricing completed in February 2026. See Warrant Repricing on page 6 of this Annual Report. **Reverse Split** On June 26, 2025, we effected a 1-for-28 reverse stock split of our common stock and began trading on a post-split basis on the Nasdaq Capital Market on June 27, 2025, which resulted in our regaining compliance with Nasdaqs minimum bid price requirement. As a result of the reverse stock split, every 28 shares of outstanding common stock were combined into one share of common stock. The reverse stock split decreased our outstanding common stock from 16,946,528 shares to 604,963 shares as of that date. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants entitling the holders to purchase common stock. All share and per share amounts in this annual report on Form 10-K and the consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. **** **February 2025 Equity Line** On February 12, 2025, we entered into a Standby Equity Purchase Agreement, or the SEPA with YA II PN, LTD., a Cayman Islands exempt limited company, or Yorkville. Pursuant to the SEPA, we have the right, but not the obligation, to sell to Yorkville from time to time up to $20.0 million of our common stock, during the 36 months following the execution of the Purchase Agreement, subject to the restrictions and satisfaction of the conditions in the SEPA. At our option, the shares of common stock would be purchased by Yorkville from time to time at a price equal to 97% of the lowest of the three daily VWAPs during a three consecutive trading day period commencing on the date that we, subject to certain limitations, deliver a notice to Yorkville that the Company is committing Yorkville to purchase such shares of common stock. We may also specify a certain minimum acceptable price per share in each Advance. As consideration for Yorkvilles irrevocable commitment to purchase our shares, we issued to Yorkville 10,927 shares of common stock. Under the applicable rules of Nasdaq and pursuant to the SEPA, in no event may we issue or sell to Yorkville more than 100,830 shares of common stock, or the Exchange Cap, which is 19.99% of the shares of common stock outstanding immediately prior to the execution of the SEPA, unless (i) we obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap or (ii) the average price of all applicable sales of common stock under the SEPA equals or exceeds $22.882 per share (which represents the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) on the trading day immediately preceding the effective date or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the effective date). In addition, effective February 12, 2025, we terminated the purchase agreement that we entered into with Lincoln Park Capital Fund, LLC in December 2022. As of March 16, 2026, we sold and issued 89,902 shares of common stock under the SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, we terminated the SEPA with Yorkville, and the SEPA is no longer in effect. | 7 | | | | | **** **January 2025 Financing** On January 12, 2025, we entered into securities purchase agreements, or the January 2025 Purchase Agreements, with certain institutional and accredited investors, or the January 2025 Purchasers. The January 2025 Purchase Agreements provide for the sale and issuance by us of an aggregate of: (i) 75,335 shares of our common stock and (ii) warrants to purchase 75,335 shares of common stock in a private placement, or the January 2025 Warrants. The shares and January 2025 Warrants were sold on a combined basis for consideration of $29.82 for one share and a January 2025 Warrant. The exercise price of the January 2025 Warrants is $26.32 per share. The January 2025 Warrants were immediately exercisable upon issuance and will expire five years following the date of issuance. The January 2025 Warrants contain standard adjustments to the exercise price including for stock splits, stock dividends and reorganizations. In lieu of making the cash payment otherwise contemplated to be made upon exercise in payment of the aggregate exercise price, the holder may, in the event the shares underlying the January 2025 Warrants are not registered under the Securities Act, elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the January 2025 Warrants. Under the terms of the January 2025 Warrants, a holder (together with its affiliates) may not exercise any portion of its January 2025 Warrant to the extent that the holder would beneficially own more than 4.99% or 9.99%, depending on the individual investor, of the outstanding common stock immediately after exercise, or the Beneficial Ownership Limitation, except that upon at least 61 days prior notice from the holder to us, the holder may increase the Beneficial Ownership Limitation, provided that the Beneficial Ownership Limitation in no event exceeds 19.99%. Paulson Investment Company, LLC, or Paulson, served as the exclusive placement agent for the issuance and sale of the securities. As compensation for such placement agent services, we paid Paulson an aggregate cash fee equal to 7.0% of the gross proceeds received by us from the offering, and a non-accountable expense of $25,000. As additional compensation to Paulson, we issued to Paulson (or its designees) a warrant, or the January 2025 Placement Agent Warrants, to purchase an aggregate of 5,273 shares at an exercise price per share equal to $32.9 per share. The January 2025 Placement Agent Warrants are exercisable six months from the date of issuance and expire on the fifth anniversary of the issue date. The January 2025 Warrants and the January 2025 Placement Agent Warrants were the subject of warrant repricing completed in February 2026. See Warrant Repricing on page 6 of this Annual Report. **November 2024 Financing** On November 22, 2024, we entered into securities purchase agreements, or the November 2024 Purchase Agreements, with certain institutional and accredited investors, or the November 2024 Purchasers. The November 2024 Purchase Agreements provide for the sale and issuance by us of an aggregate of: (i) 64,893 shares of our common stock in a registered direct offering and (ii) warrants to purchase 64,893 shares of common stock in a private placement, or the November 2024 Warrants. The shares and November 2024 Warrants were sold on a combined basis for consideration of $32.9 for one share and a November 2024 Warrant. The exercise price of the November 2024 Warrants is $29.4 per share. One of the November 2024 Purchasers was our then Chief Executive Officer, Mr. Jeffrey Meckler, who purchased 1,519 shares and November 2024 Warrants to purchase 1,519 shares, or the Affiliate Securities, at the same price and upon the same terms as the other November 2024 Purchasers. The November 2024 Warrants were immediately exercisable upon issuance and will expire five years following the date of issuance. The November 2024 Warrants contain standard adjustments to the exercise price including for stock splits, stock dividends and reorganizations. In lieu of making the cash payment otherwise contemplated to be made upon exercise in payment of the aggregate exercise price, the holder may, in the event the shares underlying the November 2024 Warrants are not registered under the Securities Act, elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the November 2024 Warrants. Under the terms of the November 2024 Warrants, a holder (together with its affiliates) may not exercise any portion of its November 2024 Warrant to the extent that the holder would beneficially own more than the Beneficial Ownership Limitation, except that upon at least 61 days prior notice from the holder to us, the holder may increase the Beneficial Ownership Limitation, provided that the Beneficial Ownership Limitation in no event exceeds 19.99%. | 8 | | | | | Paulson served as the exclusive placement agent for the issuance and sale of the securities. As compensation for such placement agent services, we paid Paulson an aggregate cash fee equal to 7.0% of the gross proceeds received by us from the offering (excluding the Affiliate Securities), and a non-accountable expense of $25,000. As additional compensation to Paulson, we issued to the Paulson (or its designees) a warrant, or the November 2024 Placement Agent Warrants, to purchase an aggregate of 4,436 shares at an exercise price per share equal to $36.75 per share. The November 2024 Placement Agent Warrants are exercisable six months from the date of issuance and expire on the fifth anniversary of the issue date. The November 2024 Warrants and the November 2024 Placement Agent Warrants were the subject of warrant repricing completed in February 2026. See Warrant Repricing on page 6 of this Annual Report. **August 2024 Financing** On August 8, 2024, we completed a registered direct offering, pursuant to which we sold and issued to certain investors, including one of our officers, 58,708 shares of common stock. In addition, in a concurrent private placement, we issued to the investors unregistered warrants to purchase 58,708 shares of common stock, or the August 2024 Private Placement. The warrants were immediately exercisable at an exercise price of $47.60 per share and expire five years from the date of issuance. The combined purchase price for one share of common stock and one warrant was $51.1, resulting in gross proceeds of approximately $3.0 million, before deducting placement agent and other offering expenses in the amount of approximately $0.5 million. The warrants issued in the August 2024 Private Placement were the subject of warrant repricing completed in February 2026. See Warrant Repricing on page 6 of this Annual Report. **Background** Approved immunotherapies, such as Interluekin-2, Interferon-alpha and the more recently approved checkpoint and CAR-T therapies produce durable responses in a few percent to about fifty percent of patients across about a dozen out of over one hundred different types of cancer. Although checkpoint therapies are able to effectively cure many previously incurable patients, only about 15% of patients receiving this type of therapy respond. The main limitation of existing immunotherapies is that they each activate only one or a small number of key steps in either the innate or adaptive immune system, but there is general agreement that highly efficient cancer immunotherapy will require activation of both innate and adaptive immunity. The human bodys innate and adaptive immune systems are each capable of cell-mediated destruction of tumors if the tumor cells are recognized as foreign or damaged. Activation of innate and adaptive responses is also dependent on immune cells sensing the presence of danger. The most potent immune cell activating danger signals are released by bacteria and viruses in the setting of infection, and include agonists of immune cell receptors, such as Toll-Like (TLR), NOD and STING. Bacterial danger signals, including TLR agonists are called pathogen-associated molecular patterns (PAMPs) and can activate both innate and adaptive immune cells, including antigen-presenting cells, promoting innate (NK, macrophage) and adaptive (T cell-mediated) destruction of tumors. The oldest form of cancer immunotherapy involves the provision of decoy danger signals from bacteria. It was based on the long-standing observation of tumor regression in the setting of bacterial infection. Treatment of cancer patients with heat-killed bacteria, or Coleys toxins, was established in 1891 and used for 70 years with significant success. For example, 5-year survival was reported for 45% of 432 inoperable sarcoma, lymphoma, melanoma, and carcinoma patients. Despite this success, several limitations led to the abandonment of this approach by the pharmaceutical industry. Although there was an indication that Coleys toxins worked best when administered intravenously (i.v.), it was too toxic when given by this route, limiting the approach to local administration, which produced highly variable results. Another limitation was lack of knowledge about the mechanism of action, preventing optimization and standardization of manufacturing, leading to another source of variability in clinical response. Due to this high variability, Coleys toxins was not grandfathered-in as an approved drug by the FDA in 1963 and was supplanted by radiation and chemotherapy, despite the fact that these more modern approaches rarely produce durable responses in advanced cancer patients. Scientists now understand the mechanism of action of Coleys toxins. Gram-negative bacteria contain multiple immune-stimulating danger signals, including TLR agonists such as lipopolysaccharide (LPS). Bacteria and purified or mono-specific TLR agonists, including LPS derivatives, have been validated and approved for prevention and treatment of early stage cancer. However, a safe and effective TLR agonist-based approach for advanced cancer has been elusive, possibly due to limitations in the ability of intratumorally administered, mono-specific TLR agonists to induce potent, systemic anti-tumor immune responses. In addition, the intratumoral approach is not feasible with all tumor types or patients. Our hypothesis is that an effective TLR agonist-based immunotherapy for advanced cancer will require invention of a packaged, multi-TLR agonist or multi-danger signal product that is modified or attenuated to allow safe i.v. administration. | 9 | | | | | **** **Our Approach** Our patented approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor immune responses can be achieved by using intact bacteria, containing multiple PAMPs, which have been attenuated so that they can be administered safely intravenously. Because LPS appears to be the most important contributor to both toxicity and efficacy, our patented product candidates are single strains of killed, non-pathogenic Gram-negative bacteria that have been treated in an effort to kill the bacteria and significantly reduce, but not completely eliminate, the cell surface LPS-endotoxin activity. Our product candidates are designed to have enhanced sufficient residual LPS to synergize with other PAMPs in the bacteria to efficiently prime innate and adaptive immune pathways. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of four different classes of existing agents, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology is designed to produce both innate and adaptive immunological memory and, importantly, not require provision of an exogenous tumor antigen, potentially due to the ability of LPS and other PAMPS to activate dendritic cells that have already captured a tumor antigen. All immune cells can participate in killing of tumors and viruses. As illustrated below, current therapies activate only one or a small subset of both pathways and cure only a small percentage of patients. * Our technology, however, is designed to synergize with existing therapies to activate both innate and adaptive immune cells, inducing efficient anti- tumor immune responses with a wide safety margin. Induction of adaptive anti-tumor immune responses and immunological memory by our technology does not require an exogenous tumor antigen. | 10 | | | | | Innate and adaptive immune responses require identification of a tumor as foreign or not self. However, most steps required for migration and activation of immune cells are unrelated to the tumor or are tumor non-specific. All innate and adaptive non-specific steps are induced or promoted by immune system danger signal molecules, such as those found in our bacteria. Bacteria-derived danger signals are also able to enhance the processing and recognition of tumor antigens, which are frequently present, but not seen by the immune system. **Results** Preclinical Trials* In preclinical models, Indaptus treated bacteria induced less systemic toxicity than untreated bacteria but were still able to activate innate and adaptive immune responses. Despite exhibiting reduced in vivo pyrogenicity and a higher maximally tolerated dose, our bacteria were able to induce secretion of most cytokines and chemokines from mouse and human immune cells in vitro at levels comparable to those seen with untreated bacteria. Our bacteria were also able to synergize with human immune cells to kill human tumor cells in vitro. We have observed significant single agent anti-tumor activity and/or combination therapy-mediated regression with durable responses in established non-Hodgkins lymphoma, as well as colorectal, hepatocellular and pancreatic carcinoma in preclinical syngeneic and human tumor xenograft models. Our bacteria synergized with each of four different classes of approved agents in preclinical models, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy to induce tumor regression, providing significant flexibility for targeting of diverse types of cancer. Our technology is designed to eradicate tumors via activation of both innate (NK cell) and adaptive (CD4+ and CD8+ T cell) mechanisms, with the goal of producing both innate and adaptive immunological memory. In our preclinical studies, tumor eradication occurred at non-toxic doses of our bacteria, with a very wide (10 to 33-fold) therapeutic index. Notable mechanism of action information has also been obtained, via gene expression analysis with treated tumors and plasma cytokine analysis, demonstrating that our combination technology has the potential to turn cold tumors into hot tumors and induce, activate or recruit innate and adaptive genes, cells and pathways. Immune cell pre-depletion studies have demonstrated that both innate (NK) and adaptive (CD4 T and CD8 T) immune cells are involved in tumor eradication. We have also demonstrated significant single agent activity against chronic Hepatitis B virus (HBV) and human immunodeficiency virus (HIV) infection in standard preclinical models. | 11 | | | | | We have carried out successful cGMP manufacturing and stability studies with our lead product candidate, Decoy20. In addition, IND-enabling multi-dose toxicology studies have been completed and did not produce sustained induction of factors that are associated with cytokine release syndrome. * The chart above demonstrates that our bacteria synergize with Anti-PD-1 Checkpoint therapy to regress established mouse hepatocellular carcinoma (HCC) Tumors. All mice (all groups) received a low-dose, non-steroidal anti-inflammatory drug (NSAID/Indomethacin), which increases the number of regressions in the combination setting. Most regressions were durable, with 5/6 combination regressions stable through termination at Day 91 and in a repeat experiment through termination at Day 143 (see next Figure below) (CR = complete response or complete regression). The repeat experiment also produced 5/6 or 6/6 durable regressions per group over a 33-fold Indaptus concentration range and an absence of safety concerns, demonstrating a very wide therapeutic index. Similar tumor eradication results have been obtained by combining our bacteria with low-dose chemotherapy in a mouse non-Hodgkins lymphoma model. Eradication of established non-Hodgkins lymphoma tumors by our technology has also been observed with human tumor xenografts, via activation of the innate immune system. Development and preclinical efficacy characterization of a systemically administered multiple Toll-like receptor (TLR) agonist for antitumor immunotherapy [abstract]. In: Proceedings of the Fourth CRI-CIMT-EATI-AACR International Cancer Immunotherapy Conference: Translating Science into Survival Sept 30-Oct 3, 2018 New York, NY. Philadelphia (PA): AACR Cancer Immunol Res 20197(2 Suppl):Abstract nr B178. The chart above illustrates that the synergistic tumor eradication by our technology and Anti-PD-1 produces immunological memory. Established tumors were regressed in 11 mice by combination treatment as in the Figure above and then the mice were re-challenged with fresh HCC tumor cells, without further treatment. All of the new tumors were rejected. Similar results have been obtained by combining our bacteria with low-dose chemotherapy in a non-Hodgkins lymphoma model. | 12 | | | | | * *Clinical Trials* In May 2022, the U.S. Food and Drug Administration, or the FDA, allowed us to proceed under our IND for a Phase 1 clinical trial in patients with advanced solid tumors where currently approved therapies have failed. In December 2022, we initiated an open label, multi-center, dose escalation and expansion, single arm (monotherapy) Phase 1 study conducted in 2 parts. The Phase 1 study began with single dose administration and was followed with continuous weekly dosing of Decoy20 in tumor-specific expansion cohorts. The study enrolled patients with any one of six advanced/metastatic solid tumors, who have exhausted approved treatment options. The studys objectives were to assess the safety and tolerability of Decoy20, to determine the maximum tolerated dose, the optimal biologically active and recommended Phase 2 dose, as well as to assess Decoy20 pharmacokinetics (PK), pharmacodynamics and clinical activity. The primary endpoints of the study were incidence, relatedness and severity of adverse events and treatment-emergent adverse events and determining the number of subjects per cohort with dose limiting toxicity-based adverse events. Secondary endpoints included the incidence of anti-drug antibodies and neutralizing antibodies pre- and post-treatment, change in Decoy20 PK parameters over time, objective response rate and duration of response. In August 2023, we evaluated the first four patients who received a single dose of 7 x 10^7 Decoy20 in Part 1 of the Phase 1 clinical trial. All four patients who enrolled were evaluable in the first cohort. These patients experienced generally anticipated transient adverse events including hemodynamic changes such as changes in pulse or blood pressure that resolved within 30 minutes and laboratory abnormalities such as grade 1-3 elevations in transaminases (liver function tests) and grade 4 reductions in lymphocytes that generally resolved within three days. One patient had a dose-limiting toxicity of grade 3 bradycardia (slow heart rate) and grade 2 hypotension (low blood pressure) which resolved within approximately 90 minutes with i.v. fluids. Patients also experienced transient induction of over 50 different biomarkers associated with innate and adaptive anti-tumor immune responses. After the end of infusion, Decoy20 was cleared from the blood within 30 to 120 minutes. Peak cytokine and chemokine induction occurred within ~4 to 24 hours and most cytokine/chemokines returned to the patients respective baseline by 24-72 hours. This rapid clearance and associated transient cytokine/chemokine induction are desired to avoid prolonged toxicity, often associated with longer term cytokine exposure. In September 2023, we began the second cohort of the Phase 1 clinical trial after receiving authorization from the Safety Review Committee. The second cohort dose was a reduction from 7 x 10^7 Decoy20 dose to 3 x 10^7 Decoy20. In March 2024, we completed the second cohort of patients who received a single dose of 3 x 10^7 Decoy20 in Phase 1 of the clinical trial. Patients on the second (lower dose) cohort experienced adverse events similar in frequency and severity to the higher dose cohort with one dose-limiting toxicity of grade 3 ALT elevation that required one week to resolve. Pharmacodynamic effects included transient induction of multiple biomarkers. Clearance of Decoy20 was similarly rapid. Following authorization from the Safety Review Committee, we advanced into the weekly dosing part of the trial. In May and June 2024, we enrolled two additional patients in the first cohort who received a single dose of 7 x 10^7 Decoy20, and in August 2024 we received the authorization from the Safety Review Committee to initiate the weekly dosing with 7 x 10^7 Decoy20. As of October 2024, we completed one month of the weekly dosing part in the first six participants at the 3 x 10^7 Decoy20 dose and following the review of the safety data by the Safety Review Committee we received the authorization to initiate unrestricted enrollment of participants at the 3 x 10^7 Decoy20 dose. By May 2025, we had enrolled 13 participants on Decoy20 as a single dose and 32 participants in the weekly dosing among the two Decoy20 dose levels. In May 2025, we decided to conclude enrollment in the weekly dosing and focus on the Combination Study, as further described below. We have observed early signs of potential benefits emerging with some participants with stable disease. As expected with the mechanism of action of Decoy20, we have seen adverse events of cytokine release syndrome (CRS) in six participants that have resolved within 24-72 hours. In October 2024, we entered into a clinical supply agreement, or the Supply Agreement, with BeOne Medicines (formerly known as BeiGene Switzerland GmbH), to advance clinical evaluation of Decoy20 in combination with BeOnes anti-PD-1 antibody, Tislelizumab, or the BeOne Product, for the treatment of participants with advanced solid tumors, or the Combination Study. This Combination Study builds on preclinical results where Decoy20, combined with a PD-1 inhibitor, demonstrated tumor eradication. By November 2025, we had enrolled six evaluable participants in the Combination Study, and we have seen one related serious adverse event of CRS in one participant that has resolved within 72 hours. Following initial efficacy evaluations, we had three participants who experienced disease progression and had to discontinue from the study, and we had evidence of stable disease assessment in three subjects. Of the three stable disease participants, one subject with squamous cell carcinoma of the head and neck developed disease progression at the next restaging assessment and discontinued from the study; one subject with pancreatic adenocarcinoma maintained stable disease with Decoy20 for more than four months, with tislelizumab held between weeks 10-20 for autoimmune thyroiditis, before discontinuing after 6 months with disease progression; and the third subject with hepatocellular carcinoma had stable disease for four months before discontinuing for disease progression after six months. The Combination Study assessed safety, dose optimization, and early signs of anti-tumor activity in participants with advanced solid tumors, previously treated with a checkpoint inhibitor or with tumors typically unresponsive to checkpoint inhibitors. Currently, we have discontinued further enrollment and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. Under the terms of the Supply Agreement, we covered all costs associated with the Combination Study, excluding the cost of the BeOne Product. BeOne supplied the BeOne Product for use in the study, and we supplied Decoy20 for the purposes of the Combination Study. Following the discontinuation of the Combination Study, we provided BeOne notice of termination per the Supply Agreement. Historically, we have operated virtually with a team of highly experienced consultants and advisors, carrying out research and development at contract research organizations (CROs). We have developed patented treatment methods (and associated patented compositions) for attenuation and killing of non-pathogenic, Gram-negative bacteria. Since our inception, we have funded our operations primarily through public and private offerings of our equity securities. **Governmental Regulation** Among others, the FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs such as those we are developing. These agencies and other federal, state and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our product candidates. | 13 | | | | | **** **U.S. Regulation of Drugs and Biologics** In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations, and biologics under the FDCA and the Public Health Service Act (PHSA) and its implementing regulations. FDA approval is required before any new unapproved drug or dosage form, including a new use of a previously approved drug, can be marketed in the United States. Drugs and biologics are also subject to other federal, state, and local statutes and regulations. The process required by the FDA before product candidates may be marketed in the United States generally involves the following: | | completion of extensive preclinical laboratory tests, animal studies and formulation studies, performed in accordance with the Good Laboratory Practices (GLP) regulations and other applicable regulations; | | | | | | | | submission to the FDA an IND, which must become effective before human clinical studies may begin and must be updated annually; | | | | | | | | approval by an independent institutional review board (IRB) or ethics committee representing each clinical site before each clinical study may be initiated; | | | | | | | | performance of adequate and well-controlled human clinical studies in accordance with Good Clinical Practice (GCP), requirements to establish the safety and efficacy, or with respect to biologics, the safety, purity and potency of the product candidate for each proposed indication; | | | | | | | | preparation of and submission to the FDA of a new drug application (NDA) or biologics license application, (BLA), after completion of all pivotal clinical studies; | | | | | | | | a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review; | | | | | | | | potential review of the product application by an FDA advisory committee, where appropriate and if applicable; | | | | satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities where the proposed product drug is produced to assess compliance with cGMP, to assure that the facilities, methods and controls are adequate to preserve the drugs identity, strength, quality and purity, and of potential inspection of selected clinical investigation sites to assess compliance with GCPs; and | | | | | | | | FDA review and approval of an NDA or BLA prior to any commercial marketing or sale of the drug in the United States. | | Once a product candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational drug product to humans. An IND will also include a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the trial includes an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns about on-going or proposed clinical trials or non-compliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor that the hold has been lifted. All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials must be conducted under protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND, and a separate submission to the existing IND must be made for each successive clinical trial conducted during product development and for any subsequent protocol amendments. While the IND is active, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of a serious suspected adverse reaction compared to that listed in the protocol or investigator brochure. | 14 | | | | | Furthermore, an independent IRB at each institution participating in the clinical trial must review and approve each protocol before a clinical trial commences at that institution and must also approve the information regarding the trial and the consent form that must be provided to each trial subject or his or her legal representative, monitor the study until completed and otherwise comply with IRB regulations. The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRBs requirements or if the drug has been associated with unexpected serious harm to patients. In addition, some clinical trials are overseen by an independent group of qualified experts organized by the sponsor, known as a data safety monitoring board or committee. Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial. There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries, including clinicaltrials.gov. The clinical investigation of a drug is generally divided into three phases. Although the phases are usually conducted sequentially, they may overlap or be combined. | | Phase 1. The product candidate is initially introduced into healthy human subjects or patients with the target disease or condition. These studies are designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness. | | | | | | | | Phase 2. The product candidate is administered to a limited patient population with a specified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials. | | | | | | | | Phase 3. The product candidate is administered to an expanded patient population to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval. | | Post-approval trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA. During the development of a product candidate, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA or BLA is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development. Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in commercial quantities in accordance with cGMPs. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug. In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. **NDA and BLA Review Process** Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of an NDA or BLA requesting approval to market the product for one or more indications. The NDA or BLA must include all relevant data available from pertinent preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the products chemistry, manufacturing and controls and proposed labeling, among other things. Data can come from company-sponsored clinical studies intended to test the safety and effectiveness of the product, or from a number of alternative sources, including studies initiated and sponsored by investigators. The submission of an NDA or BLA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies. | 15 | | | | | In addition, under the Pediatric Research Equity Act, or PREA, an NDA or BLA or supplement to an NDA or BLA must contain data to assess the safety and effectiveness of the biological product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The Food and Drug Administration Safety and Innovation Act requires that a sponsor who is planning to submit a marketing application for a drug or biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial pediatric study plan within sixty days after an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA. Unless otherwise required by regulation, PREA does not apply to any drug or biological product for an indication for which orphan designation has been granted. Within 60 days following submission of the application, the FDA reviews the submitted BLA or NDA to determine if the application is substantially complete before the agency accepts it for filing. The FDA may refuse to file any NDA or BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the NDA or BLA must be resubmitted with the additional information. Once an NDA or BLA has been accepted for filing, the FDAs goal is to review standard applications within ten months after the filing date, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and priority reviews, the review process may also be extended by FDA requests for additional information or clarification. The FDA reviews an NDA to determine, among other things, whether a product candidate is safe and effective for its intended use and whether its manufacturing is sufficient to assure and preserve the products identity, strength, quality and purity. The FDA reviews a BLA to determine, among other things, whether a product candidate is safe, pure and potent and the facility in which it is manufactured, processed, packed or held meets standards designed to assure the products continued safety, purity and potency. When reviewing an NDA or BLA, the FDA may convene an advisory committee to provide clinical insight on application review questions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. Before approving an NDA or BLA, the FDA will typically inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. After the FDA evaluates the NDA or BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced, the FDA may issue an approval letter or a Complete Response Letter, or CRL. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL usually describes the specific deficiencies in the NDA or BLA identified by the FDA and may require additional clinical data, including additional clinical trials, or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a CRL is issued, the sponsor must resubmit the NDA or BLA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the NDA or BLA does not satisfy the criteria for approval. If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. For example, the FDA may approve the NDA or BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. The FDA may also require one or more Phase 4 post-market studies and surveillance to further assess and monitor the products safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies. | 16 | | | | | **** **Expedited Development and Review Programs** The FDA offers a number of expedited development and review programs for qualifying product candidates. For example, the fast track program is intended to expedite or facilitate the process for reviewing new products that meet certain criteria. Specifically, product candidates are eligible for fast track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast track designation applies to the combination of the product candidate and the specific indication for which it is being studied. The sponsor of a fast track product candidate has opportunities for more frequent interactions with the review team during product development and, once an NDA or BLA is submitted, the application may be eligible for priority review. A fast track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA or BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA or BLA, the FDA agrees to accept sections of the NDA or BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA or BLA. A product candidate intended to treat a serious or life-threatening disease or condition may also be eligible for breakthrough therapy designation to expedite its development and review. A product candidate can receive breakthrough therapy designation if preliminary clinical evidence indicates that the product candidate, alone or in combination with one or more other drugs or biologics, may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the fast track program features, as well as more intensive FDA interaction and guidance beginning as early as Phase 1 and an organizational commitment to expedite the development and review of the product candidate, including involvement of senior managers. Any marketing application for a drug or biologic submitted to the FDA for approval, including a product candidate with a fast track designation and/or breakthrough therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review. A product candidate is eligible for priority review if it has the potential to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition. For new-molecular-entity NDAs and original BLAs, priority review designation means the FDAs goal is to take action on the marketing application within six months of the 60-day filing date (as compared to ten months under standard review). Additionally, depending on the design of the applicable clinical trials, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled confirmatory clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit, and may require that such confirmatory studies be underway before granting any accelerated approval. Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required confirmatory studies in a timely manner or if such studies fail to verify the predicted clinical benefit. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast track designation, breakthrough therapy designation, priority review, and accelerated approval do not change the standards for approval but may expedite the development or approval process. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. We may explore some of these opportunities for our product candidates as appropriate. **Orphan drug designation** Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States or, if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan designation must be requested before submitting an NDA or BLA. After the FDA grants orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologic for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the product in sufficient quantities. The designation of such drug or biologic also entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. However, competitors, may receive approval of different products for the disease or condition for which the orphan product has exclusivity or obtain approval for the same product but for a different disease or condition for which the orphan product has exclusivity. Orphan exclusivity also could block the approval of a competing product for seven years if a competitor obtains approval of the same drug, as defined by the FDA, or if the active ingredient of the product candidate is determined to be contained within the competitors product for the same disease or condition. In addition, if an orphan designated product receives marketing approval for a disease or condition broader than what is designated, it may not be entitled to orphan exclusivity. | 17 | | | | | **Post-Approval Requirements** Any products manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing user fee requirements, under which the FDA assesses an annual program fee for each product identified in an approved NDA or BLA. Drug and biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMPs and impose reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory compliance. The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things: | | restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls; | | | | | | | | fines, warning letters or holds on post-approval clinical studies; | | | | | | | | refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; | | | | | | | | product seizure or detention, or refusal of the FDA to permit the import or export of products; | | | | | | | | consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; | | | | | | | | mandated modification of promotional materials and labeling and the issuance of corrective information; | | | | | | | | the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or | | | | | | | | injunctions or the imposition of civil or criminal penalties. | | The FDA closely regulates the marketing, labeling, advertising and promotion of drug products and biologics. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the products labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturers communications on the subject of off-label use of their products. | 18 | | | | | **** **Drug Product Marketing Exclusivity** Market exclusivity provisions authorized under the FDCA can delay the submission or the approval of certain marketing applications. For example, the FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not approve or even accept for review an abbreviated new drug application, or ANDA, or an NDA submitted under Section 505(b)(2), or 505(b)(2) NDA, submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA alternatively provides three years of non-patent exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to any preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Pediatric exclusivity is another type of marketing exclusivity available in the United States. Pediatric exclusivity provides for an additional six months of marketing exclusivity attached to another period of existing exclusivity, including patent terms, if a sponsor conducts clinical trials in children in response to a written request from the FDA. The issuance of a written request does not require the sponsor to undertake the described clinical trials. **Biosimilars and Reference Product Exclusivity** The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated approval pathway for biological products that are highly similar, or biosimilar, to or interchangeable with an FDA-approved reference biological product. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, is generally shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. A product shown to be biosimilar or interchangeable with an FDA-approved reference biological product may rely in part on the FDAs previous determination of safety and effectiveness for the reference product for approval, which can potentially reduce the cost and time required to obtain approval to market the product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing that applicants own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed interchangeable by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. | 19 | | | | | A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of existing exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued Written Request for such a study. **Other Healthcare Laws** Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through which we research as well as sell, market and distribute any products for which we obtain marketing approval. Such laws include, without limitation, federal and state anti-kickback, fraud and abuse, false claims, data privacy and security and physician and other healthcare provider transparency laws and regulations. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply, they may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and imprisonment. **Coverage and Reimbursement** Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. The coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained. These third-party payors are increasingly reducing reimbursements for medical products, drugs and services. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product. Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product and also have a material adverse effect on sales. **Healthcare Reform** In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, each as amended, collectively known as the ACA, was enacted, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affected the pharmaceutical industry. The ACA contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and changes to fraud and abuse laws. By way of example, the ACA: | | increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the average manufacturer price; | | | | | | | | required collection of rebates for drugs paid by Medicaid managed care organizations; | | | | | | | | required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 70 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers outpatient drugs to be covered under Medicare Part D; and | | | | | | | | imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell branded prescription drugs to specified federal government programs. | | | 20 | | | | | Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. The rebate was previously capped at 100% of a drugs average manufacturer price, or AMP. Most recently, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the drug price negotiation programs is currently subject to legal challenges. For that and other reasons, it is currently unclear how the IRA will be effectuated. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries, proposed and enacted legislation and executive orders issued by the President designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. **Data Privacy and Security Laws** Numerous state, federal and foreign laws, regulations and standards govern the collection, use, access to, confidentiality and security of health-related and other personal information, and could apply now or in the future to our operations or the operations of our partners. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information. In addition, certain foreign laws govern the privacy and security of personal data, including health-related data. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. **Competition** The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition, government regulation and a strong emphasis on proprietary products. While we believe that our technology, knowledge and scientific resources provide us with certain competitive advantages, we face competition from many sources, including foreign and domestic pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions. Many of these competitors may have access to greater capital and resources than us. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel. Any product candidates that we successfully develop and commercialize will compete with new immunotherapies that may become available in the future. Our competitors include larger and better funded biopharmaceutical, biotechnology and therapeutics companies, specifically companies focused on cancer immunotherapies, such as Amgen, Inc., AstraZeneca plc, BMS, Genentech, Inc., GlaxoSmithKline PLC, Merck & Co. Inc., Novartis AG, Pfizer Inc., Roche Holding Ltd and Sanofi S.A. On the other hand, many of these companies are developing immunotherapeutics which may have potential to be used in concert with Decoy20 and in this regard, we view them as potentially complimentary. | 21 | | | | | With respect to our lead candidate, Decoy20, there are a number of companies that are developing possible treatments for cancer, however, we believe we are the only company using systemic administration of killed, non-pathogenic Gram-negative bacteria with reduced lipopolysaccharide-endotoxin to stimulate innate and adaptive immune system pathways. Our success will be based in part upon our ability to successfully commercialize Decoy20 and to identify, develop and manage a portfolio of therapeutics that are safer and more effective than competing products in our target indications. Our market opportunity has the potential to be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects, are more convenient or are less expensive than any therapeutics we may develop. Our competitive position will also be dependent upon our ability to attract and retain qualified personnel, to obtain patent protection or otherwise develop proprietary products or processes, and protect our intellectual property, to differentiate our product from other therapeutics and to secure sufficient capital resources for the period between technological conception and commercial sales. The availability of reimbursement from government and other third-party payors will also significantly affect the pricing and competitiveness of our products. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly or with broader applications than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. **Intellectual Property** Our success depends, at least in part, on our ability to protect our proprietary technology and intellectual property, and to operate without infringing or violating the proprietary rights of others. We rely on a combination of patent, trademark, trade secret and copyright laws, know-how, intellectual property licenses and other contractual rights (including confidentiality and invention assignment agreements) to protect our proprietary technology and intellectual property, including related intellectual property rights. **Patents** As of March 16, 2026, we own 61 granted patents and 17 pending patent applications to use within our field of business. Our patents and patent applications generally relate to compositions and methods for treating cancer and infectious diseases, and our patents and any patents that issue from our pending patent applications are expected to expire at various dates between 2033 and 2043. Our ability to maintain and consolidate our proprietary position for our technology will depend on our success in obtaining effective claims and enforcing those claims once granted. We do not know whether any of our patent applications or any patent applications that we may license will result in the issuance of any patents. Our issued patents and those that may be issued in the future, or patents that we may exclusively license, may be challenged, narrowed, circumvented or found to be invalid or unenforceable, which could limit our ability to stop competitors from marketing related products or the length of term of patent protection that we may have for our products. We cannot be certain that we were the first to invent the inventions claimed in our owned patents or patent applications. In addition, our competitors may independently develop similar technologies or duplicate any technology developed by us, and the rights granted under any issued patents may not provide us with any meaningful competitive advantages against these competitors. Furthermore, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any of our products can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent. **Trade Secrets and Confidential Information** In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. Trade secrets and know-how can be difficult to protect. We rely on, among other things, confidentiality and invention assignment agreements to protect our proprietary know-how and other intellectual property that may not be patentable, or that we believe is best protected by means that do not require public disclosure. For example, we require our employees to execute confidentiality agreements in connection with their employment relationships with us, and to disclose and assign to us inventions conceived in connection with their services to us. However, there can be no assurance that these agreements will be enforceable or that they will provide us with adequate protection. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know-how by maintaining physical security of our premises and physical and electronic security of our information technology systems. | 22 | | | | | We may be unable to obtain, maintain and protect the intellectual property rights necessary to conduct our business, and may be subject to claims that we infringe or otherwise violate the intellectual property rights of others, which could materially harm our business. For a more comprehensive summary of the risks related to our intellectual property, see Item 1A. Risk Factors - Risks Related to Our Intellectual Property. **Environmental Matters** We are subject to various environmental, health and safety laws and regulations, including those governing laboratory procedures, the handling, use, storage, treatment and disposal of hazardous materials and wastes and the cleanup of contaminated sites. Our operations involve the use of potentially hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. Although we generally contract with third parties for the operations that involve the disposal of hazardous materials and waste, we cannot eliminate the risk of contamination or injury from these materials. Based on information currently available to us, we do not expect environmental costs and contingencies to have a material adverse effect on us. However, we could incur substantial costs as a result of violations of our liabilities under environmental requirements in connection with our operations or property, including fines, penalties and other sanctions, investigation and cleanup costs and third-party claims. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damage, and any liability could exceed our resources. See Part I. Item 1A. Risk Factors - Risks Related to Healthcare Laws and Other Legal Compliance Matters - *Violations of or liabilities under environmental, health and safety laws and regulations could subject us to fines, penalties or other costs that could have a material adverse effect on the success of our business.* We believe that our business, operations and facilities are being operated in compliance with all material respects with applicable environmental and health and safety laws and regulations. **Human Capital Management** As of December 31, 2025, we had five full-time employees. None of our employees are represented by labor unions or covered by collective bargaining agreements. We believe that our future success will depend, in part, on our continued ability to attract, hire and retain qualified personnel. In particular, we depend on the skills, experience and performance of our senior management and research personnel. We compete for qualified personnel with other biotechnology, medical device, pharmaceutical and healthcare companies, as well as universities and non-profit research institutions. We provide competitive compensation and benefits programs to help meet the needs of our employees. In addition to salaries, these programs include incentive compensation plan, pension, healthcare and insurance benefits, paid time off, and family leave, among others. We also use targeted equity-based grants with vesting conditions to facilitate retention of personnel, particularly for our key employees. The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health and safety of our employees, and we consider our relations with our employees to be good. **Available Information** We maintain a corporate website at http://www.indaptusrx.com. The information contained on, or that can be accessed through, our website is neither a part of nor incorporated into this Annual Report. Copies of our reports on Forms 10-K, Forms 10-Q and Forms 8-K, may be obtained, free of charge, electronically through our corporate website at http://www.indaptusrx.com as soon as reasonably practicable after we file such material electronically with, or furnish to, the SEC. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. | 23 | | | | | **** **Item 1A. Risk Factors.** *You should carefully consider the factors described below, together with all of the other information contained in this Annual Report, including the audited consolidated financial statements and the related notes included in this Annual Report beginning on page F-1, before deciding whether to invest in our common stock. If any of the risks discussed below actually occur, our business, financial condition, operating results and cash flows could be materially adversely affected. This could cause the trading price of our common stock to decline, and you may lose all or part of your investment.* **General Risks Related to the Investment Transaction** **As a result of the issuance of Preferred Stock, our stockholders will experience significant dilution from** the issuance of shares of our common stock upon future conversion of the Preferred Stock. All of the shares of Preferred Stock are convertible into 111.0 million shares of common stock. As a result of the full conversion of the Preferred Stock, 111.0 million shares of common stock will be issued, which collectively will represent approximately 96.4% of the total number of shares of common stock expected to be outstanding on a fully diluted basis immediately after the conversion. Upon the conversion of the Preferred Stock, our existing stockholders will experience significant dilution in their ownership percentage and their voting power, with Mr. Lazar, or any transferee of the Preferred Stock, receiving effective voting control over matters presented to stockholders in the future relating to our Company. **We may fail to realize the anticipated benefits of the Investment Transaction if we are not able to identify and/or pursue a Post-Investment Transaction.** The success of the Investment Transaction and the pursuit of our business strategy to grow will depend on, among other things, our ability to identify, pursue and consummate a Post-Investment Transaction with a Target Company. We may not be able to identify a suitable Target Company to acquire or ultimately enter into and consummate a Post-Investment Transaction within the necessary timing before our capital resources are depleted. Any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us, and the availability of financing, if at all. If we do enter into and consummate a Post-Investment Transaction with a Target Company, there is no assurance that the transaction will be successful or that we will be able to achieve the anticipated revenues, efficiencies, cost savings and/or realize other expected benefits of the Post-Investment Transaction. As a result, the Board may determine it is in the best interests of the stockholders to alternatively dissolve the Company or otherwise seek bankruptcy protection or protection under other insolvency laws. In pursuing a Post-Investment Transaction, it is possible that we may need additional capital to fund the acquisition of a Target Company and/or we may issue common stock or other equity securities as consideration to acquire the Target Company. The number of shares and/or the value of the additional shares of common stock or other equity securities, if any, that we may issue in connection with a Post-Investment Transaction is not currently known and any such issuance would be subject to required corporate and/or stockholder approvals that may be applicable under law or the Nasdaq Listing Rules. To the extent we raise additional capital by issuing equity securities or issue equity securities as consideration in a Post-Investment Transaction, our stockholders may experience substantial dilution and the new equity securities may have greater rights, preferences or privileges than our existing common stock and/or our preferred stock issued, as the case maybe. In addition, the further development of our product candidates will require substantial additional cash. Consequently, any potential counterparty in a Post-Investment Transaction is likely to choose not to spend additional resources to continue development of our product candidates and may attribute little or no value, in such a transaction, to those product candidates. If we are not successful in setting forth a new strategic path for the Company, or if our plans are not executed in a timely fashion, this may cause reputational harm with our stockholders and the value of our securities may be adversely impacted. In addition, speculation regarding any developments related to a Post-Investment Company and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly. **Our Board and management team has significantly changed in connection with the Investment Transaction and we expect it to further change in connection with pursuing a Post-Investment Transaction.** In connection with the Investment Transaction, material changes to the management of our Company have occurred with Mr. Lazar being appointed as Co-Chief Executive Officer and as Chairman of the Company. Further, four additional directors nominated by Mr. Lazar have replaced prior Board members since the closing of the Investment Transaction. Additionally, we expect there to be further changes to our executive management team and Board in the future in connection with any transfer of Preferred Stock by Mr. Lazar and/or our pursuing a Post-Investment Transaction. Accordingly, we expect that we will have significant changes and turnover to our executive management team and the Board who would lead our Company. | 24 | | | | | **** **A recent increase in the number of authorized shares of common stock, or a potential future reverse stock split, would make additional shares available for issuance. Any issuance of these additional shares could lead to increased dilution for our stockholders and/or negatively impact the market price of our common stock.** At the special meeting held on February 26, 2026, our stockholders authorized the Board to increase our authorized common stock from 200,000,000 shares to up to 1,000,000,000 shares and to effect a reverse stock split, in each case at the discretion of the Board. On February 27, 2026, we filed a certificate of amendment with the Delaware Secretary of State to increase the authorized stock to 1,000,000,000 shares of common stock. Any issuance resulting from the increase in authorized common stock may have a dilutive effect, including on earnings per share, on stockholders equity and/or voting rights. Furthermore, future sales of substantial amounts of our common stock, or the perception that these sales might occur, could adversely affect the prevailing market price of our common stock or limit our ability to raise additional capital. A decision by the Board to effect a reverse stock split will yield similar increase in availability of shares and any new issuances resulting therefrom may have a similar dilutive effect on our outstanding shares. **Risks Related to Control of the Company** **Our stockholders will have significantly reduced ownership and voting power as a result of the conversion of the shares Preferred Stock.** At the special meeting held on February 26, 2026, our stockholders approved the issuance of common stock upon conversion of Preferred Stock to Mr. Lazar and the change in control of the Company associated with the conversion. Accordingly, our stockholders who owned shares of common stock prior to the conversion of the Preferred Stock will have a significantly lower percentage of ownership and correspondingly reduced voting power than they held immediately prior to the conversion. Although the Preferred Stock has not been converted into common stock yet and has no voting rights, following the conversion of the Preferred Stock, Mr. Lazar, or any transferee of the Preferred Stock, will own in the aggregate approximately 96.4% of the total number of shares of common stock outstanding on a fully diluted basis. Therefore, without taking into account future issuances of our securities (including pursuant to a Post-Investment Transaction), our stockholders will have significantly less ownership of our Company and voting power, and, therefore, they will have a substantially reduced ability to influence significant corporation decisions that require approval of holders of the outstanding common stock. **Mr. Lazar has significant control and influence over our Company and corporate matters.** In addition to the ownership concentration that will result with the conversion of the Preferred Stock, Mr. Lazar was appointed as the Chairman to our Board and began serving as our Co-Chief Executive Officer in connection with the closing of the Investment Transaction. Additionally, since the closing of the Investment Transaction, four additional directors namely Mr. Avraham Ben-Tzvi, Mr. Jabbour, Mr. McMurdo and Mr. Natan, all designees of Mr. Lazar have joined the Board. As a result of Mr. Lazars positions as Chief Executive Officer and a director, Mr. Lazar will have input on all matters before our Board. Separately, due to his ownership of Preferred Stock, Mr. Lazar, or any transferee of the Preferred Stock, would also have the ability to exercise significant influence and control over the outcome of all matters requiring Board and stockholder approval, including the election of directors. As a result of the voting power from the Preferred Stock, we may determine that we are a controlled company as defined in the Nasdaq Listing Rule 5615 and, therefore, are not subject to the Nasdaq Listing Rules that would otherwise require us to have (a) a majority of independent directors; (b) director nominees selected, or recommended for the Board selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors; (c) a nominating committee composed solely of independent directors; (d) compensation of our chief executive officer and all other officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and/or (e) a compensation committee charter which provides the compensation committee with the authority and funding to retain compensation consultants and other advisors. | 25 | | | | | **** **Risks Related to Reverse Stock Split** **The proposed reverse stock split, if effected, may not increase our stock price, and could lead to a decrease in our overall market capitalization.** On March 10, 2026, the closing sale price of our common stock on the Nasdaq was $1.87 per share of common stock. We expect that the reverse stock split, if effected, will increase the per share trading price of our common stock. However, the market price per share of our common stock after the reverse stock split may not rise (or remain constant) in proportion to the reduction in the number of shares of common stock outstanding before the reverse stock split. We cannot predict the effect of the reverse stock split on the per share trading price of our common stock, and the history of reverse stock splits for us and other companies is varied, particularly since some investors may view a reverse stock split negatively. In many cases, the market price of a companys shares declines after a reverse stock split, or the market price of a companys shares immediately after a reverse stock split does not reflect a proportionate or mathematical adjustment to the market price based on the ratio of the reverse stock split. Accordingly, our total market capitalization after a reverse stock split may be lower than our total market capitalization before the reverse stock split, and it is possible that a reverse stock split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks. Even if we implement the reverse stock split, the per share trading price of our common stock may decrease due to factors unrelated to the reverse stock split. Other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the per share trading price of our common stock. As a result, we cannot assure you that the reverse stock split, if completed, will result in the benefits that we anticipate, that the per share trading price of our common stock will increase following the reverse stock split or that the per share trading price of our common stock will not decrease in the future. **The proposed reverse stock split, if effected, may decrease the liquidity of our common stock.** The liquidity of our common stock may be harmed by the proposed reverse stock split, given the reduced number of shares that would be outstanding after the reverse stock split, particularly if the per share trading price does not increase proportionately as a result of the reverse stock split. While the Board believes that a higher stock price may help generate the interest of new investors, the reverse stock split may not result in a per share price that will attract certain types of investors, such as institutional investors or investment funds, and such share price may not satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our common stock may not improve as a result of a reverse stock split and could be adversely affected by a higher per share price. Accordingly, the reverse stock split may not increase marketability of our common stock. In addition, investors might consider the increased proportion of unissued authorized shares to issued shares to have an anti-takeover effect under certain circumstances, because the proportion allows for dilutive issuances that could prevent certain stockholders from changing the composition of the Board or render tender offers for a combination with another entity more difficult. **The proposed reverse stock split, if effected, may result in some stockholders owning odd lots that may be more difficult to sell or require greater transaction costs per share to sell.** If the proposed reverse stock split is implemented, it will increase the number of stockholders who own odd lots of less than 100 shares of common stock. A purchase or sale of less than 100 shares of common stock may result in incrementally higher trading costs through certain brokers, particularly full service brokers. Therefore, those stockholders who own less than 100 shares of our common stock following the reverse stock split may be required to pay higher transaction costs if they sell their shares of common stock. **Risks Related to Our Financial Position and Capital Requirements** **We are a clinical-stage company with a limited operating history. We are not currently profitable, do not expect to become profitable in the near future and may never become profitable.** We are a clinical-stage biotechnology company focused primarily on developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. All of our product candidates are in the preclinical or early clinical development stage, and none of our product candidates have been approved for marketing or are being marketed or commercialized. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. As a result, we have no meaningful historical operations upon which to evaluate our business and prospects and have not yet demonstrated an ability to obtain marketing approval for any of our product candidates or successfully overcome the risks and uncertainties frequently encountered by companies in the biopharmaceutical industry. Furthermore, we have not been profitable and have incurred significant operating losses in every reporting period since our inception. For the year ended December 31, 2025, we reported a net loss of approximately $20.8 million and as of December 31, 2025, we had an accumulated deficit of approximately $81.3 million. | 26 | | | | | For the foreseeable future, we expect to continue to incur losses. Further, the net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. Even if we succeed in developing and commercializing one or more product candidates, we may never become profitable, or even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders equity and working capital. **We have identified conditions and events that raise substantial doubt regarding our ability to continue as a going concern.** We have incurred net losses and utilized cash in operations since inception as described above. In addition, as of December 31, 2025, we had approximately $8.5 million and during the twelve months ended December 31, 2025, we used $14.8 million of cash in operations and expect to continue to incur significant cash outflows and incur future additional losses to execute our operating plan. We believe that the cash and cash equivalents as of December 31, 2025 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2026. We will need to increase our capital resources through equity and/or debt financings. We may also seek to finance our cash needs through collaborations, strategic alliances, or license agreements with third parties and/or debt or equity financings. If sources of financing are available, they may result in substantial dilution to our stockholders. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. Due to the uncertainty in securing additional funding, and as existing cash resources are not sufficient to fund planned operations for at least 12 months from the date of this Annual Report, we have concluded that substantial doubt exists about our ability to continue as a going concern. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. As such, there can be no assurance that we will be able to continue as a going concern. Our audited consolidated financial statements included in this Annual Report have been prepared on a going concern basis under which an entity is able to realize its assets and satisfy its liabilities in the ordinary course of business. The audited consolidated financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should we be unable to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock, and it may be more difficult for us to obtain financing. If potential collaborators decline to do business with us or potential investors decline to participate in any future financing due to such concerns, our ability to increase our cash position may be limited. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations. If we are unable to continue as a going concern, you could lose all or part of your investment in our Company. **Given our lack of current cash flow, we will need to raise additional capital. If we are unable to raise a sufficient amount of capital when needed in required amounts and on acceptable terms or at all, we may be forced to delay, limit or eliminate some or all of our research programs, product development activities and commercialization efforts.** Since we will be unable to generate sufficient, if any, cash flow to fund our operations for the foreseeable future, we will need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations. | 27 | | | | | There can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all. If such additional financing is not available on satisfactory terms, or is not available in sufficient amounts, we may be required to delay, limit or eliminate some or all of our research programs, product development activities and commercialization efforts, and our ability to achieve our business objectives, our competitiveness, and our business, financial condition and results of operations may be materially adversely affected. In addition, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Our inability to fund our business could lead to the loss of your investment. Our future capital requirements will depend on many factors, including, but not limited to: | | the outcome of identifying a suitable Target Company to acquire and ultimately entering into and consummate a Post-Investment Transaction; | | | | | | | | the scope, progress, results and costs of preclinical studies and clinical trials | | | | | | | | the scope, prioritization and number of our clinical trials and other research and development programs | | | | | | | | the amount of revenues we receive under future licensing, collaboration, development and commercialization arrangements with respect to our product candidates | | | | | | | | the impact of any pandemic, epidemic or other future health crisis on our business and operations | | | | | | | | the costs of the development and expansion of our operational infrastructure | | | | | | | | the costs, timing and outcome of regulatory review of our product candidates | | | | | | | | the ability of us, or our collaborators, to achieve development milestones, marketing approval and other events or developments under our potential future licensing agreements | | | | | | | | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights | | | | | | | | the costs and timing of securing manufacturing arrangements for clinical or commercial production | | | | | | | | the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities ourselves | | | | | | | | the costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or technology | | | | | | | | the costs associated with being a public company; and | | | | | | | | any cost that we may incur under future in- and out-licensing arrangements relating to one or more of our product candidates. | | | 28 | | | | | Even if we believe we have sufficient funds for our current or future operating plans, we may continue to seek additional capital if market conditions are favorable or in light of specific strategic considerations. Adequate additional financing may not be available to us on acceptable terms, or at all. If we are unable to obtain sufficient funding on a timely basis, in required amounts or on favorable terms, we may be required to significantly delay, reduce or eliminate one or more of our research or product development programs and/or commercialization efforts. We may also be unable to expand our operations or otherwise capitalize on business opportunities as desired. Any of these events could materially adversely affect our financial condition and business prospects. **Raising additional capital would cause dilution to our shareholders and may restrict our operations or require us to relinquish rights to our technologies or product candidates.** Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and/or debt financings and collaborations, licensing agreements or other strategic arrangements. We may seek additional capital through a combination of private and public equity offerings, at-the-market issuances, equity-linked and structured transactions, debt (straight, convertible, or otherwise) financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. For example, in December 2025, we entered into a securities purchase agreement with Mr. Lazar for sale of an aggregate of 700,000 shares of Preferred Stock, which are convertible into 111,000,000 shares of common stock. Additionally, we have consistently raised capital through private and public offerings over the last few years and may continue to raise additional capital as the need arises, which may result in further dilution to our shareholders. We may also issue in the future equity securities that provide for rights, preferences and privileges senior to those of our common stock. Given our need for cash and that equity issuances are the most common type of fundraising for similarly situated companies, the risk of dilution is particularly significant for our stockholders. Depending upon market liquidity at the time, additional sales of shares registered at any given time could cause the trading price of our common stock to decline. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us. **Risks Related to the Discovery and Development of Our Product Candidates** **We are dependent on the success of one or more of our current product candidates, and we cannot be certain that any of them will receive regulatory approval or be commercialized.** We have spent significant time, money and effort on the development of our lead product candidate, Decoy20. As a result, our business is largely dependent on the commencement of and success of clinical trials evaluating Decoy20 and our ability to complete the development of, obtain regulatory approval for, and successfully commercialize Decoy20 in a timely manner. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. The process to develop, obtain regulatory approval and commercialize Decoy20 is long, complex, costly and uncertain as to the outcome. To date, no clinical trials designed to provide substantial evidence of efficacy have been completed with any of our product candidates. All of our product candidates will require additional development, including clinical trials as well as further preclinical studies to evaluate their toxicology and optimize their formulation and regulatory approvals before they can be commercialized. Positive results obtained during early development do not necessarily mean later development will succeed or that regulatory approvals will be obtained. Our development efforts may not lead to commercial products, either because our product candidates fail to be safe and effective, or in the case of our product candidates regulated as biologics, safe, pure and potent, or because we have inadequate financial or other resources to advance our product candidates through the clinical development and approval processes. If any of our product candidates fail to demonstrate safety, purity, potency or efficacy at any time or during any phase of development, we would experience potentially significant delays in, or be required to abandon, development of the product candidate. | 29 | | | | | We do not anticipate that any of our current product candidates will be eligible to receive regulatory approval from the FDA, the EMA or comparable foreign authorities and begin commercialization for a number of years, if ever. Even if we ultimately receive regulatory approval for any of these product candidates, we or our potential future partners, if any, may be unable to commercialize them successfully for a variety of reasons. These include, for example, the availability of alternative treatments, lack of cost-effectiveness, the cost of manufacturing the product on a commercial scale and competition with other products. The success of our product candidates may also be limited by the prevalence and severity of any adverse side effects. If we fail to commercialize one or more of our current product candidates, we may be unable to generate sufficient revenues to attain or maintain profitability, and our financial condition may decline. **Clinical and preclinical development involves a lengthy and expensive process with an uncertain outcome. Any difficulties or delays in the commencement or completion, or the termination or suspension, of our current or planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue or adversely affect our commercial prospects.** Before obtaining approval from regulatory authorities for the commercialization of any of our product candidates, we must conduct extensive clinical trials to demonstrate the safety, purity, and potency, or efficacy of the product candidate in humans. Preclinical and clinical drug development is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the preclinical study or clinical trial process. Despite promising preclinical or clinical results, any product candidate can unexpectedly fail at any stage of preclinical or clinical development. The historical failure rate for product candidates in our industry is high. The results from preclinical studies or early clinical trials of a product candidate may not predict the results of later clinical trials of the product candidate, and interim results of a clinical trial are not necessarily indicative of final results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having progressed through preclinical studies and initial clinical trials. It is not uncommon to observe results in clinical trials that are unexpected based on preclinical studies and early clinical trials, and many product candidates fail in clinical trials despite very promising early results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies. Before we can initiate clinical trials for any product candidates, we must submit the results of preclinical studies to the FDA, the EMA or comparable foreign regulatory authorities along with other information, including information about product candidate chemistry, manufacturing and controls and our proposed clinical trial protocol, as part of an IND or similar regulatory submission. The FDA, the EMA or comparable foreign regulatory authorities may require us to conduct additional preclinical studies for any product candidate before it allows us to initiate clinical trials under any IND or similar regulatory submission, which may lead to delays and increase the costs of our preclinical development programs. Moreover, even if we commence clinical trials, issues may arise that could cause regulatory authorities to suspend or terminate such clinical trials. Any such delays in the commencement or completion of our ongoing and planned clinical trials for our product candidates could significantly affect our product development timelines and product development costs and harm our financial position. The commencement, data readouts and completion of clinical trials can be delayed for a number of reasons, including delays related to: | | inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials; | | | | | | | | failure in obtaining allowance or approval from regulatory authorities to commence a trial or reaching a consensus with regulatory authorities on trial design; | | | | | | | | the FDA, the EMA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials; | | | 30 | | | | | | | any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; | | | | | | | | delays in identifying, recruiting and training suitable clinical investigators; | | | | | | | | failure in obtaining approval from one or more institutional review boards (IRBs) or ethics committees at clinical trial sites; | | | | | | | | IRBs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial; | | | | | | | | changes or amendments to the clinical trial protocol; | | | | | | | | clinical sites deviating from the trial protocol or dropping out of a trial; | | | | | | | | failure by our CROs to perform in accordance with Good Clinical Practice (GCP) requirements or applicable regulatory rules and guidelines in other countries; | | | | | | | | failure in manufacturing sufficient quantities of our product candidates, or obtaining sufficient quantities of combination therapies, for use in clinical trials; | | | | | | | | subjects failing to enroll or remain in our trials at the rate we expect, or failing to return for post-treatment follow-up, including subjects failing to remain in our trials; | | | | | | | | patients choosing an alternative product for the indications for which we are developing our product candidates, or participating in competing clinical trials; | | | | | | | | lack of adequate funding to continue a clinical trial, or costs being greater than we anticipate; | | | | | | | | subjects experiencing severe or serious unexpected drug-related adverse effects; | | | | | | | | occurrence of serious adverse events in trials of the same class of agents conducted by other companies that could be considered similar to our product candidates; | | | | | | | | selection of clinical endpoints that require prolonged periods of clinical observation or extended analysis of the resulting data; | | | | | | | | transfer of manufacturing processes to larger-scale facilities operated by a contract manufacturing organization (CMO), delays or failure by our CMOs or us to make any necessary changes to such manufacturing process, or failure of our CMOs to produce clinical trial materials in accordance with current Good Manufacturing Practice (cGMP), regulations or other applicable requirements; and | | | | | | | | third parties being unwilling or unable to satisfy their contractual obligations to us in a timely manner. | | Clinical trials must be conducted in accordance with the FDA and other applicable regulatory authorities legal requirements, regulations and guidelines, and remain subject to oversight by these governmental agencies and ethics committees or IRBs at the medical institutions where such clinical trials are conducted. We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA, the EMA or comparable foreign regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or applicable clinical trial protocols, adverse findings from inspections of clinical trial sites by the FDA, the EMA or comparable foreign regulatory authorities, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to regulators or to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. | 31 | | | | | Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA, the EMA or comparable foreign regulatory authorities. The FDA, the EMA or comparable foreign regulatory authority may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA, the EMA or comparable foreign regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA, the EMA or comparable foreign regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates. In addition, the FDAs, the EMAs and other regulatory authorities policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation (CTR) which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the Clinical Trials Directive required a separate clinical trial application (CTA) to be submitted in each member state, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member states decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be governed by the CTR varies. Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the Clinical Trials Directive remain governed by said Directive until January 31, 2025. After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted. In addition, many of the factors that cause, or lead to, the termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Any resulting delays to our clinical trials could shorten any period during which we may have the exclusive right to commercialize our product candidates. In such cases, our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects. **We may need to incur significant research and development expenses and other operating expenses to advance our product candidates, which may make it difficult for us to attain profitability.** We have currently discontinued enrollment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. Accordingly, we expect to incur less research and development expenses compared to prior years. However, in the event we commence enrollment and dosing of patients again, we will need to expend substantial funds in research and development, including preclinical studies and clinical trials of our product candidates, and to manufacture and market any product candidates in the event they are approved for commercial sale. We also may need additional funding to develop or acquire complementary companies, technologies and assets, as well as for working capital requirements and other operating and general corporate purposes. Moreover, any increases in staffing will dramatically increase our costs in the near and long-term. Because the successful development of our product candidates is uncertain, we are unable to precisely estimate the actual funds we will require to develop and potentially commercialize them. In addition, we may not be able to generate sufficient revenue, even if we are able to commercialize any of our product candidates, to become profitable. | 32 | | | | | **** **We may expend our limited resources to pursue a limited number of research programs, product candidates and specific indications and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.** Due to our limited financial and managerial resources, we must focus on a limited number of research programs and product candidates and on specific indications. As such, we have been focused on the development of Decoy20. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications for anti-cancer and anti-viral immunotherapy that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. **Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an approved product, or result in other significant adverse implications on our business, financial condition and results of operations.** As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events associated with our product candidates use. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. For example, because the mechanism of action of our product candidates depends on stimulation of the immune system, there is the potential for over-stimulation or undesirable immune reactions. Undesirable side effects caused by our product candidates, whether used alone or in combination with other therapies, could cause us or regulatory authorities to interrupt, delay or halt clinical trials or the delay or denial of regulatory approval by the FDA, the EMA or comparable foreign regulatory authorities, or, if such product candidates are approved, result in a more restrictive label and other post-approval requirements. Any treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or could result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly. If our product candidates are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trial, when used alone or in combination with other approved products or product candidates, we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. Patients in any future clinical trials may suffer significant adverse events or other side effects not observed in our preclinical studies or previous clinical trials. Patients treated with our product candidates may also be undergoing surgical, radiation or chemotherapy treatments, which can cause side effects or adverse events that are unrelated to our product candidate, but may still impact the success of our clinical trials. The inclusion of critically ill patients in our clinical trials may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using or due to the gravity of such patients illnesses. If such significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to the clinical trials, or we may be required to abandon the trials or our development efforts of that product candidate altogether. We, the FDA, other comparable regulatory authorities or an IRB may suspend clinical trials of a product candidate at any time for various reasons, including a belief that subjects in such trials are being exposed to unacceptable health risks or adverse side effects. Even if the side effects do not preclude the product candidate from obtaining or maintaining regulatory approval, undesirable side effects may inhibit market acceptance due to tolerability concerns as compared to other available therapies. Any of these developments could materially harm our business, financial condition and prospects. | 33 | | | | | Additionally, if any of our product candidates receives regulatory approval, and we or others later identify undesirable side effects caused by such product, a number of potentially significant negative consequences could result. For example, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy (REMS), to ensure that the benefits of treatment with such product candidate outweigh the risks for each potential patient, which may include, among other things, a communication plan to health care practitioners, patient education, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry. We or our collaborators may also be required to adopt a REMS or engage in similar actions, such as patient education, certification of health care professionals or specific monitoring, if we or others later identify undesirable side effects caused by any product that we develop alone or with collaborators. Other potentially significant negative consequences associated with adverse events include: | | we may be required to suspend marketing of a product, or we may decide to remove such product from the marketplace; | | | | | | | | regulatory authorities may withdraw or change their approvals of a product; | | | | | | | | regulatory authorities may require additional warnings on the label or limit access of a product to selective specialized centers with additional safety reporting and with requirements that patients be geographically close to these centers for all or part of their treatment; | | | | | | | | we may be required to create a medication guide outlining the risks of a product for patients, or to conduct post-marketing studies; | | | | | | | | we may be required to change the way a product is administered; | | | | | | | | we could be subject to fines, injunctions, or the imposition of criminal or civil penalties, or be sued and held liable for harm caused to subjects or patients; and | | | | | | | | a product may become less competitive, and our reputation may suffer. | | Any of these events could diminish the usage or otherwise limit the commercial success of our product candidates and prevent us from achieving or maintaining market acceptance of our product candidates, if approved by the FDA or other regulatory authorities. **We may find it difficult to enroll patients in any future clinical trials. If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.** Patient enrollment is a significant factor in the timing of clinical trials, and the timing of our clinical trials depends, in part, on the speed at which we can recruit patients to participate in our trials, as well as completion of required follow-up periods. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials to such trials conclusion as required by the FDA or other comparable regulatory authorities. The conditions for which we currently plan to evaluate our product candidates are diseases with limited patient pools from which to draw for clinical trials. The eligibility criteria of our clinical trials, once established, may further limit the pool of available trial participants. Patient enrollment for any of our clinical trials may be affected by other factors, including: | | size and nature of the targeted patient population; | | | | | | | | severity of the disease or condition under investigation; | | | 34 | | | | | | | availability and efficacy of approved therapies for the disease or condition under investigation; | | | | | | | | patient eligibility criteria for the trial in question as defined in the protocol; | | | | | | | | perceived risks and benefits of the product candidate under study; | | | | | | | | clinicians and patients perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any products that may be approved for, or any product candidates under investigation for, the indications we are investigating; | | | | | | | | efforts to facilitate timely enrollment in clinical trials; | | | | | | | | patient referral practices of physicians; | | | | | | | | the ability to monitor patients adequately during and after treatment; | | | | | | | | proximity and availability of clinical trial sites for prospective patients; | | | | | | | | continued enrollment of prospective patients by clinical trial sites; and | | | | | | | | the risk that patients enrolled in clinical trials will drop out of such trials before completion. | | Additionally, other pharmaceutical companies targeting these same diseases are recruiting clinical trial patients from these patient populations, which may make it more difficult to fully enroll our clinical trials. We also rely on, and will continue to rely on, CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and preclinical studies. Though we have entered into agreements governing their services, we will have limited influence over their actual performance. Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates and jeopardize our ability to obtain regulatory approval for the sale of our product candidates. Furthermore, even if we are able to enroll a sufficient number of patients for our clinical trials, we may have difficulty maintaining enrollment of such patients in our clinical trials. We have currently discontinued enrolment of new patients to our Combination Study and do not have any current plans to initiate a new clinical trial. We do not have any current plans to initiate a new clinical trial. **Interim, topline and preliminary data from our clinical trials and preclinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.** From time to time, we may publicly disclose interim, topline, or preliminary data from our clinical trials and preclinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, topline, or preliminary results that we report may differ from future results of the same studies or trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline and preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the topline or preliminary data we previously published. As a result, topline and preliminary data should be viewed with caution until the final data is available. Interim data from clinical trials that we may complete are further subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data becomes available. Adverse differences between interim, topline, or preliminary data and final data could significantly harm our business prospects. Further, disclosure of such data by us or by our competitors could result in volatility in the price of our common stock. | 35 | | | | | Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition. **Our efforts to discover product candidates beyond our current product candidates may not succeed, and any product candidates we recommend for clinical development may not actually begin clinical trials.** The process of researching and developing new product candidates is expensive, time-consuming and unpredictable. Data from our current preclinical programs may not support the clinical development of our product candidates, and we may not identify any additional products suitable for recommendation for clinical development. Moreover, any product candidate we recommend for clinical development may not demonstrate, through preclinical studies, indications of safety and potential efficacy that would support advancement into clinical trials. Such findings would potentially impede our ability to maintain or expand our clinical development pipeline. Our ability to develop new product candidates and advance them into clinical development also depends upon our ability to fund our research and development operations, and we cannot be certain that additional funding will be available on acceptable terms, or at all. **The regulatory approval processes of the FDA, the EMA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.** The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our product candidates are subject to extensive regulation by the FDA in the U.S. and by comparable foreign regulatory authorities in foreign markets, such as the EMA in Europe. In the U.S., we are not permitted to market our product candidates in the U.S. until we receive regulatory approval of a Biologics License Application (BLA) or New Drug Application (NDA) from the FDA. The process of obtaining such regulatory approval is expensive, often takes many years following the commencement of clinical trials and can vary substantially based upon the type, complexity and novelty of the product candidates involved, as well as the target indications and patient population. Approval policies or regulations may change, and the FDA, EMA and comparable regulatory authorities have substantial discretion in the approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval of a product candidate is never guaranteed. Of the large number of drugs in development, only a small percentage successfully complete the FDA, EMA or comparable regulatory approval processes and are commercialized. Prior to obtaining approval to commercialize a product candidate in the U.S. or abroad, we must demonstrate with substantial evidence from adequate and well-controlled clinical trials, and to the satisfaction of the FDA, EMA or comparable foreign regulatory authorities, that such product candidates are safe and effective for their intended uses, and in the case of biological products, that such product candidates are safe, pure and potent. Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe available nonclinical or clinical data support the safety purity, potency or efficacy of our product candidates, such data may not be sufficient to obtain approval from the FDA and comparable foreign regulatory authorities. The FDA, EMA or comparable foreign regulatory authorities, as the case may be, may also require us to conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or may object to elements of our clinical development program. | 36 | | | | | The FDA, EMA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including: | | such authorities may disagree with the design or execution of our clinical trials; | | | | | | | | negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA, EMA or comparable foreign regulatory agencies for approval; | | | | | | | | serious and unexpected drug-related side effects may be experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; | | | | | | | | the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; | | | | | | | | such authorities may not accept clinical data from trials that are conducted at clinical facilities or in countries where the standard of care is potentially different from that of their own country; | | | | | | | | we may be unable to demonstrate that a product candidates clinical and other benefits outweigh its safety risks; | | | | | | | | such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; | | | | | | | | such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of a BLA, NDA or other submission or to obtain regulatory approval in the U.S. or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; | | | | | | | | such authorities may disagree with us regarding the formulation, labeling and/or the product specifications of our product candidates; | | | | | | | | approval may be granted only for indications that are significantly more limited than those sought by us, and/or may include significant restrictions on distribution and use; | | | | | | | | such authorities may find deficiencies in the manufacturing processes or facilities of the third-party manufacturers with which we contract for clinical and commercial supplies; or | | | | | | | | such authorities may not accept a submission due to, among other reasons, the content or formatting of the submission. | | With respect to foreign markets, approval procedures vary among countries and, in addition to the foregoing risks, may involve additional product testing, administrative review periods and agreements with pricing authorities. Even if we eventually complete clinical trials and receive approval of a BLA, NDA or comparable foreign marketing application for our product candidates, the FDA or comparable foreign regulatory authority may grant approval contingent on the performance of costly additional clinical trials and/or the implementation of a REMS, which may be required because the FDA believes it is necessary to ensure safe use of the product after approval. Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would materially adversely impact our business and prospects. **Even if we obtain FDA approval for any of our product candidates in the United States, we may never obtain approval for or commercialize such candidates in any other jurisdiction, which would limit our ability to realize their full market potential.** In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure approval by regulatory authorities in other countries or jurisdictions. However, the failure to obtain approval in one jurisdiction may negatively impact our ability to obtain approval elsewhere. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. | 37 | | | | | Approval processes vary among countries and can involve additional product testing and validation, as well as additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and increased costs for us and require additional preclinical studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. We do not have any product candidates approved for sale in any jurisdiction, including in international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of any product we develop will be unrealized. **Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, reviewed, approved or commercialized in a timely manner or at all, which could negatively impact our business.** The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDAs or foreign regulatory authorities ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDAs or foreign regulatory authorities ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies, such as the EMA following its relocation to Amsterdam and resulting staff changes, may also slow the time necessary for new drugs, and biologics or modifications to approved drugs and biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. Separately, in response to the global COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points. Even though the FDA has since resumed standard inspection operations, any resurgence of the virus or emergence of new variants may lead to further inspectional or administrative delays. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business. **Even if we receive regulatory approval for any product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expenses.** Any regulatory approvals that we may receive for our product candidates will require the submission of reports to regulatory authorities and surveillance to monitor the safety and efficacy of the product candidate, may contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements. For example, the FDA may require a REMS in order to approve our product candidates, which could entail requirements for a medication guide, physician training and communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or foreign regulatory authorities approve our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as on-going compliance with cGMPs and GCP for any clinical trials that we may conduct. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA and other regulatory authorities for compliance with cGMP regulations and standards. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facilities where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. In addition, failure to comply with FDA and other comparable foreign regulatory requirements may subject our company to administrative or judicially imposed sanctions, including: | | restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory product recalls; | | | 38 | | | | | | | restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials; | | | | fines, restitutions, disgorgement of profits or revenues, warning letters, untitled letters or holds on clinical trials; | | | | | | | | refusal by the FDA to approve pending applications or supplements to approved applications submitted by us or suspension or revocation of approvals; | | | | | | | | product seizure or detention, or refusal to permit the import or export of our products; and | | | | | | | | injunctions or the imposition of civil or criminal penalties. | | The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity. The FDAs and other regulatory authorities policies may change and additional government regulations may be promulgated that could prevent, limit or delay marketing authorization of any product candidates we develop. We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitability. **The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.** The FDA strictly regulates marketing, labeling, advertising and promotion of prescription drugs. These regulations include standards and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and off-label promotion. Any regulatory approval that the FDA grants is limited to those specific diseases and indications for which a product is deemed to be safe and effective by FDA. While physicians in the United States may choose, and are generally permitted, to prescribe drugs for uses that are not described in the products labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, our ability to promote any products will be narrowly limited to those indications that are specifically approved by the FDA. If we are found to have promoted such off-label uses, we may become subject to significant liability. The U.S. federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of any product candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition. **Risks Related to Our Dependence on Third Parties** **The commercial success of our product candidates depends upon their market acceptance among physicians, patients, healthcare payors and the medical community.** Even if our product candidates obtain regulatory approval, our products, if any, may not gain market acceptance among physicians, patients, healthcare payors and the medical community. The degree of market acceptance of any of our approved product candidates will depend on a number of factors, including: | | the effectiveness of our approved product candidates as compared to currently available products; | | | 39 | | | | | | | patient willingness to adopt our approved product candidates in place of current therapies; | | | | | | | | our ability to provide acceptable evidence of safety and efficacy; | | | | | | | | relative convenience and ease of administration; | | | | | | | | the prevalence and severity of any adverse side effects; | | | | | | | | restrictions on use in combination with other products; | | | | | | | | availability of alternative treatments; | | | | | | | | pricing and cost-effectiveness assuming either competitive or potential premium pricing requirements, based on the profile of our product candidates and target markets; | | | | | | | | effectiveness of our or our partners sales and marketing strategy; | | | | | | | | our ability to obtain sufficient third-party coverage or reimbursement; and | | | | | | | | potential product liability claims. | | In addition, the potential market opportunity for our product candidates is difficult to precisely estimate. Our estimates of the potential market opportunity for our product candidates include several key assumptions based on our industry knowledge, industry publications, third-party research reports and other surveys. Independent sources have not verified all of our assumptions. If any of these assumptions prove to be inaccurate, then the actual market for our product candidates could be smaller than our estimates of our potential market opportunity. If the actual market for our product candidates is smaller than we expect, our product revenues may be limited, it may be harder than expected to raise funds, and it may be more difficult for us to achieve or maintain profitability. If we fail to achieve market acceptance of our product candidates in the U.S. and abroad, our revenue will be limited and it will be more difficult to achieve profitability. **We rely on third parties to conduct our preclinical studies and clinical trials and perform other tasks. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business, financial condition and results of operations could be substantially harmed.** We rely upon third-party CROs, medical institutions, clinical investigators and contract laboratories to monitor and manage data for our ongoing preclinical and clinical programs. These CROs, investigators and other third parties play a significant role in the conduct and timing of these trials and subsequent collection and analysis of data. Though we expect to carefully manage our relationships with such CROs, investigators and other third parties, there can be no assurance that we will not encounter challenges or delays in the future, or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects. Further, while we have and will have agreements governing the activities of our third-party contractors, we have limited influence over their actual performance. Nevertheless, we maintain responsibility for ensuring that each of our clinical trials and preclinical studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on these third parties does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with requirements for cGMP, or similar foreign requirements, GCP, and good laboratory practice (GLP), which are a collection of laws and regulations enforced by the FDA, the EMA and comparable foreign authorities for all of our product candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of preclinical study and clinical trial sponsors, principal investigators, preclinical study and clinical trial sites, and other contractors. If we or any of our CROs or vendors fail to comply with applicable regulations, the data generated in our preclinical studies and clinical trials may be deemed unreliable, and the FDA, the EMA or comparable foreign authorities may require us to perform additional preclinical studies and clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with products produced consistent with cGMP regulations, or similar foreign requirements. Our failure to comply with these regulations may require it to repeat clinical trials, which would delay the development and regulatory approval processes. | 40 | | | | | We may not be able to enter into arrangements with CROs on commercially reasonable terms, or at all. In addition, our CROs will not be our employees, and except for remedies available to us under our agreements with such CROs, we will not be able to control whether or not they devote sufficient time and resources to our ongoing preclinical and clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements, or for other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result, our business, financial condition and results of operations and the commercial prospects for our product candidates could be materially and adversely affected, our costs could increase, and our ability to generate revenue could be delayed. In addition, principal investigators for our clinical trials may be asked to serve as scientific advisors or consultants to us from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any BLA or NDA we submit. Any such delay or rejection could prevent us from commercializing our product candidates. In addition, our CROs have the right to terminate their agreements with us in the event of an uncured material breach and under other specified circumstances. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties on commercially reasonable terms or at all. Switching or adding additional CROs, medical institutions, clinical investigators or contract laboratories involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work replacing a previous CRO. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. There can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse effect on our business, financial condition or results of operations. **We currently rely on third parties for the manufacture of our product candidates during clinical development, and expect to continue to rely on third parties for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates, or such quantities at an acceptable cost, which could delay, prevent or impair our development or potential commercialization efforts.** We do not own or operate manufacturing facilities and have no current plans to develop our own clinical or commercial-scale manufacturing capabilities. We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates, and related raw materials for clinical development, as well as for commercial manufacture if any of our product candidates receives regulatory approval. The facilities used by our third-party manufacturers must be approved for the manufacture of our product candidates by the FDA, EMA, or any comparable foreign regulatory authority, pursuant to inspections that will be conducted after we submit an NDA or BLA to the FDA, or submit a comparable marketing application to a foreign regulatory authority. We do not control the manufacturing process of, and are completely dependent on, third-party manufacturers for compliance with cGMP requirements for manufacture of our product candidates. If these third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or any comparable foreign regulatory authority, they will not be able to secure and/or maintain regulatory approval for the use of their manufacturing facilities. In addition, we have no control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA, EMA or any comparable foreign regulatory authority does not approve these facilities for the manufacture our product candidates, or if such authorities withdraw any such approval in the future, we may be required to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our financial position. | 41 | | | | | Our or a third partys failure to execute on our manufacturing requirements on commercially reasonable terms and in compliance with cGMP or other regulatory requirements could adversely affect our business in a number of ways, including: | | an inability to initiate or complete clinical trials of our product candidates in a timely manner; | | | | | | | | delay in submitting regulatory applications, or receiving regulatory approvals, for our product candidates; | | | | | | | | subjecting third-party manufacturing facilities to additional inspections by regulatory authorities; | | | | | | | | requirements to cease development or to recall batches of our product candidates; and | | | | | | | | in the event of approval to market and commercialize any product candidate, an inability to meet commercial demands. | | In addition, we do not have any long-term commitments or supply agreements with any third-party manufacturers. We may be unable to establish any long-term supply agreements with third-party manufacturers or to do so on acceptable terms, which increases the risk of failing to timely obtain sufficient quantities of our product candidates or such quantities at an acceptable cost. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: | | failure of third-party manufacturers to comply with regulatory requirements and maintain quality assurance; | | | | | | | | breach of the manufacturing agreement by the third party; | | | | | | | | failure to manufacture our product candidates according to our specifications; | | | | | | | | failure to manufacture our product according to our schedule or at all; | | | | | | | | misappropriation of our proprietary information, including our trade secrets and know-how; and | | | | | | | | termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. | | Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval, and any related remedial measures may be costly or time consuming to implement. We do not currently have arrangements in place for redundant supply or a second source for all required raw materials used in the manufacture of our product candidates. If our existing or future third-party manufacturers cannot perform as agreed, we may be required to replace such manufacturers and we may be unable to replace them on a timely basis or at all, which would have a material adverse impact on our financial position. **Any clinical supply or collaboration arrangement that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our current and potential future product candidates.** We may seek clinical supply or collaboration arrangements with biopharmaceutical companies for the development or commercialization of our current and potential future product candidates. | 42 | | | | | To the extent that we decide to enter into collaboration agreements, we will face significant competition in seeking appropriate collaborators. Moreover, collaboration arrangements are complex and time consuming to negotiate, execute and implement. We may not be successful in our efforts to establish and implement collaborations or other alternative arrangements should we choose to enter into such arrangements, and the terms of the arrangements may not be favorable to us. If and when we collaborate with a third party for development and commercialization of a product candidate, we can expect to relinquish some or all of the control over the future success of that product candidate to the third party. The success of our clinical supply and collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a clinical supply or collaboration arrangement can lead to delays in developing or commercializing the applicable product candidate and can be difficult to resolve in a mutually beneficial manner. In some cases, collaborations with biopharmaceutical companies and other third parties are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect our business, financial condition and results of operations. **If we are unable to develop our own commercial organization or enter into agreements with third parties to sell and market our product candidates, we may be unable to generate significant revenues.** We do not have a sales and marketing organization, and we have no experience as a company in the sales, marketing and distribution of pharmaceutical products. If any of our product candidates are ever approved for commercialization, we may be required to develop our sales, marketing and distribution capabilities, or make arrangements with a third party to perform sales and marketing services. Developing a sales force for any product resulting from any of our product candidates is expensive and time consuming and could delay any product launch. We may be unable to establish and manage an effective sales force in a timely or cost-effective manner, if at all, and any sales force we do establish may not be capable of generating sufficient demand for our product candidates. To the extent that we enter into arrangements with collaborators or other third parties to perform sales and marketing services, our product revenues are likely to be lower than if we marketed and sold our product candidates independently. If we are unable to establish adequate sales and marketing capabilities, independently or with others, we may not be able to generate significant revenues and may not become profitable. **** **Risks Related to Commercialization** **The successful commercialization of Decoy20 or any future product candidates, if approved, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or maintain coverage and adequate reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue.** The availability of coverage and the adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as Decoy20 and any future product candidates, if approved. Our ability to achieve coverage and acceptable levels of reimbursement for our products by third-party payors will have an effect on our ability to successfully commercialize those products. Accordingly, we will need to successfully implement a coverage and reimbursement strategy for any approved product candidate. Even if we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. If we participate in the Medicaid Drug Rebate Program or other governmental pricing programs, in certain circumstances, our products would be subject to ceiling prices set by such programs, which could reduce the revenue we may generate from any such products. Participation in such programs would also expose us to the risk of significant civil monetary penalties, sanctions and fines should we be found to be in violation of any applicable obligations thereunder. | 43 | | | | | For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. We cannot be sure that coverage and reimbursement in the United States, the European Union or elsewhere will be available, or at an acceptable level, for any product that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future. Third-party payors increasingly are challenging prices charged for biopharmaceutical products and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a third-party payor may consider our products as substitutable and only offer to reimburse patients for the less expensive product. Even if we are successful in demonstrating improved efficacy or improved convenience of administration with our products, pricing of existing drugs may limit the amount we will be able to charge for our products. These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our products and may not be able to obtain a satisfactory financial return on products that we may develop. There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers who use such therapies. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for Decoy20 and any future product candidates. Obtaining and maintaining reimbursement status is time-consuming, costly and uncertain. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs. However, no uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently and, in some cases, at short notice, and we believe that changes in these rules and regulations are likely. Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe and other countries has and will continue to put pressure on the pricing and usage of our products candidates, if approved in these jurisdictions. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our products. Accordingly, in markets outside the United States, if any, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our products. We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, and prescription drugs, surgical procedures and other treatments in particular, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. | 44 | | | | | **** **Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to obtain marketing approval for and commercialize Decoy20 and any future product candidates and may affect the prices we may set.** In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain marketing approval. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. By way of example, in March 2010, the ACA was enacted in the United States. The ACA established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; extended manufacturers Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; expanded eligibility criteria for Medicaid programs; expanded the entities eligible for discounts under the 340B drug pricing program; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and establishes a Center for Medicare & Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending. Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the ACA, and on June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Courts decision, President Biden had issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how the healthcare reform measures will impact our business. In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminate the statutory cap on the Medicaid drug rebate, beginning January 1, 2024 at 100% of a drugs AMP. Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs. Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient assistance programs, and reform government program reimbursement methodologies for products. Most recently, the Inflation Reduction Act of 2022, or IRA, included a number of significant drug pricing reforms, which include the establishment of a drug price negotiation program within the U.S. Department of Health and Human Services, or HHS (beginning in 2026) that requires manufacturers to charge a negotiated maximum fair price for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers under Medicare Parts B and D to penalize price increases that outpace inflation (first due in 2023), and a redesign of the Part D benefit, as part of which manufacturers are required to provide discounts on Part D drugs (beginning in 2025). The IRA permits the HHS Secretary to implement many of these provisions through guidance, as opposed to regulation, for the initial years. On August 29, 2023, HHS announced the list of the first ten drug that will be subject to price negotiations, although the drug price negotiation program is currently subject to legal challenges. For that and other reasons, it is currently unclear how the IRA will be effectuated. Additional drug pricing proposals could appear in future legislation. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for Decoy20 and any future product candidates, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects. | 45 | | | | | We expect that these new laws and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize Decoy20 and any future product candidates, if approved. **Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidates that we may develop.** We will face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially sell any product candidates that we may develop. If we cannot successfully defend ourselves against claims that our product candidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in: | | decreased demand for any product candidates that we may develop; | | | | | | | | injury to our reputation and significant negative media attention; | | | | | | | | regulatory investigations that could require costly recalls or product modifications; | | | | | | | | withdrawal of clinical trial participants; | | | | | | | | significant costs to defend the related litigation; | | | | | | | | substantial monetary awards to trial participants or patients; | | | | | | | | loss of potential revenue; | | | | | | | | the diversion of managements attention away from managing our business; and | | | | | | | | the inability to commercialize any product candidates that we may develop. | | Although we maintain product liability insurance coverage, it may not be adequate to cover all liabilities that we may incur and is subject to deductibles and coverage limitations. We anticipate that we will need to increase our insurance coverage when and if we successfully commercialize any product candidate. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. If we are unable to obtain insurance at acceptable cost or otherwise protect against potential product liability claims, we will be exposed to significant liabilities, which may materially and adversely affect our business and financial position. These liabilities could prevent or interfere with our commercialization efforts. **If we commence manufacturing of our products, we will be subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit the supply of our product candidates.** The process of manufacturing our product candidates is complex, highly regulated, and subject to several risks. For example, the process of manufacturing our product candidates is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes for any of our product candidates could result in reduced production yields, product defects, and other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. In addition, the manufacturing facilities in which our product candidates are made could be adversely affected by equipment failures, labor shortages, natural disasters, power failures and numerous other factors. | 46 | | | | | In addition, any adverse developments affecting manufacturing operations for our product candidates may result in shipment delays, inventory shortages, lot failures, withdrawals or recalls, or other interruptions in the supply of our product candidates. We also may need to take inventory write-offs and incur other charges and expenses for product candidates that fail to meet specifications, undertake costly remediation efforts, or seek costlier manufacturing alternatives. **Risks Related to Competition and Managing Growth** **If our competitors have product candidates that are approved faster, marketed more effectively, are better tolerated, have a more favorable safety profile or are demonstrated to be more effective than our product candidates, our commercial opportunity may be adversely affected.** The industry in which we operate is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our technology, knowledge, experience and scientific resources provide it with competitive advantages, we face potential competition from many different sources, including commercial biotechnology enterprises, academic institutions, government agencies and private and public research institutions. Any product candidates that we successfully develop and commercialize will compete with existing immunotherapies and new immunotherapies that may become available in the future. Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical studies, clinical trials, regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our competitors may succeed in developing technologies and therapies that are more effective, better tolerated or less costly than any which we are developing, or that would render our product candidates obsolete and noncompetitive. Even if we obtain regulatory approval for any of our product candidates, our competitors may succeed in obtaining regulatory approvals for their products earlier than we do. We will also face competition from these third parties in recruiting and retaining qualified scientific and management personnel, in establishing clinical trial sites and patient registration for clinical trials, and in acquiring and in-licensing technologies and products complementary to our programs or advantageous to our business. The key competitive factors affecting the success of each of our product candidates, if approved, are likely to be its efficacy, safety, tolerability, frequency and route of administration, convenience and price, the level of branded and generic competition, market acceptance by physicians and patients, and the availability of coverage and reimbursement from government and other third-party payors. **Any product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.** The Patient Protection and Affordable Care Act, signed into law on March 23, 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsors own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product. | 47 | | | | | We believe that any of our future product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to Congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, could be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products will depend on a number of marketplace and regulatory factors that are still developing. **** **We will need to increase the size of our organization and may not successfully manage our growth.** We are an early clinical-stage biotechnology company with a small number of employees, and our management systems currently in place are not likely to be adequate to support our future growth plans. Our ability to grow and to manage our growth effectively will require us to hire, train, retain, manage and motivate additional employees and to implement and improve our operational, financial and management systems. These demands also may require the hiring of additional senior management personnel or the development of additional expertise by our senior management personnel. Hiring a significant number of additional employees, particularly those at the management level, would increase our expenses significantly. Moreover, if we fail to expand and enhance our operational, financial and management systems in conjunction with our potential future growth, it could have a material adverse effect on our business, financial condition and results of operations. **Risks Related to Our Intellectual Property** **We may not be able to adequately protect our proprietary or licensed technology in the marketplace.** We depend on our ability to protect our proprietary technology and products, or those that we may license. We intend to rely on trade secret, patent, copyright and trademark laws, confidentiality, license, and other agreements with employees and third parties to protect our intellectual property. Our success depends in large part on our ability and any licensors or licensees ability to obtain and maintain patent protection in the U.S. and other countries with respect to our proprietary or licensed technology and products. We cannot be certain that patent enforcement activities by future licensors will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. We also cannot be certain that future licensors will allocate sufficient resources or prioritize their or our enforcement of such patents. Even if we are not a party to these legal actions, an adverse outcome could prevent us from licensing intellectual property that we may need to operate our business, which would have a material adverse effect on our business, financial condition and results of operations. | 48 | | | | | We believe we will be able to obtain, through prosecution of patent applications covering our owned technology, adequate patent protection for our proprietary technology. If we are compelled to spend significant time and money protecting or enforcing our patents and future patents that we may own, designing around patents held by others or licensing or acquiring, potentially for large fees, patents or other proprietary rights held by others, our business, financial condition and results of operations may be materially and adversely affected. If we are unable to effectively protect the intellectual property that we own or in-license, other companies may be able to offer the same or similar products for sale, which could materially adversely affect our business, financial condition and results of operations. The patents of others from whom we may license technology, and any future patents we may own, may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing the same or similar products or limit the length of term of patent protection that we may have for our products. **We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.** We may be unable to acquire or in-license any compositions, methods of use, processes or other intellectual property rights from third parties that we identify as necessary for our current or future product candidates. We may face competition with regard to acquiring and in-licensing third-party intellectual property rights, including from a number of more established companies. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license intellectual property rights to us. We also may be unable to acquire or in- license third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. We may enter into collaboration agreements with U.S. and foreign academic institutions to accelerate development of our current or future preclinical product candidates. Typically, these agreements include an option for the company to negotiate a license to the institutions intellectual property rights resulting from the collaboration. Even with such an option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If we are unable to license rights from a collaborating institution, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our desired program. If we are unable to successfully obtain required third-party intellectual property rights or maintain our existing intellectual property rights, we may need to abandon development of the related program and our business, financial condition and results of operations could be materially and adversely affected. **Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection for licensed patents, pending patent applications and potential future patent applications and patents could be reduced or eliminated for non-compliance with these requirements.** Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will be due to be paid to the United States Patent and Trademark Office USPTO and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the applicable patent and/or patent application. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If this occurs with respect to our in-licensed patents or patent applications we may file in the future, our competitors might be able to use our technologies, which would have a material adverse effect on our business, financial condition and results of operations. | 49 | | | | | The patent positions of products are often complex and uncertain. The breadth of claims allowed in patents in the U.S. and many jurisdictions outside of the U.S. may not be consistent. Changes in either the patent laws or interpretations of patent laws in the U.S. and other countries may diminish the value of our licensed or owned intellectual property or create uncertainty. In addition, publication of information related to our current product candidates and potential products may prevent us from obtaining or enforcing patents relating to these product candidates and potential products, including without limitation composition-of-matter patents, which are generally believed to offer the strongest patent protection. Patents that we may own now or may own or license in the future do not necessarily ensure the protection of our licensed or owned intellectual property for a number of reasons, including, without limitation, the following: | | the patents may not be broad or strong enough to prevent competition from other products that are identical or similar to our product candidates; | | | | | | | | there can be no assurance that the term of a patent can be extended under the provisions of patent term extensions afforded by U.S. law or similar provisions in foreign countries, where available; | | | | | | | | the issued patents and patents that we may own now or may obtain or license in the future may not prevent generic or biosimilar entry into the market for our product candidates; | | | | | | | | we, or third parties from whom we in-license or may license patents, may be required to disclaim part of the term of one or more patents; | | | | | | | | there may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim; | | | | | | | | there may be prior art of which we are aware, which we do not believe affects the validity or enforceability of a patent claim, but which, nonetheless, ultimately may be found to affect the validity or enforceability of a patent claim; | | | | | | | | there may be other patents issued to others that will affect our freedom to operate; | | | | | | | | if the patents are challenged, a court could determine that they are invalid or unenforceable; | | | | | | | | there might be a significant change in the law that governs patentability, validity and infringement of our licensed patents or any future patents we may own that adversely affects the scope of our patent rights; | | | | | | | | a court could determine that a competitors technology or product does not infringe our patents or any future patents we may own; and | | | | | | | | the patents could irretrievably lapse due to failure to pay fees or otherwise comply with regulations or could be subject to compulsory licensing. If we encounter delays in our development or clinical trials, the period of time during which we could market our potential products under patent protection would be reduced. | | Our competitors may be able to circumvent patents or future patents that we may own by developing similar or alternative technologies or products in a non-infringing manner. Our competitors may seek to market generic or biosimilar versions of any approved products by submitting abbreviated new applications or biosimilar biological product applications to the FDA in which our competitors claim that our licensed patents or any future patents we may own are invalid, unenforceable or not infringed. Alternatively, our competitors may seek approval to market their own products similar to or otherwise competitive with our products. In these circumstances, we may need to defend or assert our patents or any future patents we may own, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our licensed patents or any future patents we may own invalid or unenforceable. We may also fail to identify patentable aspects of our research and development before it is too late to obtain patent protection. Even if we own or in-license valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. | 50 | | | | | The issuance of a patent is not conclusive as to its inventorship, scope, ownership, priority, validity or enforceability. In this regard, third parties may challenge our patents or any future patents we may own in the courts or patent offices in the U.S. and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and potential products. In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. **Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.** Patents have a limited lifespan, and the protection patents afford is limited. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Even if patents covering our product candidates are obtained, once the patent life has expired for patents covering a product or product candidate, we may be open to competition from competitive products and services. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and prevent us from commercializing, or increase the costs of commercializing, our products. Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our current or potential future product candidates infringe. There also could be patents that we believe we do not infringe upon, but that we may ultimately be found to infringe upon. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our product candidates or potential products infringe. For example, pending applications may exist that claim or can be amended to claim subject matter that our product candidates or potential products infringe. Competitors may file continuing patent applications claiming priority to already issued patents in the form of continuation, divisional, or continuation-in-part applications, in order to maintain the pendency of a patent family and attempt to cover our product candidates. Third parties may assert that we are employing their proprietary technology without authorization and may sue us for patent or other intellectual property infringement. These lawsuits are costly and could adversely affect our business, financial condition and results of operations and divert the attention of managerial and scientific personnel. If we are sued for patent infringement, we would need to demonstrate that our product candidates, potential products or methods either do not infringe the claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving invalidity is difficult. For example, in the U.S., proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us. In addition, we may not have sufficient resources to bring these actions to a successful conclusion. If a court holds that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless it acquires or obtains a license under the applicable patents or until the patents expire. We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, in any such proceeding or litigation, we could be found liable for monetary damages, including treble damages and attorneys fees, if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially and adversely affect our business, financial condition and results of operations. Any claims by third parties that we have misappropriated their confidential information or trade secrets could have a similar material and adverse effect on our business, financial condition and results of operations. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. | 51 | | | | | **** **Any claims or lawsuits relating to infringement of intellectual property rights brought by or against us will be costly and time consuming and may adversely affect our business, financial condition and results of operations.** We may be required to initiate litigation to enforce or defend our licensed and owned intellectual property. Lawsuits to protect our intellectual property rights can be very time consuming and costly. There is a substantial amount of litigation involving patent and other intellectual property rights in the biopharmaceutical industry generally. Such litigation or proceedings could substantially increase our operating expenses and reduce the resources available for development activities or any future sales, marketing or distribution activities. In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are resolved. Further, any claims we assert against a perceived infringer could provoke these parties to assert counterclaims against us alleging that we have infringed their patents. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. In addition, our patents and patent applications, and patents and patent applications that we may apply for, own or license in the future, could face other challenges, such as interference proceedings, opposition proceedings, re-examination proceedings and other forms of post-grant review. Any of these challenges, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of our patents and patent applications and patents and patent applications that we may apply for, own or license in the future subject to challenge. Any of these challenges, regardless of their success, would likely be time consuming and expensive to defend and resolve and would divert our management and scientific personnels time and attention. **Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.** As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involves both technological and legal complexity and is costly, time-consuming and inherently uncertain. For example, the U.S. previously enacted and is currently implementing wide-ranging patent reform legislation. Specifically, on September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law and included a number of significant changes to U.S. patent law, and many of the provisions became effective in March 2013. However, it may take the courts years to interpret the provisions of the Leahy-Smith Act, and the implementation of the statute could increase the uncertainties and costs surrounding the prosecution of our licensed and future patent applications and the enforcement or defense of our licensed and future patents, all of which could have a material adverse effect on our business, financial condition and results of operations. In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we might obtain in the future. | 52 | | | | | **** **We may not be able to protect our intellectual property rights throughout the world.** Filing, prosecuting and defending patents on product candidates throughout the world could be prohibitively expensive. Competitors may use our licensed and owned technologies in jurisdictions where we have not licensed or obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain or license patent protection, but where patent enforcement is not as strong as that in the U.S. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our licensed patents and future patents we may own, or marketing of competing products in violation of our proprietary rights generally. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, we may encounter significant problems in protecting and defending our licensed and owned intellectual property both in the U.S. and abroad. Proceedings to enforce our future patent rights, if any, in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. **We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.** In order to protect our proprietary technology and processes, we rely in part on confidentiality agreements with our corporate partners, employees, consultants, manufacturers, outside scientific collaborators and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of our confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information. Failure to obtain or maintain trade secret protection could adversely affect our competitive business position. **We may be subject to claims challenging the inventorship of our patents, any future patents we may own, and other intellectual property.** Although we are not currently experiencing any claims challenging the inventorship of our patents or our owned intellectual property, we may in the future be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other owned intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business, financial condition and results of operations. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. **Risks Related to Healthcare Laws and Other Legal Compliance Matters** **We are subject to various U.S. federal, state and foreign healthcare laws and regulations, which could increase compliance costs, and our failure to comply with these laws and regulations could harm our results of operations and financial condition.** Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers expose us to broadly applicable foreign, federal and state fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute any products for which we obtain marketing approval. Such laws include: | | the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or providing any remuneration (including any kickback, bribe or certain rebates), directly or indirectly, overtly or covertly, in cash or in kind, in return for, either the referral of an individual or the purchase, lease, or order, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation; | | | 53 | | | | | | | the federal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making or causing to be made a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; | | | | | | | | the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services. Similar to the federal Anti- Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; | | | | the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Childrens Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (CMS), information related to payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives), and teaching hospitals and other healthcare providers, as well as ownership and investment interests held by such healthcare professionals and their immediate family members; and | | | | | | | | analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; some state laws require biotechnology companies to comply with the biotechnology industrys voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; some state laws that require biotechnology companies to report information on the pricing of certain drug products; and some state and local laws that require the registration or pharmaceutical sales representatives. | | Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare and privacy laws and regulations will involve ongoing substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government-funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations. Defending against any such actions can be costly and time-consuming and may require significant financial and personnel resources. | 54 | | | | | Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business are found not to be in compliance with applicable laws or regulations, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs. **Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.** The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention, and security of personal information. Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business. This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. Each of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues. If we fail to comply with applicable laws and regulations, we may face government investigations and/or enforcement actions, fines, civil or criminal penalties, private litigation or adverse publicity that could adversely affect our business, financial condition and results of operation. For example, we may be subject to criminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner that is not authorized or permitted by the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder or applicable state laws. **Violations of or liabilities under environmental, health and safety laws and regulations could subject us to fines, penalties or other costs that could have a material adverse effect on the success of our business.** We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures, the handling, use, storage, treatment and disposal of hazardous materials and wastes and the cleanup of contaminated sites. Our operations involve the use of potentially hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We could incur substantial costs as a result of violations of or liabilities under environmental requirements in connection with our operations or property, including fines, penalties and other sanctions, investigation and cleanup costs and third-party claims. Although we generally contract with third parties for the disposal of hazardous materials and wastes from our operations, we cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of changes to applicable laws and regulations and cannot be certain of our future compliance. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Although we maintain workers compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials. | 55 | | | | | **** **Other Risks Related to Our Business** **Our business and operations may suffer in the event of information technology system failures, cyberattacks or deficiencies in our cybersecurity.** We collect and maintain information in digital form that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information of customers and our employees and contractors. It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. Our information technology systems and those of our third-party service providers, strategic partners and other contractors or consultants are vulnerable to attack and damage or interruption from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization. We have also outsourced elements of our information technology infrastructure, and as a result a number of third-party vendors may or could have access to our confidential information. Moreover, we have not instituted strict processes to oversee and identify such risks from cybersecurity threats associated with our use of any third-party service provider so we rely on risk management strategies implemented by them and have no assurance that they follow best practices or are robust in nature. Further, attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. As a result of the changes brought about by the COVID-19 pandemic, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. We and certain of our service providers are from time to time subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions. If a security breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws. We could also incur liability, including litigation exposure, penalties and fines, and we could become the subject of regulatory action or investigation. Our competitive position could be harmed and the further development and commercialization of our products and services could be delayed. We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. While we have implemented a cybersecurity risk management program, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. **Risks Related to Our Common Stock** **If we fail to comply with the continued listing requirements of the Nasdaq Capital Market, 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.** Nasdaq has established certain standards for the continued listing of a security on the Nasdaq Capital Market. The standards for continued listing include, among other things, that the minimum bid price for the listed securities not fall below $1.00 per share for a period of 30 consecutive trading days and that we maintain a minimum of $2,500,000 in stockholders equity. | 56 | | | | | We have in the past fallen out of compliance with the minimum bid price requirement although we have subsequently been able to regain compliance. No assurance can be given that we will be able to regain compliance with the Rule. Failure to meet applicable Nasdaq continued listing standards could result in a delisting of our common stock. A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. 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, employees and fewer business development opportunities. **Risks related to Nasdaqs proposed rule regarding minimum market value of listed securities.** In January 2026, Nasdaq proposed to strengthen its continued listing standards by requiring all companies listed on the Nasdaq Global or Capital Markets to maintain a minimum Market Value of Listed Securities (MVLS) of at least $5 million. If a companys MVLS falls below this threshold for 30 consecutive business days, Nasdaq will immediately suspend trading and delist the companys securities, with no compliance or cure period. While companies may request a hearing to challenge a delisting determination, trading will remain suspended throughout the appeals process, and the hearing panel can only reverse the decision if Nasdaq staff made a factual error. If this proposed rule is approved and adopted, any sustained decline in our MVLS below $5 million could result in the immediate suspension and delisting of our securities from Nasdaq, which would materially and adversely affect the liquidity and market price of our shares and could negatively impact our ability to raise capital or attract investors. Our MVLS over the 30 consecutive business days as of March 17, 2026 has been under $5 million. **The market price of our common stock is volatile and you may sustain a complete loss of your investment.** Our common stock currently trades on the Nasdaq Capital Market. The market price of our common stock has been, and is likely to continue to be, volatile. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as: | | announcements of any acquisition or consummation of any acquisition of a Target Company; inability to obtain the approvals necessary to commence clinical trials; | | | | | | | | results of clinical and preclinical studies; | | | | announcements of regulatory approval or the failure to obtain it, or specific label indications or patient populations for its use, or changes or delays in the regulatory review process; | | | | | | | | announcements of technological innovations, new products or product enhancements by us or others; | | | | | | | | adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketing activities; | | | | | | | | changes or developments in laws, regulations or decisions applicable to our product candidates or patents; | | | | | | | | any adverse changes to our relationship with manufacturers, suppliers or partners; | | | | | | | | announcements concerning our competitors or the pharmaceutical or biotechnology industries in general; | | | 57 | | | | | | | achievement of expected product sales and profitability or our failure to meet expectations; | | | | | | | | our commencement of or results of, or involvement in, litigation, including, but not limited to, any product liability actions or intellectual property infringement actions; | | | | | | | | any major changes in our board of directors, management or other key personnel; | | | | | | | | legislation in the United States, Europe and other foreign countries relating to the sale or pricing of pharmaceuticals; | | | | | | | | announcements by us of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments; | | | | | | | | expiration or terminations of licenses, research contracts or other collaboration agreements; | | | | | | | | public concern as to the safety of therapeutics we, any licensees or others develop; | | | | | | | | success of research and development projects; | | | | | | | | developments concerning intellectual property rights or regulatory approvals; | | | | | | | | variations in us and our competitors results of operations; | | | | | | | | changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts; | | | | | | | | future issuances of common stock or other securities; | | | | | | | | general market conditions, including the volatility of market prices for shares of biotechnology companies generally, and other factors, including factors unrelated to our operating performance; | | | | | | | | political and economic instability, war or acts of terrorism (such as Russias invasion of Ukraine and the conflict in the Middle East) or natural disasters, emergence of a pandemic, or other widespread health emergencies (or concerns over the possibility of such an emergency, similar to the unprecedented COVID-19 pandemic); and | | | | | | | | the other factors described in this Risk Factors section. | | These factors and any corresponding price fluctuations may materially and adversely affect the market price of our common stock, which would result in substantial losses by our investors. Further, the stock market in general, the Nasdaq Capital Market and the market for biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like theirs. See also General Risk Factors - *Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations*. Broad market and industry factors may negatively affect the market price of our common stock regardless of our actual operating performance. In addition, a systemic decline in the financial markets and related factors beyond our control may cause our share price to decline rapidly and unexpectedly. Price volatility of our common stock might be worse if the trading volume of our common stock is low. In the past, following periods of market volatility, stockholders have often instituted securities class action litigation. This risk is especially relevant for us because biopharmaceutical companies have experienced significant stock price volatility in recent years. If we face such securities litigation, it could result in substantial costs and a diversion of managements resources and attention, which could harm our business. Future sales of our common stock could also reduce the market price of our stock. | 58 | | | | | Moreover, the liquidity of our common stock will be limited, not only in terms of the number of shares of common stock that can be bought and sold at a given price, but by potential delays in the timing of executing transactions in our common stock and a reduction in security analyst and medias coverage of us, if any. These factors may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and ask prices for our common stock. In addition, without a large float, our common stock will be less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may be more volatile. In the absence of an active public trading market, an investor may be unable to liquidate their investment in our common stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price of our common stock than would be the case if our public float were larger. We cannot predict the prices at which our common stock will trade in the future. **An active trading market for our common stock may not be sustained.** An active public trading market for our common stock may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration. **If securities or industry analysts do not publish or cease publishing research or reports, or publish unfavorable reports about us, our business or our market, our share price and trading volume could be negatively impacted.** The trading market for our common stock could be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our common stock, or provide more favorable relative recommendations about our competitors, our share price would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could negatively impact our share price or trading volume. **Sales of a substantial number of our shares in the public market by our existing shareholders could cause our share price to decline.** Sales of a substantial number of our shares in the public market or the perception that these sales might occur, could depress the market price of our securities and could impair our ability to raise capital through the sale of additional equity securities. We are not able to predict the effect that sales may have on the prevailing market price of our securities. **We are a smaller reporting company and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.** We are considered a smaller reporting company. We are therefore entitled to rely on certain reduced disclosure requirements, such as an exemption from providing selected financial data and executive compensation information. These exemptions and reduced disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict whether investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock prices may be more volatile. Furthermore, as a result of voting power of the Preferred Stock, we may determine that we are a controlled company as defined in the Nasdaq Listing Rule 5615 and, therefore, are not subject to the Nasdaq Listing Rules that would otherwise require us to have (a) a majority of independent directors; (b) director nominees selected, or recommended for the Board selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors; (c) a nominating committee composed solely of independent directors; (d) compensation of our chief executive officer and all other officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and/or (e) a compensation committee charter which provides the compensation committee with the authority and funding to retain compensation consultants and other advisors. | 59 | | | | | **** **Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert managements attention and affect our ability to attract and retain qualified board members.** As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act and The Nasdaq Stock Market LLC, or the Nasdaq, rules. The requirements of these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and place strain on our personnel, systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we disclose whether we maintain effective disclosure controls and procedures and internal control over financial reporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place is a costly and time-consuming effort that needs to be re-evaluated frequently. We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Implementing any appropriate changes to our internal controls may require specific compliance training for our directors, officers and employees, entail substantial costs, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. In accordance with Nasdaq rules, we will be required to maintain a majority independent board of directors. The various rules and regulations applicable to public companies make it more difficult and more expensive for us to maintain directors and officers liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage. If we are unable to maintain adequate directors and officers insurance, our ability to recruit and retain qualified officers and directors will be significantly curtailed. It is expected that the rules and regulations applicable to public companies will result in us incurring substantial legal and financial compliance costs. These costs will decrease our net income or increase our net loss and may require us to reduce costs in other areas of our business. **Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our share price.** As a public company in the U.S., we incur significant accounting, legal and other expenses in order to comply with requirements of the SEC, and the Nasdaq Capital Market, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act. Pursuant to Section 404, we are required to furnish a report by our management on our internal control over financial reporting. However, so long as we remain a smaller reporting company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. The process to document and evaluate our internal control over financial reporting to achieve compliance with Section 404 within the prescribed period is both costly and challenging. If we fail to maintain the adequacy of our internal control over financial reporting as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC. If we cannot in the future favorably assess the effectiveness of our internal control over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which could have a material adverse effect on our share price. | 60 | | | | | **** **If the Domestication Merger (defined below), taken together with the Merger (defined below), fails to qualify as a Section 351(a) Exchange, former U.S. holders of Intec Pharma, or Intec Israel, ordinary shares may recognize taxable gain as a result of the Domestication Merger.** On July 27, 2021, Intec Israel, Indaptus Therapeutics, Inc. and Domestication Merger Sub Ltd., an Israeli company and a wholly owned subsidiary of Indaptus, completed a domestication merger, or the Domestication Merger, pursuant to the terms and conditions of an Agreement and Plan of Merger and Reorganization, dated April 27, 2021, whereby Domestication Merger Sub Ltd. merged with and into Intec Israel, with Intec Israel being the surviving entity and a wholly-owned subsidiary of Indaptus Therapeutics, Inc. On August 3, 2021, Indaptus Therapeutics, Inc. completed its merger with Decoy, pursuant to an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, dated March 15, 2021, following which Decoy became the surviving entity and a wholly-owned subsidiary of Indaptus Therapeutics, Inc. and the business conducted by Decoy became the business conducted by the combined company. Intec Israel intended for the Merger to qualify as a Section 351(a) Exchange. The position of Intec Israel is not binding on the IRS or the courts, and Intec Israel does not intend to request a ruling from the IRS with respect to the Merger. Accordingly, there can be no assurance that the IRS will not challenge the qualification of the Domestication Merger and the Merger as a Section 351(a) Exchange or that a court will not sustain such a challenge. If the IRS were to be successful in any such contention, or if for any other reason the Domestication Merger was not treated as part of a Section 351(a) Exchange, the Domestication Merger could be a taxable event to the former U.S. holders of ordinary shares of Intec Israel. Former holders of Intec Israels ordinary shares are urged to consult with their own tax advisors with respect to the tax consequences of the Domestication Merger. **Notwithstanding that the Domestication Merger and the Merger together are intended to qualify as a Section 351(a) Exchange, the Domestication Merger could be a taxable event for certain former U.S. Holders of Intec Israel ordinary shares.** Subject to the limitations and qualifications described in *The Merger - Material U.S. Federal Income Tax Consequences of the Domestication Merger and the Merger*, described in the registration statement on Form S-4, as amended (File No. 333-255389), filed by us with the SEC, or the Form S-4, including the application of the passive foreign investment company, or PFIC rules, the Domestication Merger is intended to qualify, taken together with the Merger, as a Section 351(a) Exchange. Nonetheless, certain former U.S. Holders of Intec Israels ordinary shares are likely to be taxed under the PFIC rules of the Code because of the likelihood that Intec Israel is classified as a PFIC. **General Risk Factors** **Unfavorable global economic or geopolitical conditions could adversely affect our business, financial condition or results of operations.** Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. In recent years, the U.S. and global markets have experienced significant volatility and disruptions in capital and credit markets, as well as fluctuations in commodity prices, driven by persistent inflationary pressures, elevated interest rates, and ongoing geopolitical tensions. In addition to the continuing conflict between Russia and Ukraine, the recent Israel-U.S. military actions in Iran and attacks in nearby Middle Eastern countries, and heightened tensions in the South China Sea, have further contributed to global market uncertainty and supply chain challenges. A severe or prolonged economic downturn, low employment levels, health insurance coverage, wages could result in a variety of risks to our business, including, our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers of raw materials used to manufacture our product candidates for our clinical trials, possibly resulting in supply disruption. Furthermore, our stock price may decline due in part to the volatility of the stock market and any general economic downturn. **Changes in tax law and regulations could adversely affect our business, financial condition and results of operations.** New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of any of our future earnings. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. Generally, future changes in applicable tax laws and regulations, or their interpretation and application, potentially with retroactive effect, could have an adverse effect on our business, financial condition and results of operations. We are unable to predict whether such changes will occur and, if so, the ultimate impact on our business. We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock. | 61 | | | | | **** **Item 1B. Unresolved Staff Comments.** We do not have any unresolved comments issued by the SEC staff. **Item 1C. Cybersecurity** **Cybersecurity Risk Management and Strategy** We, through our third party service provider that manages our information technology systems and networks, have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. Our cybersecurity risk management program includes: | | risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; | | | | designated team members who are responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; | | | | the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; and | | | | a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. | | We have not identified risks from known cybersecurity threats, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See Item 1A. Risk Factors - Our Risks Related to Our Business - *Our business and operations may suffer in the event of information technology system failures, cyberattacks or deficiencies in our cybersecurity.* **Cybersecurity Governance** Our Board considers cybersecurity risk as part of its risk oversight function and oversees our cybersecurity and other information technology risks and managements implementation of our cybersecurity risk management program. Our Board receives periodic reports from management on our cybersecurity risks. In addition, management updates the Board and the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. Our management team, including our Chief Operating Officer, is responsible for assessing and managing our material risks from cybersecurity threats. Our Chief Operating Officer has primary responsibility for our overall cybersecurity risk management program and supervises our retained provider of IT services and external cybersecurity consultants. Our Chief Operating Officer has experience supervising and managing company security and privacy departments. | 62 | | | | | Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from external security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. **Item 2. Properties** Our principal executive offices are located at 3 Columbus Circle, 15th Floor, New York, NY. In addition, we previously leased approximately 2,000 square feet of office space in San Diego, California under a lease agreement that expired on October 31, 2025. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. **Item 3. Legal Proceedings** From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of March 16, 2026, there are no pending material legal proceedings, and we are currently not aware of any legal proceedings or claims against us or our property that we believe will have any significant effect on our business, financial position or operating results. None of our officers or directors is a party against us in any legal proceeding. **Item 4. Mine Safety Disclosures.** Not applicable. **PART II** **Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.** **Market Information** Our common stock is listed on the Nasdaq Capital Market under the name Indaptus Therapeutics, Inc. and ticker symbol INDP. **Holders** As of March 16, 2026, we had 21 record holders of our common stock. This number does not include the number of persons whose shares are in nominee or in street name accounts through brokers. **Dividend Policy** We have never declared or paid cash dividends to our shareholders, and we do not intend to pay cash dividends in the foreseeable future. We intend to reinvest any earnings in developing and expanding our business. Any future determination relating to our dividend policy will be at the discretion of our board of directors and will depend on a number of factors, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, our strategic goals and plans to expand our business, applicable law and other factors that our board of directors may deem relevant. **Securities Authorized for Issuance under Equity Compensation Plans** Information about our equity compensation plan under which the Companys equity securities are authorized for issuance is set forth in Part III - Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters of this Annual Report. **Recent Sales of Unregistered Securities** None. **Purchases of Equity Securities by the Issuer and Affiliated Purchasers** We did not repurchase any of our equity securities during the quarter ended December 31, 2025. **Item 6. [Reserved]** **** | 63 | | | | | **Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.** *You should read the following discussion and analysis of our financial condition and results of operations along with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. You should review the sections titled Summary Risk Factors and Part I, Item 1A. Risk Factors in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described below. Please also see the Cautionary Note Regarding Forward-Looking Statements section in the forepart of this Annual Report.* **Overview** We are a clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of four different classes of existing agents, including NSAIDs, checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology has demonstrated activation of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen in preclinical models. In 2023, we initiated a Phase 1 clinical trial with our lead clinical candidate, Decoy20, in patients with advanced solid tumors where currently approved therapies have failed. In May 2025, we decided to conclude enrollment in the dosing of Decoy20 as a monotherapy and focus on the Combination Study. As of the date of this Annual Report on Form 10-K, we have discontinued further enrollment in the Combination Study and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. For further information regarding our business and operations, see Part I. Item 1. Business. **Lazar Investment Transaction** On December 22, 2025, we entered into the Purchase Agreement with Mr. Lazar pursuant to which he purchased from the Company 300,000 shares of Series AA Convertible Preferred Stock and 700,000 shares of Series AAA Convertible Preferred Stock of the Company at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million. As part of the Investment Transaction, the Company plans to pursue a strategic transaction involving either an investment in or acquisition of a Target Company. Should such a transaction be approved and successfully finalized, we anticipate that combining with a Target Company will create future growth opportunities for both the Company and its stockholders. For further information, see Part I. Item 1. Business Recent Developments. **Impact of Macroeconomic Conditions on our Operations** Economic developments such as inflation and interest rates have negatively affected the global financial markets and may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. The ultimate impact of current economic conditions is highly uncertain and subject to change. While it is unknown how long these conditions will last and what the complete financial effect will be to us, capital raise efforts and additional development of our technologies may be negatively affected. In addition, our business operations expose us to risks associated with public health crises and epidemics/pandemics. **** **Components of Operating Results** **Research and Development Expenses** Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of fees paid to contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, as well as compensation expenses for certain employees involved in the planning, managing, and analyzing the work of the CROs and CMOs and materials used for research and development activities. We expense research and development costs as incurred. We accrue expenses for manufacturing, preclinical studies and clinical trial activities performed by third parties based on estimates of services received and efforts expended pursuant to agreements with CROs, CMOs, and other outside service providers. We determine these estimates based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. In the event advance payments are made to a CRO, CMO, or outside service provider, we record the payments as a prepaid asset, which will be amortized or expensed as the contracted services are performed. However, actual costs and timing of these activities are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan. | 64 | | | | | Currently, we have discontinued further enrollment to the Combination Study and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. As a result, we expect our research and development expenses to decrease in the short term. Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of preclinical studies and clinical trials and development of product candidates will depend on a variety of factors, including: | | the timing and receipt of regulatory approvals | | | | | | | | the scope, rate of progress and expenses of preclinical studies and clinical trials and other research and development activities | | | | | | | | potential safety monitoring and other studies requested by regulatory agencies and | | | | | | | | significant and changing government regulation. | | The process of conducting the necessary clinical research to obtain FDA and other regulatory approval is costly and time consuming and the successful development of product candidates is highly uncertain. These risks and uncertainties associated with our research and development projects are discussed more fully in Part I. Item 1A. Risk Factors - *We may incur significant research and development expenses and other operating expenses, which may make it difficult for us to attain profitability*. As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. **General and Administrative Expenses** General and administrative expenses include compensation, employee benefits, and stock-based compensation, finance administration and human resources, facility costs (including rent), professional service fees, and other general overhead costs to support our operations. With the discontinuation and winding down of the Combination Study, we expect our general and administrative expenses to decrease in the short term however this may be offset by additional costs related to any acquisition of a Target Company. General and administrative expenses also include additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the Nasdaq Capital Market and the SEC, additional director and officer insurance expenses, investor relations activities, and other administrative and professional services. **Other Income, Net** Other income, net includes interest earned on deposits and investments and other items of income, expense, gain and loss that are incidental to the core operations of the Company. **Results of Operations** **Year Ended December 31, 2025 compared to Year Ended December 31, 2024** The following tables set forth our results of operations for the years ended December 31, 2025 and 2024 and the relative dollar and percentage change between the two years. | | | Year ended December 31, | | | Change (2025 to 2024) | | | | | | 2025 | | | 2024 | | | ($) | | | % | | | | Operating expenses: | | | | | | | | | | | | | | | | | | | Research and development | | $ | 9,340,959 | | | $ | 7,251,097 | | | $ | 2,089,862 | | | | 28.8 | % | | | General and administrative | | | 10,492,554 | | | | 8,114,654 | | | | 2,377,900 | | | | 29.3 | % | | | Total operating expenses | | | 19,833,513 | | | | 15,365,751 | | | | 4,467,762 | | | | 29.1 | % | | | Loss from operations | | | (19,833,513 | ) | | | (15,365,751 | ) | | | (4,467,762 | ) | | | 29.1 | % | | | Other income, net | | | 138,018 | | | | 343,724 | | | | (205,706 | ) | | | (59.8 | )% | | | Change in fair value of convertible promissory notes | | | (1,153,421 | ) | | | - | | | | (1,153,421 | ) | | | - | | | | Net loss | | $ | (20,848,916 | ) | | $ | (15,022,027 | ) | | $ | (5,826,889 | ) | | | 38.8 | % | | | Net loss attributable to common stockholders per share, basic and diluted | | $ | (21.58 | ) | | $ | (44.96 | ) | | $ | 23.40 | | | | (52.0 | )% | | | Weighted average number of shares used in calculating net loss per share, basic and diluted | | | 966,124 | | | | 334,133 | | | | | | | | | | | | 65 | | | | | **Research and Development Expenses** Our research and development expenses for the year ended December 31, 2025 amounted to approximately $9.3 million, an increase of approximately $2.1 million, or approximately 28.8%, compared with approximately $7.2 million for the year ended December 31, 2024. This increase was attributable primarily to higher clinical trial costs of approximately $1.5 million related to our Phase 1 study and to higher payroll and related expenses of approximately $0.6 million following entering into the Modification Agreements, as described in Item 11. **General and Administrative Expenses** Our general and administrative expenses for the year ended December 31, 2025 amounted to approximately $10.5 million, an increase of approximately $2.4 million, or approximately 29.3%, compared with approximately $8.1 million for the year ended December 31, 2024. This increase was attributable primarily to higher payroll and related expenses of approximately $1.9 million following entering into the Modification Agreements, as described in Item 11, and increase of approximately $1.4 million in transaction-related expenses associated with the private placement of convertible notes and warrants completed in June 2025, professional fees and franchise tax. This increase was partially offset by a decrease of approximately $0.9 million in D&O insurance premium, investor relations and board fees. **Other Income** During the year ended December 31, 2025, our other income, net was approximately $0.14 million, which represented a decrease of approximately $0.2 million, or approximately 59.8%, as compared to the year ended December 31, 2024. The other income generated in the period consists primarily of income earned on the Companys cash and cash equivalent accounts, the balances of which were lower during the year ended December 31, 2025 compared to the year ended December 31, 2024. **Liquidity and Capital Resources** We do not currently have any approved products and have never generated any revenue from product sales. Since our inception, we have funded our operations primarily through public and private offerings of our equity securities. On December 22, 2025, the Company entered into the Purchase Agreement with Mr. Lazar, pursuant to which he agreed to purchase from the Company series of Preferred Stock at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million, subject to the terms and conditions thereunder. The offering closed on December 23, 2025. In June 2022, we entered into the ATM Agreement with Wainwright, which was amended on September 1, 2022, pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock for aggregate gross proceeds of up to $6.3 million. The issuances and sales of common stock by us under the ATM Agreement were being made pursuant to shelf registration statements on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022 and most recently on August 13, 2025 and declared effective on August 20, 2025. As of the date of this Annual Report, we have sold 525,428 shares of our common stock for aggregate gross proceeds of approximately $2.7 million. In June 2025, we completed a private placement (the June 2025 Financing) of convertible notes to certain investors, including our then Chief Executive Officer, which automatically converted in July 2025 into 501,566 shares of our common stock and pre-funded warrants to purchase 190,795 shares of our common stock at a conversion price of $8.302 per share. In connection with the offering, we also issued to the investors warrants to purchase 1,384,722 shares of our common stock, exercisable at $8.302 per share and expiring on July 27, 2030. The total gross proceeds were approximately $5.7 million and placement agent fees and other offering expenses were approximately $0.8 million As of the date hereof, all pre-funded warrants have been exercised into an aggregate of 190,795 shares of common stock. | 66 | | | | | In February 2025, we entered into the SEPA with Yorkville, pursuant to which we have the right, but not the obligation, to sell up to $20.0 million of our common stock during a 36 months period, subject to the restrictions and satisfaction of the conditions in the SEPA. Upon execution of the SEPA, we issued to Yorkville 10,927 commitment shares. As of March 16, 2026, we sold and issued 89,902 shares of common stock under the SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, we terminated the SEPA with Yorkville, and the SEPA is no longer in effect. In January 2025, we completed a private placement (the January 2025 Financing) for the sale and issuance by us of an aggregate of: (i) 75,335 shares of our common stock and (ii) warrants to purchase 75,335 shares of common stock. The shares and warrants were sold on a combined basis for consideration of $29.82 for one share and one warrant for aggregate gross proceeds of approximately $2.25 million. We believe that our cash and cash equivalents of approximately $8.5 million as of December 31, 2025, which includes the net proceeds of $5.9 million from the Investment Transaction with Mr. Lazar, will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2026. We will need to increase our capital resources through equity or debt financings, and we may need to do so sooner than we expect. If sources of financing are available, they may result in substantial dilution to our stockholders. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. If we are unable to consummate a financing or other transaction, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. These conditions raise substantial doubt regarding our ability to continue as a going concern within one year after the date of this prospectus. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years. **Cash Flows** *Operating Activities* Net cash used in operating activities was approximately $14.8 million for the year ended December 31, 2025, compared with net cash used in operating activities of approximately $12.3 million for the year ended December 31, 2024. The approximately $2.5 million increase in net cash used was primarily attributable to the increase in the net loss that was partially offset by changes in operating assets and liabilities. *Investing Activities* There was no net cash provided by or used in investing activities for the year ended December 31, 2025 and 2024. *Financing Activities* Net cash provided by financing activities for the year ended December 31, 2025 was approximately $17.5 million, which was provided by the issuance and sale of our common stock and warrants in the January 2025 Financing, the issuance and sale of our common stock under the SEPA, the issuance of convertible notes and warrants in the June 2025 Financing and issuance and sale of our common stock under the ATM Agreement. Net cash provided by financing activities for the year ended December 31, 2024 was approximately $4.7 million, which was provided by issuance and sale of our common stock under the ATM Agreement and issuance and sale of our common stock and warrants in the August 2024 Offering and in the November 2024 Offering. *Funding Requirements* We believe that our existing cash and cash equivalents as of December 31, 2025 are adequate to fund our ongoing activities into the second quarter of 2026 and we expect to continue to incur operating expenses in the future in connection with our ongoing activities and our plans to pursue a strategic transaction involving either an investment in or acquisition of an operating business. | 67 | | | | | We will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies stock have been highly volatile as a result of current macroeconomic conditions and market volatility. As a result, we may face difficulties raising capital through sales of our common stock on acceptable terms, if at all. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. For additional information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report and Risk Factors in Item 1A. of this Annual Report. We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under the SEC rules. **Critical Accounting Policies** This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates that affect the reported amounts of our assets, liabilities and expenses. Significant accounting policies employed by us, including the use of estimates, are presented in the notes to our annual financial statements included in this Annual Report. We periodically evaluate our estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require our subjective or complex judgments, resulting in the need to make estimates about the effect of matters that are inherently uncertain. If actual performance should differ from historical experience or if the underlying assumptions were to change, our financial condition and results of operations may be materially impacted. We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements: **Accounting for Research and Development Costs** We record the costs associated with services provided by CROs and CMOs as they are incurred. Though the scope and timing of work are generally based on signed agreements, some judgement is involved in determining periodic expenses because payment flows do not always match the periods over which services and materials are provided to us. As a result, our management is required to make estimates of services received and efforts expended pursuant to agreements established with these third parties at each period-end date. During the year ended December 31, 2025, we incurred approximately $9.3 million of research and development expenses, of which approximately $5.8 million were for services provided by our CROs and CMOs. As of December 31, 2025, we recorded an accrued liability of approximately $1.1 million for expenses incurred, but not yet invoiced, and prepaid expenses of approximately $0.4 million for payments made that relate to future periods. Overestimating or underestimating the services received or efforts expended could cause us to overstate or understate research and development expenses incurred within a reporting period, and related accrued and prepaid expenses. **Stock-Based Compensation** Compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized over the requisite service period of the individual grant, generally equal to the vesting period, on a straight-line basis. We determine the estimated fair value of each stock option on the date of grant using the Black-Scholes valuation model which uses assumptions regarding a number of complex and subjective variables. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. Expected volatility is based on an analysis of the historical volatility of a peer group of companies. The expected term represents the period that we expect our stock options to be outstanding. The expected term assumption is estimated using the simplified method set forth in the U.S. Securities and Exchange Commissions Staff Accounting Bulletin Topic 14, which is the mid-point between the option vesting date and the expiration date. We have never declared or paid dividends on our common stock and have no plans to do so in the foreseeable future. Changes in these assumptions may lead to variability with respect to the amount of stock-based compensation expense we recognize related to stock options. **Recently Issued Accounting Pronouncements** Certain recently issued accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report. **Item 7A. Quantitative and Qualitative Disclosures About Market Risk.** We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 7A. | 68 | | | | | **Item 8. Financial Statements and Supplementary Data.** **** **INDAPTUS THERAPEUTICS, INC.** **CONSOLIDATED FINANCIAL STATEMENTS** **TABLE OF CONTENTS** | | | Page | | | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB name: HASKELL & WHITE LLP and PCAOB ID: 200) | | F-2 | | | CONSOLIDATED FINANCIAL STATEMENTS: | | | | | Consolidated Balance Sheets as of December 31, 2025 and 2024 | | F-3 | | | Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 | | F-4 | | | Consolidated Statements of Stockholders Equity for the years ended December 31, 2025 and 2024 | | F-5 | | | Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 | | F-6 | | | Notes to the Consolidated Financial Statements | | F-7 | | | F-1 | | | | | **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Stockholders and Board of Directors Indaptus Therapeutics, Inc. **Opinion on the Consolidated Financial Statements** **** We have audited the accompanying consolidated balance sheets of Indaptus Therapeutics, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles. **Going Concern** The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has experienced recurring losses, negative cash flows from operations, and has limited capital resources. These matters raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. **Basis for Opinion** **** These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. **Critical Audit Matters** **** Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. | /s/ Haskell & White LLP | | | | HASKELL & WHITE LLP | | We have served as the Companys auditor since 2021. Irvine, California March 17, 2026 | F-2 | | | | | **Consolidated Balance Sheets** | | | 2025 | | | 2024 | | | | | | December 31, | | | | | | 2025 | | | 2024 | | | | Assets | | | | | | | | | | | Current assets: | | | | | | | | | | | Cash and cash equivalents | | $ | 8,507,628 | | | $ | 5,786,753 | | | | Prepaid expenses and other current assets | | | 802,540 | | | | 831,577 | | | | | | | | | | | | | | | Total current assets | | | 9,310,168 | | | | 6,618,330 | | | | | | | | | | | | | | | Non-current assets: | | | | | | | | | | | Right-of-use asset | | | - | | | | 82,175 | | | | Other assets - deposits to third parties | | | - | | | | 638,251 | | | | | | | | | | | | | | | Total non-current assets | | | - | | | | 720,426 | | | | | | | | | | | | | | | Total assets | | $ | 9,310,168 | | | $ | 7,338,756 | | | | | | | | | | | | | | | Liabilities and stockholders equity | | | | | | | | | | | Current liabilities: | | | | | | | | | | | Accounts payable and other current liabilities | | $ | 6,158,575 | | | $ | 3,309,717 | | | | Operating lease liability, current portion | | | - | | | | 84,164 | | | | | | | | | | | | | | | Total current liabilities | | | 6,158,575 | | | | 3,393,881 | | | | | | | | | | | | | | | Commitments and contingencies (Note 8) | | | - | | | | - | | | | | | | | | | | | | | | Stockholders equity: | | | | | | | | | | | Common stock: $0.01 par value, 200,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 2,167,324 shares issued and outstanding as of December 31, 2025 and 428,799 shares issued and outstanding as of December 31, 2024* | | | 21,674 | | | | 4,288 | | | | Preferred stock: $0.01 par value, 5,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 1,000,000 shares issued and outstanding as of December 31, 2025 and no shares issued and outstanding as of December 31, 2024 | | | 10,000 | | | | - | | | | Additional paid in capital* | | | 84,408,018 | | | | 64,379,770 | | | | Accumulated deficit | | | (81,288,099 | ) | | | (60,439,183 | ) | | | | | | | | | | | | | | Total stockholders equity | | | 3,151,593 | | | | 3,944,875 | | | | | | | | | | | | | | | Total liabilities and stockholders equity | | $ | 9,310,168 | | | $ | 7,338,756 | | | | * | Retroactively restated for one-for-twenty-eight share reverse stock split effected on June 27, 2025. | | See accompanying notes to the consolidated financial statements and report of independent registered public accounting firm | F-3 | | | | | INDAPTUS THERAPEUTICS, INC. **Consolidated Statements of Operations and Comprehensive Loss** | | | 2025 | | | 2024 | | | | | | For the year ended December 31, | | | | | | 2025 | | | 2024 | | | | Operating expenses: | | | | | | | | | | | Research and development | | $ | 9,340,959 | | | $ | 7,251,097 | | | | General and administrative | | | 10,492,554 | | | | 8,114,654 | | | | | | | | | | | | | | | Total operating expenses | | | 19,833,513 | | | | 15,365,751 | | | | | | | | | | | | | | | Loss from operations | | | (19,833,513 | ) | | | (15,365,751 | ) | | | | | | | | | | | | | | Other income, net | | | 138,018 | | | | 343,724 | | | | Change in fair value of convertible promissory notes | | | (1,153,421 | ) | | | - | | | | | | | | | | | | | | | Net loss | | $ | (20,848,916 | ) | | $ | (15,022,027 | ) | | | | | | | | | | | | | | Net loss available to common stockholders per share of common stock, basic and diluted* | | $ | (21.58 | ) | | $ | (44.96 | ) | | | | | | | | | | | | | | Weighted average number of shares used in calculating net loss per share, basic and diluted* | | | 966,124 | | | | 334,133 | | | | * | Retroactively restated for one-for-twenty-eight share reverse stock split effected on June 27, 2025. | | See accompanying notes to the consolidated financial statements and report of independent registered public accounting firm | F-4 | | | | | INDAPTUS THERAPEUTICS, INC. **Consolidated Statements of Stockholders Equity** | | | Shares* | | | Amount* | | | Shares | | | Amount | | | Capital* | | | deficit | | | Total | | | | | | Common stock | | | Preferred Stock | | | Additional paid in | | | Accumulated | | | | | | | | | Shares* | | | Amount* | | | Shares | | | Amount | | | Capital* | | | deficit | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance, January 1, 2024 | | | 300,037 | | | $ | 3,000 | | | | - | | | $ | - | | | $ | 57,490,654 | | | $ | (45,417,156 | ) | | $ | 12,076,498 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation | | | - | | | | - | | | | - | | | | - | | | | 2,305,849 | | | | - | | | | 2,305,849 | | | | Issuance of shares of common stock, net of issuance costs | | | 5,425 | | | | 54 | | | | - | | | | - | | | | 354,057 | | | | - | | | | 354,111 | | | | Issuance of shares of common stock and warrants, net of issuance costs | | | 58,708 | | | | 587 | | | | - | | | | - | | | | 2,461,383 | | | | - | | | | 2,461,970 | | | | Issuance of shares of common stock and warrants, net of issuance costs | | | 64,629 | | | | 647 | | | | - | | | | - | | | | 1,767,827 | | | | - | | | | 1,768,474 | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (15,022,027 | ) | | | (15,022,027 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance, December 31, 2024 | | | 428,799 | | | 4,288 | | | | - | | | - | | | 64,379,770 | | | (60,439,183 | ) | | 3,944,875 | | | | Balance | | | 428,799 | | | $ | 4,288 | | | | - | | | $ | - | | | $ | 64,379,770 | | | $ | (60,439,183 | ) | | $ | 3,944,875 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation | | | 350,000 | | | | 3,500 | | | | - | | | | - | | | | 1,354,582 | | | | - | | | | 1,358,082 | | | | Issuance of shares of common stock and warrants, net of issuance costs (Note 6b) | | | 75,335 | | | | 754 | | | | - | | | | - | | | | 1,985,990 | | | | - | | | | 1,986,744 | | | | Issuance of shares of common stock, net of issuance costs (Note 6c) | | | 89,902 | | | | 899 | | | | - | | | | - | | | | 1,733,821 | | | | - | | | | 1,734,720 | | | | Issuance of commitment shares (Note 6c) | | | 10,927 | | | | 109 | | | | - | | | | - | | | | (109 | ) | | | - | | | | - | | | | Issuance of common stock and warrants upon conversion of promissory notes, net of issuance costs (Note 7) | | | 501,566 | | | | 5,016 | | | | - | | | | - | | | | 6,854,625 | | | | - | | | | 6,859,641 | | | | Exercise of pre-funded warrants | | | 190,795 | | | | 1,908 | | | | - | | | | - | | | | - | | | | - | | | | 1,908 | | | | Issuance of shares of common stock, net of issuance costs (Note 6d) | | | 520,000 | | | | 5,200 | | | | - | | | | - | | | | 2,238,591 | | | | - | | | | 2,243,791 | | | | Issuance of Series AA and Series AAA preferred stock, net of issuance costs (Note 6e) | | | - | | | | - | | | | 1,000,000 | | | | 10,000 | | | | 5,860,748 | | | | - | | | | 5,870,748 | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (20,848,916 | ) | | | (20,848,916 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance, December 31, 2025 | | | 2,167,324 | | | $ | 21,674 | | | | 1,000,000 | | | $ | 10,000 | | | $ | 84,408,018 | | | $ | (81,288,099 | ) | | $ | 3,151,593 | | | | Balance | | | 2,167,324 | | | $ | 21,674 | | | | 1,000,000 | | | $ | 10,000 | | | $ | 84,408,018 | | | $ | (81,288,099 | ) | | $ | 3,151,593 | | | | * | Retroactively restated for one-for-twenty-eight share reverse stock split effected on June 27, 2025. | | See accompanying notes to the consolidated financial statements and report of independent registered public accounting firm | F-5 | | | | | INDAPTUS THERAPEUTICS, INC. **Consolidated Statements of Cash Flows** | | | 2025 | | | 2024 | | | | | | For the year ended December 31, | | | | | | 2025 | | | 2024 | | | | Cash flows from operating activities: | | | | | | | | | | | Net loss | | $ | (20,848,916 | ) | | $ | (15,022,027 | ) | | | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | Depreciation | | | - | | | | 735 | | | | Stock-based compensation | | | 1,358,082 | | | | 2,305,849 | | | | Change in fair value of convertible promissory notes | | | 1,153,421 | | | | - | | | | Changes in operating assets and liabilities: | | | | | | | | | | | Prepaid expenses and other current and non- current assets | | | 667,288 | | | | (81,944 | ) | | | Accounts payable and other current liabilities | | | 2,848,858 | | | | 474,057 | | | | Operating lease right-of-use asset and liability, net | | | (1,989 | ) | | | 142 | | | | Net cash used in operating activities | | | (14,823,256 | ) | | | (12,323,188 | ) | | | | | | | | | | | | | | Cash flows from financing activities: | | | | | | | | | | | Proceeds from issuance of convertible promissory notes | | | 5,714,800 | | | | - | | | | Proceeds from issuance of shares of common stock and warrants | | | 6,396,888 | | | | 5,510,591 | | | | Proceeds from issuance of preferred stock | | | 6,000,000 | | | | - | | | | Proceeds from exercise of pre-funded warrants | | | 1,908 | | | | - | | | | Issuance costs | | | (569,465 | ) | | | (762,703 | ) | | | Net cash provided by financing activities | | | 17,544,131 | | | | 4,747,888 | | | | | | | | | | | | | | | Net increase (decrease) in cash and cash equivalents | | | 2,720,875 | | | | (7,575,300 | ) | | | | | | | | | | | | | | Cash and cash equivalents at beginning of period | | | 5,786,753 | | | | 13,362,053 | | | | | | | | | | | | | | | Cash and cash equivalents at end of period | | $ | 8,507,628 | | | $ | 5,786,753 | | | | | | | | | | | | | | | Noncash investing and financing activities | | | | | | | | | | | Transaction costs in accounts payable and other current liabilities | | $ | - | | | $ | 163,333 | | | | Settlement of convertible promissory notes | | $ | 6,868,221 | | | $ | - | | | | Issuance of commitment shares* | | $ | 109 | | | $ | - | | | | * | Retroactively restated for one-for-twenty-eight share reverse stock split effected on June 27, 2025. | | See accompanying notes to the consolidated financial statements and report of independent registered public accounting firm | F-6 | | | | | INDAPTUS THERAPEUTICS, INC. **Notes to Consolidated Financial Statements** **NOTE 1: GENERAL** Indaptus Therapeutics, Inc. and its wholly-owned subsidiaries, Decoy Biosystems, Inc. and Intec Pharma Ltd. (collectively the Company), is a biotechnology company dedicated to enhancing and expanding curative cancer immunotherapy for patients with unresectable or metastatic solid tumors and lymphomas, which are responsible for more than 90% of all cancer deaths. The Company is developing a novel, multi-targeted product that activates both innate and adaptive anti-tumor and anti-viral immune responses. On December 22, 2025, the Company entered into a Securities Purchase Agreement (the Purchase Agreement) with David E. Lazar, pursuant to which he agreed to purchase from the Company 300,000 shares of Series AA Preferred Stock (the Series AA Preferred Stock) and 700,000 shares of Series AAA Preferred Stock (the Series AAA Preferred Stock and, together with the Series AA Preferred Stock, the Preferred Stock) at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million, subject to the terms and conditions thereunder (the Investment Transaction). The offering closed on December 23, 2025. As part of the Investment Transaction, the Company plans to pursue a strategic transaction involving either an investment in or acquisition of an operating business (the Target Company, referred to as the Post-Investment Transaction). The Company is currently in the process of evaluating its strategic options for a Post-Investment Transaction. For more details, see Note 6(e). *Risks and uncertainties* The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operations (see below), competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, and dependence on key individuals. In addition, the Company is subject to risks related to its ability to realize the anticipated benefits of the Investment Transaction in the event it is not able to identify and/or pursue a Post-Investment Transaction. *Going concern and managements plans* The Company has incurred net losses and utilized cash in operations since inception. For the year ended December 31, 2025, the Company incurred a net loss of approximately $20.8 million, and as of December 31, 2025, the Company had an accumulated deficit of approximately $81.3 million. In addition, during the year ended December 31, 2025, the Company used approximately $14.8 million of cash in operations and expects to continue to incur significant cash outflows and incur future additional losses as it continues to evaluate the phase 1 data of the Companys lead product candidate while actively exploring strategic options for a Post-Investment Transaction. The Company believes that, as of the date of the issuance of these consolidated financial statements, it has adequate cash to fund its ongoing activities into the second quarter of 2026 based on its current operating plan. The Company plans to execute its operating plan by obtaining additional capital, principally through entering into additional public or private debt and equity financing. In February 2025, the Company entered into a Standby Equity Purchase Agreement pursuant to which the Company has the right, but not the obligation, to sell up to $20.0 million of the Companys common stock during a 36-month period, subject to the restrictions and satisfaction of the conditions in the Standby Equity Purchase Agreement (the SEPA). During 2025, the Company raised net proceeds of approximately $1.74 million under the SEPA, after deducting offering expenses in the amount of approximately $0.1 million. For more details, see Note 6(c). In June 2025, the Company raised total gross proceeds of approximately $5.7 million through the issuance of convertible notes. Placement agent fees and other offering-related expenses totaled approximately $0.8 million. For more details, see Note 7. In September 2025, the Company raised total gross proceeds of approximately $2.34 million through its At The Market Offering Agreement (ATM Agreement). For more details, see Note 6(d). In December 2025, the Company raised total gross proceeds of $6.0 million from Mr. Lazar in the Investment Transaction. For more details, see Note 6(e). However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or in the amounts required. If the Company is unsuccessful in securing sufficient financing, it may need to delay, reduce, or eliminate its research and development programs, which could adversely affect its business prospects, or cease operations. As a result of these uncertainties, there is substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Company was unable to continue as a going concern. | F-7 | | | | | *Reverse Split* On June 26, 2025, the Company effected a 1-for-28 reverse stock split of its common stock and began trading on a post-split basis on the Nasdaq Capital Market on June 27, 2025, which resulted in the Company regaining compliance with the Nasdaq minimum bid price requirement. As a result of the reverse stock split, every 28 shares of outstanding common stock were combined into one share of common stock. The reverse stock split decreased the Companys outstanding common stock from 16,946,528 shares to 604,963 shares as of that date. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants entitling the holders to purchase common stock. All share and per share amounts in these consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. **NOTE 2: SIGNIFICANT ACCOUNTING POLICIES** *Basis of presentation* These consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). *Principles of consolidation* These consolidated financial statements include the accounts of Indaptus and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation. ** *Use of estimates* The preparation of these consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. The most significant estimates relate to the determination of the fair value of stock-based compensation and the determination of period-end obligations to certain contract research organizations. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. *Loss per share* Loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is based upon the weighted average number of shares of common stock and of common stock equivalents outstanding when dilutive. Common stock equivalents include outstanding stock options, warrants, pre-funded warrants, and convertible Preferred Stock, which are included under the treasury stock method when dilutive. The following number of stock options, warrants, pre-funded warrants, and convertible Preferred Stock were excluded from the calculation of diluted loss per share because their effect would have been anti-dilutive for the periods presented (share data): SCHEDULE OF ANTI-DILUTIVE SECURITIES | | | Weighted average | | | | | | For the year ended December 31, | | | | | | 2025 | | | 2024 | | | | Outstanding stock options | | | 104,103 | | | | 2,519,419 | | | | Warrants | | | 942,729 | | | | 3,935,282 | | | | Pre-funded warrants | | | 50,911 | | | | - | | | | Preferred stock | | | 21,978 | | | | - | | | *Cash and cash equivalents* The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. As of December 31, 2025, and 2024, cash and cash equivalents consist primarily of checking and money market deposits. The Companys cash balances exceed those that are federally insured; however, the Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. To date, the Company has not recognized any losses caused by uninsured balances. | F-8 | | | | | *Property and equipment* Property and equipment assets are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The Company uses an estimated useful life of three years for employee-related computers and other office equipment and five years for furniture. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the related asset. *Patents* The Company expenses patent costs, including related legal costs, as incurred and records such costs within general and administrative expense. ** *Research and development expenses* Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, subcontractors and materials used for research and development activities, including clinical trials and professional services. All costs associated with research and development are expensed as incurred. The Company accrues for expenses resulting from obligations under agreements with contract research organizations (CROs), contract manufacturing organizations (CMOs), and other outside service providers for which payment flows do not match the periods over which services or materials are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements with CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. In the event advance payments are made to a CRO, CMO, or outside service provider, the payments are recorded as a prepaid expense which is amortized or expensed as the contracted services are performed. *General and administrative expenses* General and administrative expenses include compensation, employee benefits, and stock-based compensation for executive management, finance, administration and human resources, facility costs (including rent), professional service fees, and other general overhead costs to support the Companys operations. *Income taxes* Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized in the foreseeable future. As of December 31, 2025, and 2024, the Company has recorded a full valuation allowance against its deferred tax assets. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. | F-9 | | | | | *Stock-based compensation* The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined using the Black-Scholes-Merton (Black-Scholes) model as of the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, on a straight-line basis. The Black-Scholes model requires the use of highly subjective and complex assumptions, which determine the fair value of stock-based payment awards, including the options expected term and the price volatility of the underlying stock. The Company estimates the fair value of options granted by using the Black-Scholes model with the following assumptions: *Expected Volatility*The Company estimates volatility for option grants by evaluating the historical volatility of a peer group of companies, together with the historical volatility of its own stock, for the period immediately preceding the option grant for a term that is approximately equal to the options expected term. *Expected Term*The expected term of the Companys options represents the period that the stock-based payment awards are expected to be outstanding. The expected term is estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. *Risk-Free Interest Rate*The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the options expected term at the grant date. *Dividend Yield*The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero. The Company has elected to recognize forfeitures as they occur. *Fair Value Measurement* ** ASC 820, Fair Value Measurements, (ASC 820) provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: | | Level 1: | Quoted prices in active markets for identical assets or liabilities. | | | | | | | | | Level 2: | Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. | | | | | | | | | Level 3: | Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. | | The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company. | F-10 | | | | | As of December 31, 2025 and December 31, 2024, the recorded values of cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses and other liabilities approximated their fair values due to the short-term nature of these items. *Convertible notes* ** In 2025, the Company issued convertible notes and elected to account for the debt at fair value. Such fair value measurements are categorized within Level 3 of the fair value hierarchy. The changes in the fair value of the convertible notes are recognized separately in the statement of operations. For more details, see Note 7. The following table summarizes the change in fair value of the Companys Level 3 liabilities for the year ended December 31, 2025: SCHEDULE OF CONVERTIBLE DEBT | | | Convertible promissory notes | | | | Fair value, January 1, 2025 | | $ | - | | | | Additions | | | 5,714,800 | | | | Change in fair value | | | 1,153,421 | | | | Conversion of promissory notes into shares and warrants | | | (6,868,221 | ) | | | Fair value, December 31, 2025 | | $ | - | | | *Recently adopted accounting pronouncements* In December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09, Improvements to Income Tax Disclosures. This ASU does not change accounting for income taxes but requires new disclosures focusing on two areas, the effective rate reconciliation and taxes paid. The Company adopted the standard and applied the disclosure requirements on a prospective basis as required for the year ended December 31, 2025. *Recently issued accounting pronouncements* In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. This ASU will require entities to provide enhanced disclosures, in a tabular format, related to certain expense categories included in the statement of operations. The ASU aims to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the income statement. The new ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on the related disclosures. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting. This ASU was issued to enhance consistency in interim reporting for all entities by providing clarity about the current interim reporting requirements and creating a comprehensive list of interim disclosures required under US GAAP. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and amendments can be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the adoption of this standard on its interim disclosures. **NOTE 3: PREPAID EXPENSES AND OTHER CURRENT ASSETS** Prepaid expenses and other current assets were comprised of the following: SCHEDULE OF PREPAID EXPENSE AND OTHER CURRENT ASSETS | | | December 31, 2025 | | | December 31, 2024 | | | | Prepaid insurance | | $ | 390,361 | | | $ | 506,489 | | | | Prepaid research and development | | | 392,572 | | | | 150,000 | | | | Other prepaid expenses | | | 19,607 | | | | 175,088 | | | | Total prepaid expenses and other current assets | | $ | 802,540 | | | $ | 831,577 | | | **** **** | F-11 | | | | | **** **NOTE 4: ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES** Accounts payable and other current liabilities were comprised of the following: SCHEDULE OF ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES | | | December 31, 2025 | | | December 31, 2024 | | | | Accounts payable | | $ | 544,057 | | | $ | 870,229 | | | | Accrued employee costs | | | 4,025,341 | | | | 1,371,498 | | | | Accrued professional fees | | | 322,039 | | | | 72,054 | | | | Accrued research and development | | | 1,098,956 | | | | 860,958 | | | | Accrued board fees | | | 78,500 | | | | 117,750 | | | | State franchise taxes payable | | | 84,100 | | | | - | | | | Other accrued expenses | | | 5,582 | | | | 17,228 | | | | Total accounts payable and other current liabilities | | $ | 6,158,575 | | | $ | 3,309,717 | | | **** **NOTE 5: STOCK-BASED COMPENSATION** The Company has an equity incentive plan for grants to employees, officers, consultants, directors, and other service providers that was approved in 2021 (the 2021 Plan). The 2021 Plan provides for the grant of non-qualified stock options, incentive stock options, restricted stock awards, restricted stock units, unrestricted stock awards, stock appreciation rights and other forms of stock-based compensation. The 2021 Plan permits the Companys board to change the type, terms, and conditions of awards as circumstances may change. This flexibility to adjust the type of compensation to be granted is particularly important given current economic and world events. A summary of the stock option activity during the period ended December 31, 2025, is presented in the table below: SCHEDULE OF STOCK OPTION ACTIVITY | | | | | | Weighted average | | | | | | | | | Number of options | | | Exercise price | | | Remaining contractual life (in years) | | | Intrinsic value | | | | Outstanding as of January 1, 2025 | | | 103,114 | | | $ | 225.68 | | | | 7.6 | | | $ | - | | | | Granted | | | 28,301 | | | $ | 2.80 | | | | - | | | $ | - | | | | Forfeited and cancelled | | | (7,508 | ) | | $ | - | | | | - | | | $ | - | | | | Outstanding as of December 31, 2025 | | | 123,907 | | | $ | 104.70 | | | | 7.3 | | | $ | 24,000 | | | | Exercisable as of December 31, 2025 | | | 80,373 | | | $ | 153.26 | | | | 6.2 | | | $ | - | | | | Vested and expected to vest as of December 31, 2025 | | | 123,907 | | | $ | 104.70 | | | | 7.3 | | | $ | 24,000 | | | In addition, on December 22, 2025, in connection with the Investment Transaction with David E. Lazar, see Note 6(e), the Company entered into employment modification agreements (the Modification Agreements) with its executive officers. Pursuant to the Modification Agreements, the executive officers agreed to reduce the notice period for termination for any reason to 10 days and waive the severance benefits under their original employment agreements in exchange for a combination of an equity settlement payment in lieu of cash payable in 350,000 shares of common stock, based on $2.03 per share, and a cash payment of approximately $3.50 million. The following table summarizes the total stock-based compensation expense included in the consolidated statements of operations for the periods presented: SCHEDULE OF STOCK BASED COMPENSATION EXPENSES | | | 2025 | | | 2024 | | | | | | For the year ended December 31, | | | | | | 2025 | | | 2024 | | | | Research and development | | $ | 287,675 | | | $ | 624,480 | | | | General and administrative | | | 1,070,407 | | | | 1,681,369 | | | | Total stock-based compensation expense | | $ | 1,358,082 | | | $ | 2,305,849 | | | As of December 31, 2025, total compensation cost not yet recognized related to unvested stock options was approximately $0.26 million, which is expected to be recognized over a weighted-average period of approximately 1.2 years. | F-12 | | | | | The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option. The weighted average inputs used to measure the value of the options granted during the years ended December 31, 2025 and 2024 are presented in the table below. The weighted average fair value of stock options issued during the years ended December 31, 2025 and 2024 was $6.72 and $36.68 per share, respectively. SCHEDULE OF WEIGHTED AVERAGE INPUTS USED TO MEASURE VALUE OF OPTIONS GRANTED | | | 2025 | | | 2024 | | | | Exercise price | | $ | 7.69 | | | $ | 43.12 | | | | Expected term (in years) | | | 5.6 | | | | 5.8 | | | | Volatility | | | 124.9 | % | | | 114.78 | % | | | Risk free rate | | | 4.0 | % | | | 4.0 | % | | | Dividend yield | | | 0 | % | | | 0.0 | % | | The following table presents the exercise price of outstanding stock options as of December 31, 2025: SCHEDULE OF EXERCISE PRICE OF OUTSTANDING STOCK OPTIONS | Exercise price | | Options outstanding | | | | | | | | | | $0.01 - $80.00 | | | 75,288 | | | | $0.01 - $80.00 | | | 75,288 | | | | $80.01 or higher | | | 48,619 | | | | Total | | | 123,907 | | | **NOTE 6: CAPITALIZATION** | | a. | As of December 31, 2025 and December 31, 2024, the Company had 200,000,000 shares of common stock authorized and 2,167,324 and 428,799 shares issued and outstanding, respectively. As of December 31, 2025 and December 31, 2024, the Company had 5,000,000 shares of preferred stock authorized and 300,000 shares of Series AA Preferred Stock and 700,000 shares of Series AAA Preferred Stock issued and outstanding as of December 31, 2025. There were no shares of preferred stock issued or outstanding as of December 31, 2024. As of December 31, 2025 and December 31, 2024, there were warrants outstanding to purchase an aggregate of 1,788,729 and 238,423 shares of common stock, respectively. As of December 31, 2025, these warrants were exercisable at a weighted average price of $28.72 and their weighted average remaining contractual term was 4.3 years. On February 11, 2026, the Company reduced the exercise of warrants to purchase an aggregate of 1,676,425 shares of the Companys common stock that were issued in financing transactions during 2024 and 2025 to $1.75 per share. For more details see Note 11. Following this adjustment, the total outstanding warrants at December 31, 2025 are exercisable at a weighted average price of $19.57. | | | | | | | | | b. | On January 16, 2025, the Company completed a private placement offering pursuant to which the Company sold and issued to certain investors an aggregate of 75,335 shares of common stock and warrants to purchase 75,335 shares of common stock (the January 2025 Warrants). The shares and January 2025 Warrants were sold on a combined basis for consideration of $29.82 for one share and one January 2025 Warrant. The January 2025 Warrants are immediately exercisable at an exercise price of $26.32 per share and expire five years from the date of issuance. The total net proceeds were approximately $2.0 million, after deducting placement agent and other offering expenses in the amount of approximately $0.25 million. In February 2025, the Company filed a registration statement to register the resale by the investors of the shares of common stock and shares of common stock issuable upon exercise of the January 2025 Warrants. The registration statement was declared effective on February 11, 2025. In addition, in connection with the January 2025 Offering, the Company issued to the placement agent and its designees warrants to purchase an aggregate of 5,268 shares of common stock at an exercise price of $32.90. The placement agent warrants are exercisable six months from the date of issuance and expire on the fifth anniversary of the issue date. The fair value of a warrant to purchase one share of common stock that was issued to the placement agent was $20.72. On February 11, 2026, the Company reduced the exercise price of the January 2025 Warrants and the placement agent warrants to $1.75 per share. For more details see Note 11. | | | F-13 | | | | | | | c. | On February 12, 2025, the Company entered into the SEPA with Yorkville, which provides that, upon the terms and subject to the restrictions and satisfaction of the conditions in the SEPA, Yorkville is committed to purchase up to an aggregate of $20.0 million of the Companys shares of common stock over a 36-month period. At the Companys option, the shares of common stock would be purchased by Yorkville from time to time at a price equal to 97% of the lowest of the three daily VWAPs during a three consecutive trading day period commencing on the date that the Company, subject to certain limitations, delivers a notice to Yorkville that the Company is committing Yorkville to purchase such shares of common stock. The Company may also specify a certain minimum acceptable price per share in each advance. The Company will control the timing and amount of sales of the Companys shares to Yorkville. As consideration for Yorkvilles irrevocable commitment to purchase shares of the Companys common stock upon the terms of and subject to restrictions and satisfaction of the conditions set forth in the SEPA, upon execution of the SEPA, the Company issued to Yorkville 10,927 shares of common stock as commitment shares. Under the applicable Nasdaq Rules and pursuant to the SEPA, in no event may the Company issue or sell to Yorkville more than 100,830 shares of common stock (the Exchange Cap), which is 19.99% of the shares of common stock outstanding immediately prior to the execution of the SEPA, unless (i) the Company obtains stockholder approval to issue shares of common stock in excess of the Exchange Cap, or (ii) the average price of all applicable sales of common stock under the SEPA equals or exceeds $22.882 per share (which represents the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) on the trading day immediately preceding the effective date or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the effective date). On February 12, 2025, the Company filed a Form S-1 covering the resale of up to 357,142 shares of common stock comprised of (i) 10,927 commitment shares, and (ii) up to 346,215 shares of common stock reserved for issuance and sale to Yorkville under the SEPA. The Form S-1 was declared effective on February 13, 2025. During 2025, the Company sold and issued 89,902 shares of common stock under the SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, the Company terminated the SEPA with Yorkville, and the SEPA is no longer in effect. | | | | | | | | d. | On June 1, 2022, the Company entered into an ATM Agreement which was amended on September 1, 2022 with a sales agent, pursuant to which the Company may offer and sell, from time to time through the sales agent, shares of the Companys common stock. The issuance and sale of common stock by the Company under the ATM Agreement is being made pursuant to the Companys effective shelf registration statement on Form S-3 filed with the SEC on August 13, 2025 and declared effective on August 20, 2025. During 2025 the Company sold 520,000 shares of the Companys common stock for aggregate net proceeds of approximately $2.25 million, after deducting issuance expenses in the amount of approximately $0.1 million. The Companys ability to issue shares under the shelf registration statement on Form S-3 is limited by General Instruction I.B.6 to Form S-3. | | | | | | | | | e. | On December 22, 2025, the Company entered the Purchase Agreement with David E. Lazar pursuant to which the Company agreed to issue and sell an aggregate of 1,000,000 shares of convertible preferred stock, consisting of (i) 300,000 shares of Series AA Convertible Preferred Stock and (ii) 700,000 shares of Series AAA Convertible Preferred Stock, at a purchase price of $6.00 per share for gross proceeds of $6.0 million. The transaction closed on December 23, 2025. Each share of Series AA Preferred Stock is convertible, subject to stockholder approval, into 20 shares of the Companys common stock, par value $0.01 per share. Each share of Series AAA Preferred Stock is convertible into 150 shares of Common Stock. Upon full conversion, the Preferred Stock would convert into an aggregate of 111,000,000 shares of Common Stock. Conversion of the Preferred Stock was subject to compliance with Nasdaq Listing Rule 5635, which requires stockholder approval for issuances of Common Stock in excess of 19.99% of the Companys outstanding shares. Accordingly, the Company agreed to seek stockholder approval for the issuance of the full number of shares of common stock underlying the Preferred Stock. Conversion approval was obtained subsequent to December 31, 2025, on February 26, 2026. See additional discussion in Note 11. The Company determined that the Preferred Stock was not within the scope of ASC 480 as it did not contain any embedded derivatives required to be bifurcated from the Preferred Stock therefore these instruments were equity classified within permanent equity. | | | | | | | | f. | On December 23, 2025, the Company filed a Series AA Certificate of Designation and Series AAA Certificate of Designation with the Secretary of State of Delaware designating the rights, preferences and limitations of each of the shares of the Series AA Preferred Stock and the Series AAA Preferred Stock (collectively, the Preferred Stock), respectively. | | | | | | | | | | Following stockholder approval, eachshare of Series AA Preferred Stock is convertible into 20 shares of the Companys Common Stock, and each share of Series AAA Preferred Stock is convertible into 150 shares of Common Stock. The Preferred Stock shall rank: | | | | | senior to all of the common stock; | | | | | senior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms junior to the Preferred Stock (Junior Securities); and | | | | | on parity with each other (i.e. Series AA Preferred Stock shall rankpari passuwith Series AAA Preferred Stock) | | | | | in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily (each, a Dissolution). | | | | | | | | | | In the event of a Dissolution, holders of the Preferred Stock will be entitled to receive, before any distributions to the holders of the Common Stock and the holders of junior securities, an amount per share of Preferred Stock equal to the greater of (i) $6.00 (subject to adjustment in the event of any stock split, combination or reclassification), plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of the Preferred Stock been converted into common stock (without regard to any restrictions on conversion) immediately prior to such Dissolution. Shares of Preferred Stock will be entitled to receive dividends equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends actually paid on shares of common stock. For the avoidance of any doubt, neither a change in control of the Company, the merger or consolidation of the Company with or into any other entity, nor the sale, lease, exchange or other disposition of all or substantially all of the Companys assets shall, in and of itself, be deemed to constitute a Dissolution. | | | | | | | | | | Shares of Preferred Stock will generally have no voting rights, except to the extent provided by applicable law, and except that the consent of the holders of a majority of the outstanding shares of the Preferred Stock will be required to (i) alter, repeal or change the powers, preferences or rights of the Preferred Stock or alter or amend the Certificate of Designations so as to adversely affect the Preferred Stock, (ii) supplement, amend, restate, repeal, or waive any provision of the Companys amended and restated certificate of incorporation or bylaws, or file any certificate of amendment, certificate of designation, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Companys amended and restated certificate of incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (iii) increase or decrease (other than by conversion) the number of authorized shares of the Preferred Stock; or (iv) enter into any agreement with respect to any of the foregoing. | | | F-14 | | | | | **NOTE 7: CONVERTIBLE PROMISSORY NOTES** In June 2025, the Company entered into securities purchase agreements with certain investors, including the chief executive officer of the Company, for the offering in a private placement of convertible promissory notes (the Notes) in the aggregate principal amount of approximately $5.7 million and warrants to purchase shares of common stock. The Notes bore interest at the rate of 6% per year and matured on July 28, 2026. The Notes were convertible, together with accrued interest, into shares of the Companys common stock on the date which was the earlier of (i) the date that is 30 days from the effectiveness of a reverse split effected by the Company on Nasdaq (i.e. July 27, 2025), and (ii) the one-year anniversary from the issuance of the Notes. On July 27, 2025, the Notes automatically converted into an aggregate of 501,566 shares of the Companys common stock at a conversion price of $8.3024 per share, which represented 80% of the average Nasdaq closing price of the Companys common stock for the five trading days immediately preceding and including the conversion date, subject to a maximum conversion price of $11.20 per share. In addition, for investors whose conversions would have exceeded ownership limits of 4.99% or 9.99%, the Company issued pre-funded warrants to purchase an aggregate of 190,795 shares of common stock which represent the portion that would otherwise exceed the applicable threshold. The pre-funded warrants have substantially the same terms as the July 2025 Warrants (as defined below), except they are exercisable at $0.01 per share and do not have an expiration date. As of December 31, 2025, pre-funded warrants to purchase an aggregate of 190,795 shares of common stock had been exercised. In connection with the automatic conversion of the Notes, the Company also issued to investors in the offering warrants to purchase an aggregate of 1,384,722 shares of common stock (the July 2025 Warrants). The July 2025 Warrants are exercisable at a price of $8.3024 per share and have a term of five years, expiring on July 27, 2030. On February 11, 2026, the Company reduced the exercise price of the July 2025 Warrants to $1.75 per share. For more details see Note 11. The Company made an irrevocable election to measure the Notes at fair value as it believes the fair value option provides a greater ability to estimate the outcome of future events as facts and circumstances change, particularly with respect to changes in the fair value of the common stock. Accordingly, the Company recognized an increase in the fair value of the Notes of approximately $1.15 million during 2025. On July 27, 2025, the Company determined the fair value of the Notes immediately prior to their conversion, based on the closing share price on that date and the number of shares to be issued. Upon conversion, the Company reclassified the fair value of the Notes, approximately $6.8 million, net of approximately $9,000 for issuance cost, from current liabilities to shareholders equity. Placement agent fees and other offering-related expenses totaling approximately $0.8 million were recognized as general and administrative expenses in the statement of operations. In addition, the Company issued to the placement agent and its designees warrants to purchase an aggregate of 83,083 shares of common stock at an exercise price of $8.3024. The placement agent warrants have substantially the same terms as the July 2025 Warrants, except they include a cashless exercise feature and expire on the fifth anniversary of the issuance date. The fair value of each July 2025 Warrant and each placement agent warrant was $8.73. On February 11, 2026, the Company reduced the exercise price of the placement agent warrants to $1.75 per share. For more details see Note 11. **NOTE 8: COMMITMENTS AND CONTINGENCIES** *Litigation* From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount of such potential loss can be estimated, the Company accrues liability for the estimated loss. Legal proceedings are subject to uncertainties and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation. | F-15 | | | | | **NOTE 9: INCOME TAXES** **** As of December 31, 2025, the Company had net operating loss carry forwards that may be available to reduce future years taxable income. Income before provision for income taxes consisted of the following: SCHEDULE OF INCOME BEFORE PROVISION FOR INCOME TAXES | | | 2025 | | | 2024 | | | | | | For the year ended December 31, | | | | | | 2025 | | | 2024 | | | | U.S. | | $ | (21,447,994 | ) | | $ | (15,577,092 | ) | | | Foreign | | | 600,800 | | | | 556,663 | | | | Total income before provision for income taxes | | $ | (20,847,194 | ) | | $ | (15,020,429 | ) | | The provision for income taxes on earnings from continuing operations consisted of the following: SCHEDULE OF INCOME TAX PROVISION | | | 2025 | | | 2024 | | | | | | For the year ended December 31, | | | | | | 2025 | | | 2024 | | | | Current: | | $ | | | $ | | | | Federal | | | - | | | | - | | | | State | | | 1,716 | | | | 1,700 | | | | Foreign | | | - | | | | - | | | | Total Current | | $ | 1,716 | | | $ | 1,700 | | | | Deferred: | | | | | | | | | | | Federal | | | - | | | | - | | | | State | | | - | | | | - | | | | Foreign | | | - | | | | - | | | | Total Deferred | | | - | | | | - | | | | Income tax expense | | $ | 1,716 | | | $ | 1,700 | | | The reconciliation of federal statutory income tax rate to our effective tax rate after the adoption of ASU 2023-09 is as follows: SCHEDULE OF EFFECTIVE TAX RATE AND STATUTORY TAX RATE | | | For the year ended December 31, 2025 | | | | | | | | | | | | | U.S. Federal Statutory Tax Rate | | | (4,374,816 | ) | | | 21.0 | % | | | State and Local Income Taxes, Net of Federal Income Tax Effect* | | | 1,356 | | | | 0.0 | % | | | Permanent differences | | | | | | | | | | | Permanent differences,Percent | | | | | | | | | | | Foreign Tax Effects | | | (126,168 | ) | | | 0.6 | % | | | Changes in Valuation Allowances | | | 4,077,647 | | | (19.6 | )% | | | Stock-based compensation | | | | | | | | | | | Stock-based compensation, percent | | | | | | | | | | | Nontaxable or Nondeductible items: | | | | | | | | | | | Change in fair value of convertible notes | | | 242,218 | | | | (1.2 | )% | | | Other | | | 385,207 | | | | (1.8 | )% | | | Other Adjustments | | | (203,728 | ) | | | 1.0 | % | | | Effective Tax Rate | | $ | 1,716 | | | | 0.0 | % | | | * | State taxes in California made up the majority (greater than 50%) of the tax effect in this category. | | | | | For the year ended December 31, 2024 | | | | | | | | | | | | | U.S. Federal Statutory Tax Rate | | | (3,154,290 | ) | | | 21.0 | % | | | State and local taxes, net of federal tax benefit | | | (11,768 | ) | | | 0.1 | % | | | Permanent differences | | | 230,890 | | | | (1.5 | )% | | | Change in valuation allowance | | | 2,454,200 | | | | (16.3 | )% | | | Stock-based compensation | | | 482,045 | | | | (3.2 | )% | | | Other | | | 623 | | | | 0.0 | % | | | Income tax expense | | $ | 1,700 | | | | 0.1 | % | | | F-16 | | | | | The significant components of deferred income taxes were as follows: SCHEDULE OF NET DEFERRED TAX ASSETS | | | 2025 | | | 2024 | | | | Deferred tax assets: | | | | | | | | | | | Net operating losses | | $ | 57,370,722 | | | $ | 53,447,116 | | | | Capitalized R&D | | | 2,289,605 | | | | 2,959,591 | | | | Stock-based compensation | | | 1,070,010 | | | | 288,756 | | | | Accruals | | | 6,945 | | | | 249,495 | | | | Operating lease liabilities | | | - | | | | 17,760 | | | | Other | | | 435 | | | | 616 | | | | Total gross deferred tax assets | | | 60,737,717 | | | | 56,963,334 | | | | | | | | | | | | | | | Deferred tax liabilities: | | | | | | | | | | | Right-of-use asset | | | - | | | | (17,340 | ) | | | Gross deferred tax liabilities | | | - | | | | (17,340 | ) | | | | | | | | | | | | | | Gross deferred tax assets | | | 60,737,717 | | | | 56,945,994 | | | | Valuation Allowance | | | (60,737,717 | ) | | | (56,945,994 | ) | | | Net deferred tax asset/(liabilities) | | $ | - | | | $ | - | | | Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is more likely than not. Realization of the future tax benefits is dependent on the Companys ability to generate sufficient taxable income within the carryforward period. Because of the Companys recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance for the years ended December 31, 2025 and 2024. The net change in total valuation allowance for the years ended December 31, 2025 and 2024 was an increase of $3.8 million and increase of $2.5 million respectively. At December 31, 2025, the Company has United States federal and state net operating loss (NOL) carryforwards of $54.6 million and $8.1 million, respectively. The federal NOL carryforwards generated in pre-2018 tax years of $0.8 million will begin to expire in 2036 while federal NOLs generated after 2017 of $53.8 million will carry forward indefinitely. The state NOL carryforwards of $8.1 million will begin to expire in 2035 unless previously utilized. At December 31, 2025, the Company also had Israel NOL carryforwards of $197.2 million. The Israel NOLs carry forward indefinitely. The Companys ability to utilize its net operating losses may be limited under Section 382 and 383 of the Internal Revenue Code. The limitations apply if an ownership change, as defined by Section 382, occurs. Generally, an ownership change occurs when certain shareholders increase their aggregate ownership by more than 50 percentage points over their lowest ownership percentage in a testing period (typically three years). Although the Company has not undergone a Section 382 analysis, it is possible that the utilization of the net operating losses could be substantially limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be utilized against future taxes. As a result, the Company may not be able to take full advantage of these carryforwards for federal and state tax purposes. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation. The Company recognizes the benefit of tax positions taken or expected to be taken in its tax returns in the consolidated financial statements when it is more likely than not that the position will be sustained upon examination by authorities. Recognized tax positions are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. As of December 31, 2025 and 2024 the Company has not recorded any unrecognized tax benefits. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. As of December 31, 2025 and 2024, the Company recorded no accrued interest and penalties related to unrecognized tax benefits. | F-17 | | | | | The Company files U.S. federal and various state income tax returns and is subject to the examination for tax years back to 2022 and 2021 for federal and state purposes, respectively, and its NOLs dating back to inception are subject to adjustment by the taxing authorities if claimed on future tax filings for which the statute remain open to examination. The Company also files Israeli tax returns and is subject to examination for tax years back to 2021. The Company is not currently under audit by the Internal Revenue Service or other similar national, state and local authorities. **NOTE 10: SEGMENT INFORMATION** **** The Company operates in one business segment, focusing on the development of a novel and patented systemically administered anti-cancer and anti-viral immunotherapy. The Companys chief operating decision maker (CODM) is the chief executive officer. The CODM assesses performance for the segment based on operating expenses as reported in the accompanying consolidated statements of operations. As such, the CODM uses cash forecast models in deciding how to invest into the segment. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results is used in assessing performance of the segment. The following table presents reportable segment loss, including significant expenses regularly provided to the CODM, attributable to the Companys reportable segment for the years ended December 31, 2025 and 2024: SCHEDULE OF REPORTABLE SEGMENT LOSS | | | 2025 | | | 2024 | | | | | | For the Year ended December 31, | | | | | | 2025 | | | 2024 | | | | Research and development: | | | | | | | | | | | External research and development | | $ | 5,832,371 | | | $ | 4,355,449 | | | | Internal personnel costs | | | 3,508,588 | | | | 2,895,648 | | | | Total research and development | | | 9,340,959 | | | | 7,251,097 | | | | General and administrative | | | 10,492,554 | | | | 8,114,654 | | | | Other income, net | | | (138,018 | ) | | | (343,724 | ) | | | Change in fair value of convertible promissory notes | | | 1,153,421 | | | | - | | | | Net loss | | $ | 20,848,916 | | | $ | 15,022,027 | | | **NOTE 11: SUBSEQUENT EVENTS** The Company evaluated subsequent events from December 31, 2025, the date of these consolidated financial statements, through March 17, 2026, which represents the date the consolidated financial statements were issued, for events requiring recognition or disclosure in the consolidated financial statements for the year ended December 31, 2025. The Company concluded that no events have occurred that would require recognition or disclosure in the consolidated financial statements, except for the following: | a. | On February 11, 2026, the Company entered into warrant repricing agreements with certain holders of warrants to purchase an aggregate of 913,638 shares of the Companys common stock that were issued in financing transactions during 2024 and 2025. Pursuant to these agreements, the exercise price of such warrants was reduced to $1.75 per share. As a condition to the repricing, the participating holders agreed to enter into a voting agreement pursuant to which they agreed to vote all shares of common stock held by them in favor of the proposals that were presented at the Companys special stockholder meeting scheduled for February 26, 2026. In addition, on February 11, 2026, the Companys board of directors approved a reduction of the exercise price to $1.75 per share for the remaining warrants and placement agent warrants to purchase an aggregate of 762,787 shares of common stock issued in the same financing transactions. Other than the reduction in the exercise price, all other terms and provisions of the warrants remain unchanged. | | | | | | | | b. | On February 26, 2026, the Companys stockholders voted to approve, among other things, the issuance of shares of the Companys common stock issuable upon the conversion of the Series AA Preferred Stock and Series AAA Preferred Stock in accordance with Nasdaq Listing Rules 5635(b) and 5635(d). For more details see Note 6(e). | | | F-18 | | | | | **Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.** None. **Item 9A. Controls and Procedures. Disclosure Controls and Procedures.** *Limitations on Effectiveness of Controls and Procedures* In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. *Evaluation of Disclosure Controls and Procedures* We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed, in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer (who is our principal executive officer and principal financial officer), to allow timely decisions regarding required disclosures. Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of December 31, 2025, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2025. *Managements Annual Report on Internal Control over Financial Reporting* Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, our management concluded that as of December 31, 2025, our internal control over financial reporting was effective. *Attestation Report of the Independent Registered Public Accounting Firm* This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting due to an exemption provided to issuers that are not large accelerated filers nor accelerated filers under applicable SEC rules. | 69 | | | | | **Changes in Internal Control over Financial Reporting** There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. **Item 9B. Other Information.** During the three months ended December 31, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K. **Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.** Not applicable. **PART III** **Item 10. Directors and Executive Officers.** The following table sets forth information relating to our executive officers and directors as of March 16, 2026. | Name | | Age | | Position | | | Executive Officers | | | | | | | David E. Lazar | | 35 | | Co-Chief Executive Officer and Chairman | | | Jeffrey A. Meckler | | 59 | | Co-Chief Executive Officer and Director | | | Michael J. Newman, Ph.D. | | 70 | | Chief Scientific Officer | | | Nir Sassi | | 50 | | Chief Financial Officer | | | Walt A. Linscott, Esq. | | 65 | | Chief Operating Officer | | | | | | | | | | Non-Executive Directors | | | | | | | Dr. Roger J. Pomerantz | | 68 | | Director | | | Avraham Ben-Tzvi | | 55 | | Director | | | Anthony J. Maddaluna | | 72 | | Director | | | William B. Hayes | | 59 | | Director | | | David Natan | | 72 | | Director | | | Jerome Jabbour | | 51 | | Director | | | Matthew McMurdo | | 54 | | Director | | Biographical information with respect to our executive officers and directors is provided below. **Information about Our Executive Officers** **** **David E. Lazar** has served on our Board since December 2025 and was appointed in connection with the closing of the Investment Transaction. Mr. Lazar has served as the CEO and Chairman of Kala Bio Inc. (NASDAQ: KALA) since December 2025. Mr. Lazar previously served as Chief Executive Officer of Novabay Pharmaceuticals, Inc. (NASDAQ: NBY) from August - November 2025. Prior to that, Mr. Lazar served as director on the board of directors of FiEE, Inc. (NASDAQ: FIEE) (formerly Minim, Inc.) where he also served as the Chief Executive Officer and Chief Financial Officer from December 2023 to February 2025. Mr. Lazar served as interim Chief Executive Officer and principal financial officer of Bio Green Med Solution Inc. (NASDAQ: BGMS) (formerly Cyclacel Pharmaceuticals, Inc.), from January 2, 2025 through February 26, 2025. Mr. Lazar served as the Chief Executive Officer of Black Titan Corporation listed on Nasdaq (NASDAQ: BTTC) (formerly Titan Pharmaceuticals, Inc.) from August 2022 to April 2024, where he also served as a director and board chairman from August 2022 until October 2023. Mr. Lazar also served as the chief executive officer and chairman of the board of directors of OpGen, Inc. (OTC: OPGN) from March 2024 to August 2024. Mr. Lazar also served as the president and a member of the board of directors of LQR House Inc. (NASDAQ: YHC) from October 2024 to April 2025. Mr. Lazar served as the Chief Executive Officer of Activist Investing from March 2018 to April 2022. The Board believes that Mr. Lazars expertise as an investor with a diverse knowledge of capital markets and experience leading public companies qualifies him to serve as a member of the Companys Board of Directors. **** | 70 | | | | | **** **Jeffrey A. Meckler**has served as our Chief Executive Officer since July 2021 and member of our board of directors since inception in February 2021. Previously, Mr. Meckler served as our sole officer from inception to July 2021, Intec Israels Vice Chairman of the board of directors from April 2017, as Intec Israels Chief Executive Officer from July 2017 and as President and Secretary and director of Intec Parent, Inc. from March 2021 until the Merger. Mr. Meckler has served on numerous public and private corporate boards and since October 2014 has served as a director of Travere Therapeutics (Nasdaq: TVTX). Mr. Meckler served as Chief Executive Officer and a director of CoCrystal Pharma, Inc., a pharmaceutical company, from April 2015 to July 2016. He has also served as a director of QLT, Inc. (Nasdaq: QLTI), a biotechnology company, from June 2012 to November 2016, as well as the Managing Director of The Andra Group, a life sciences consulting firm since 2009. Mr. Meckler also served as Chief Executive Officer of Trieber Therapeutics from January 2017 to July 2017. Earlier in his career, Mr. Meckler held a series of positions at Pfizer Inc. in manufacturing systems, market research, business development, strategic planning and corporate finance, which included playing a significant role in acquisitions and divestitures. Mr. Meckler is the past President and continues to serve on the board of directors of Children of Bellevue, a non-profit organization focused on advocating and developing pediatric programs at Bellevue Hospital Center. Mr. Meckler holds a B.S. in Industrial Management and M.S. in Industrial Administration from Carnegie Mellon University. In addition, Mr. Meckler received his J.D. from Fordham University School of Law. We believe that Mr. Meckler is qualified to serve on our board of directors because of his extensive executive leadership experience in the biopharmaceutical industry, including his service at Pfizer, and his experience serving on public company boards. **Michael J. Newman, Ph.D.**has served as our Chief Scientific Officer since August 2021 and served as a board member from August 2021 until February 2026. Dr. Newman is a pharmaceutical/biotechnology executive with over 40 years of experience carrying out and managing oncology research and development, in addition to undergraduate and graduate research and training in microbiology. He was the Founder, President, Chief Executive Officer and a member of the board of directors of Decoy (from August 2013 to August 2021). His previous positions also include faculty appointments in Biochemistry at Brandeis University (from 1984 to 1987) and the Roche Institute of Molecular Biology (from 1987 to 1992), Senior Associate Director of Oncology at Sandoz Pharmaceuticals (world-wide head of Cancer Biology), and Executive Director of Oncology at Novartis Pharmaceuticals (Head of Cancer Biology in the U.S.) (from 1992 to 1997), and senior management at several Biotechnology companies (from 1998 to 2012). Dr. Newman received a bachelors degree in Biology from the University of California at San Diego, a Ph.D. in Cell and Developmental Biology from Harvard Medical School (National Science Foundation Pre-Doctoral Fellow) and carried out post-doctoral research at Cornell University. **Nir Sassi**has served as our Chief Financial Officer since July 2021 and served as Intec Israels Chief Financial Officer from March 2010 until the Merger (other than from January 2015 to August 2016, during which period Mr. Sassi served as Intec Israels VP Finance), and its President from March 2021 until the Merger. Prior to his service with Intec Israel, Mr. Sassi served as a Senior Manager at PricewaterhouseCoopers Israel, an accounting firm, from 2002 until 2010, including two years relocation to the PricewaterhouseCoopers New York office. Mr. Sassi is a certified public accountant in Israel and has a bachelors degree in economics and accounting from Ben Gurion University in Beer Sheva, Israel. **Walt A. Linscott, Esq.**has served as our Chief Operating Officer since March 2023. Prior to that, he served as our Chief Business Officer from July 2021 until March 2023. Mr. Linscott joined Intec Israel in October 2017 and served as its Chief Business Officer from July 2018 until the Merger. Previously, from October 2017 to July 2018, Mr. Linscott served as Intec Israels Chief Administrative Officer. Prior to his service with Intec Israel, Mr. Linscott co-founded a global consulting enterprise in October 2014 providing strategic advice to developing companies and most recently served as the President and Chief Operating Officer of Treiber Therapeutics, Inc. from March 2017 to October 2017. Mr. Linscott also has held senior level executive positions at public and private medical device and pharmaceutical companies including Cocrystal Pharma, Inc., from July 2015 to March 2017, Carestream Health, Inc., from January 2011 to January 2015 and Solvay Pharmaceuticals, Inc., from 2001 to 2005. In addition to this experience, he was an associate and partner at Thompson Hine LLP from 1990 to 2001, and again as a partner from 2005 to 2010 where he founded the firms Atlanta, Georgia office, served as Partner in Charge and Chair of the firms Life Science Practice Group. Mr. Linscott holds a Master of Science in Experimental and Translational Therapeutics from the University of Oxford, a Postgraduate Diploma in Global Business from the University of Oxford and a Postgraduate Diploma in Entrepreneurship from Cambridge University. He earned a bachelors degree from Syracuse University and a Juris Doctor from the University of Dayton School of Law. Mr. Linscott served on active duty as an Officer in the United States Marine Corps prior to attending law school. | 71 | | | | | **** **Non-Executive Directors** **Dr. Roger J. Pomerantz**served as our Chairman from July 2021 until December 2025 and previously served on Intec Israels board of directors from March 2018 until the Merger. Dr. Pomerantz served as Chairman and Chief Executive Officer of Contrafect Corporation (Nasdaq: CFRX) from April 2019 to November 2023. Prior to that, he served as Vice Chairman of Contrafect from May 2014 to April 2019. Previously, Dr. Pomerantz was a Venture Partner at Flagship Pioneering from 2014 through 2019. In addition, from November 2013 to December 2019, Dr. Pomerantz served as Chairman of the board of directors of Seres Therapeutics, Inc. (Nasdaq: MCRB), a biotechnology company, and as its President and Chief Executive Officer from June 2014 to January 2019. Prior to joining Seres, Dr. Pomerantz was Worldwide Head of Licensing & Acquisitions, Senior Vice President at Merck & Co. Inc., where he oversaw all licensing and acquisitions at Merck Research Laboratories, including external research, out-licensing regional deals, and academic alliances. Previously, he served as Senior Vice President and Global Franchise Head of Infectious Diseases at Merck. Prior to joining Merck, Dr. Pomerantz was Global Head of Infectious Diseases for J&J. Dr. Pomerantz has. Since February 2020, he served as Chairman of Collplant Biotechnologies (Nasdaq: CLPT), since May 2022 he served as Vice Chairman of Enlivex Therapeutics Ltd. (Nasdaq: ENLV), and was previously a member of the board of directors of Viracta (Nasdaq: VIRX) from June 2020 until December 2024, Rubius Therapeutics (Nasdaq: RUBY) from 2014 to 2019 and Evelo Therapeutics (Nasdaq: EVLO) from 2015 to 2016. Dr. Pomerantz earned his B.A. in biochemistry at the Johns Hopkins University and his M.D. at the Johns Hopkins School of Medicine. He completed his internal medicine internship and residency training, and his subspecialty clinical and research training in infectious diseases and virology at the Massachusetts General Hospital of Harvard Medical School. His post-doctoral research training in molecular retrovirology was obtained at both Harvard Medical School and the Whitehead Institute of the Massachusetts Institute of Technology (MIT). Dr. Pomerantz also served as the Chief Resident at the Massachusetts General Hospital. Following his medical-scientist training, he was an Endowed, Tenured Professor of Medicine and Molecular Pharmacology and Chairman of the Infectious Diseases Department of Thomas Jefferson University in Philadelphia. Dr. Pomerantz is an internationally recognized expert in HIV molecular pathogenesis and latency. He has developed ten approved infectious disease drugs in important diseases including HIV, HCV, tuberculosis, and Clostridium difficile infection. We believe Dr. Pomerantz is qualified to serve on our board of directors because of his significant scientific, executive and board leadership experience in drug development and in the pharmaceutical industry. **Avraham Ben-Tzvi** is the founder of ABZ Law Office, a boutique Israeli law firm specializing in corporate and securities laws, commercial law & contracts, and various civil law matters, as well as providing outsourced general counsel services for publicly traded as well as private companies and corporations, which he established in January 2017. Mr. Ben-Tzvi served as Chief Legal Officer and General Counsel of Purple Biotech Ltd. (formerly Kitov Pharma Ltd.) (NASDAQ/TASE: PPBT), a clinical-stage company advancing first-in-class therapies to overcome tumor immune evasion and drug resistance, from November 2015 until April 2020. Prior to that, Mr. Ben-Tzvi served as General Counsel and Company Secretary at Medigus Ltd. (NASDAQ/TASE: MDGS), a minimally invasive endosurgical tools medical device and miniaturized imaging equipment company, from April 2014 until November 2015. Prior to that he served as an attorney at one of Israels leading international law firms where, amongst other corporate and commercial work, he advised companies and underwriters on various offerings by Israeli companies listing in the US and on various SEC related filings. Prior to becoming a lawyer, Mr. Ben-Tzvi worked in several business development, corporate finance and banking roles at companies in the financial services, lithium battery manufacturing and software development industries. Mr. Ben-Tzvi has been serving as a member of the Board of Directors of Black Titan Corporation (NASDAQ: BTTC), a distributor of human capital management software solutions in Southeast Asia, since October 1, 2025, following the completion of a merger with Titan Pharmaceuticals Inc. where he served as a director between August 2022 and the completion of the merger with Black Titan Corporation on October 1, 2025. Between January 5, 2025 and April 2, 2025, Mr. Ben-Tzvi served as a member of the Board of Directors of Cyclacel Pharmaceuticals Inc. (NASDAQ: CYCC) a pharmaceuticals development company. Between October 15, 2024 and December 19, 2024, Mr. Ben-Tzvi served as a member of the Board of Directors of LQR House, Inc. (NASDAQ: YHC), a company in the wine and spirits e commerce sector. Between March 25, 2024 and August 2, 2024, Mr. Ben-Tzvi served as a member of the Board of Directors of OpGen, Inc. (NASDAQ: OPGN), a precision medicine company. Between December 2023 and February 2025, Mr. Ben-Tzvi served as a member of the Board of Directors of Minim, Inc. (NASDAQ: MINM), a company which delivered smart software-driven communications products under the globally recognized Motorola brand and Minim trademark. Mr. Ben-Tzvi holds a B.A., magna cum laude, in Economics from Yeshiva University in New York and an L.L.B., magna cum laude from Shaarei Mishpat College of Law in Hod HaSharon, Israel. Mr. Ben-Tzvi is a licensed attorney and member of the Israel Bar Association and is also licensed as a Notary by the Israeli Ministry of Justice. We believe that Mr. Tzvis profession as a lawyer in Israel and his experience of working with companies having American and Israeli presence qualifies him to serve as a member of the Companys Board of Directors. | 72 | | | | | **** **Jerome D. Jabbour, JD** is currently the Chairman and Chief Executive Officer of Matinas BioPharma Holdings, Inc. (NYSE AMER: MTNB). Mr. Jabbour was appointed Chief Executive Officer in March 2018 and was named Chairman in March 2025. He has served as Matinas President since March 2016. Prior to that he served as Matinas Executive Vice President, Chief Business Officer, General Counsel and Secretary since October 2013 and as one Matinas Directors from April 2012 until November 2013. Mr. Jabbour is also a co-Founder of Matinas Biopharma. Prior to joining Matinas, he was the Executive Vice President and General Counsel of Medimedia USA, or MediMedia, from 2012 to October 2013, a privately held diversified healthcare services company. Prior to MediMedia, he was the Senior Vice President, Head of Global Legal Affairs of Wockhardt Limited (2008-2012), a global pharmaceutical and biotechnology company, and Senior Counsel and Assistant Secretary at Reliant Pharmaceuticals (2004-2008). Earlier in his career, he held positions as Commercial Counsel at Alpharma, Inc. (2003-2004) and as a corporate associate at Lowenstein Sandler LLP (1999-2003). Mr. Jabbour earned his JD from Seton Hall University School of Law in New Jersey and a B.A. in Psychology from Loyola University in Baltimore. He is a member of the New Jersey Bar as well as the Bar of the Supreme Court of the United States. Mr. Jabbours background as an executive, attorney, and his experience working with public companies make him qualified to serve on our Board. **Matthew C. McMurdo** joined the Company as Vice President, New Strategies effective January 15, 2026. Mr. McMurdo has been a consultant for Activist Investing, LLC since 2023 and has served as Managing Member of McMurdo Law Group, LLC, a corporate law practice, since 2010. Previously, Mr. McMurdo was a Partner at Nannarone & McMurdo, LLP, a boutique law firm, from 2008 to 2010. In addition, Mr. McMurdo served as General Counsel of Berkley Asset Management LLC, the general partner of a real estate fund focused on opportunistic and distressed real estate assets, from 2011 to 2013. Mr. McMurdo was Of-Counsel at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., from 2007 to 2008 and an associate at Greenberg Traurig, LLP from 2006 to 2007. Mr. McMurdo served on the Board of Directors, and on the audit and nomination committee, and chairman of the compensation committee of Black Titan Corp. (NASDAQ: BTTC) (formerly, Titan Pharmaceuticals Inc. (NASDAQ: TTNP)) from 2022 to 2024. He also served as a Director at FiEE, Inc. (NASDAQ: FIEE) (formerly, Minim, Inc. (NASDAQ: MINM)) from 2023 to 2025 and as Director at Bio Green Med Solution Inc. (NASDAQ: BGMS) (formerly Cyclacel Pharmaceuticals, Inc.) (NASDAQ: CYCC) from January 2, 2025 through February 26, 2025. Mr. McMurdo also served on the board of directors of OpGen, Inc. (OTC: OPGN) from March 2024 to August 2024. Mr. McMurdo holds a B.S. in Finance from Lehigh University and a J.D., cum laude, from Benjamin N. Cardozo School of Law. Mr. McMurdos extensive experience as an attorney, executive and consulting roles, and prior board positions with public companies makes him qualified to serve on our Board. On September 20, 2024, Mr. McMurdo entered into an order, or the Order, with the SEC, which order finds that Mr. McMurdo engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Securities and Exchange Act of 1934 and Rule 102(e)(1)(ii) of the SECs Rules of Practice. The Order relates to Mr. McMurdos engagement as counsel for a non-SEC reporting public company from 2016 through 2021 and finds, among other things, that Mr. McMurdo prepared, signed, and issued attorney letters for current information containing false or misleading information to support the continued listing of the company on OTC Markets. Mr. McMurdo agreed to the entry of the Order suspending him from appearing and practicing before the SEC as an attorney. Under the Order, McMurdo is permitted to apply for reinstatement after one year. Mr. McMurdo is not yet reinstated as of the date of this Annual Report on Form 10-K. **David Natan** currently serves as President and Chief Executive Officer of Natan & Associates, LLC, a consulting firm offering chief financial officer services to public and private companies in a variety of industries, both domestically and internationally, since 2007. From 2010 to May 2020, Mr. Natan served as Chief Executive Officer of ForceField Energy, Inc. (OTCMKTS: FNRG), a company focused on the solar industry and LED lighting products sourced from China. From February 2002 to November 2007, Mr. Natan served as Executive Vice President of Reporting and Chief Financial Officer of Pharma Net Development Group, Inc., a drug development services and clinical trials company, and, from June 1995 to February 2002, as Chief Financial Officer and Vice President of Global Technovations, Inc., a manufacturer and marketer of oil analysis instruments and speakers and speaker components. Prior to that, Mr. Natan served various roles in increasing responsibility with Deloitte & Touche LLP, a global accounting and consulting firm. Mr. Natan currently serves as a member of the Board of Directors and Chair of the Audit Committee of Sunshine Biopharma, Inc. (Nasdaq: SBFM), a pharmaceutical and nutritional supplement company, since February 2022. Additionally, since April 2024, Mr. Natan has served as a member of the Board of Directors and Audit Committee Chair of FIEE, Inc., a technology company specializing in SAAS solutions and Al software development, primarily in Hong Kong. Previously, Mr. Natan has served as a director for the following public companies: Global Technovations, Forcefield Energy, Black Titan (Nasdaq: BTTC), Vivakor Inc. (Nasdaq: VIVK), Net Brands Corp. (OTC: NBND), OpGen Inc. (OTC: OPGN), and Bio Green Med Solutions (Nasdaq: BGMS). Mr. Natan is a CPA (inactive), holds a B.A. in Economics from Boston University, and was appointed to Omicron Delta Epsilon, an international honor society in the field of Economics. Mr. Natans extensive experience as an executive, his background in finance, and his exposure to public companies qualifies him to be on our Board. **Anthony J. Maddaluna**has served on our board since July 2021 and previously served on Intec Israels board of directors since December 2017 until the Merger. Mr. Maddaluna has more than 40 years of experience in the pharmaceutical manufacturing industry, including leadership positions in plants, regions and globally. From January 2011 to December 2016, Mr. Maddaluna held a series of positions at Pfizer Inc., most recently serving as the Executive Vice President and President of Pfizer Global Supply. Prior to that Mr. Maddaluna served as Senior Vice President of Pfizer Global Manufacturing Strategy and Supply Network Transformation from 2008 until 2011, and as Vice President of Pfizer Global Manufacturing Europe Area from 1998 until 2008. Mr. Maddaluna served as a director of Albany Molecular Research Inc. from February 2016 until its acquisition by The Carlyle Group and GTCR in August 2017 and currently serves on the board of managers for the private company. Mr. Maddaluna holds a B.S. in Chemical Engineering from Northeastern University and an M.B.A. from Southern Illinois University. We believe Mr. Maddaluna is qualified to serve on our board of directors because of his extensive experience in the pharmaceutical manufacturing industry, including his service at Pfizer, and his experience serving on company boards. **William B. Hayes**has served on our board since July 2021 and previously served on Intec Israels board of directors since June 2018 until the Merger. Most recently, Mr. Hayes was Executive Vice President, Chief Financial Officer and Treasurer of Laboratory Corporation of America Holdings (LabCorp) (NYSE: LH), a diagnostics laboratory company. Mr. Hayes joined LabCorp in 1996, where he was responsible for day-to-day operations of the revenue cycle function. He rose through a series of promotions and in 2005 was named Executive Vice President, Chief Financial Officer and Treasurer of LabCorp, a role he held until his retirement in 2014. Prior to LabCorp, Mr. Hayes was at KPMG for nine years in their audit department. Since October 2019, Mr. Hayes has served on the board of Builders FirstSource, a supplier and manufacturer of building materials (Nasdaq: BLDR), and currently chairs its audit committee. Previously, Mr. Hayes served as a director from March 2016 for Patheon N.V. (NYSE: PTHN), a pharmaceutical manufacturing company, until its acquisition by Thermo Fisher in late 2017. Mr. Hayes holds a Bachelor of Science in accounting from the University of North Carolina at Greensboro. We believe Mr. Hayes is qualified to serve on our board of directors because of his accounting background and experience serving on public company boards. | 73 | | | | | **Board Composition** Our Amended and Restated Certificate of Incorporation, as amended, or the Charter, provides for a classified Board consisting of three (3) classes of directors, Class I, Class II and Class III, each with staggered three (3)-year terms. We currently have nine (9) directors on our Board. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following the election. The current class structure is as follows: Class I, whose term will expire at the 2028 Annual Meeting of Stockholders Class II, whose term will expire at the 2026 Annual Meeting of Stockholders and Class III, whose term will expire at the 2027 Annual Meeting of Stockholders. The current Class I directors are David E. Lazar, Avraham Ben-Tzvi, and Jerome Jabbour; the current Class II directors are William B. Hayes, Anthony Maddaluna, and David Natan; the current Class III directors are Jeffrey A. Meckler, Matthew McMurdo and Roger J. Pomerantz, M.D., F.A.C.P. As set forth in our Charter, the Board of Directors is currently divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our Charter and Bylaws provide that the authorized number of directors may be changed only by resolution of the Board of Directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our Board of Directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our Company. Our directors may be removed only for cause by the affirmative vote of the holders of a majority in voting power of the outstanding shares of our capital stock entitled to vote in the election of directors. **Director Independence** Mr. McMurdo, Mr. Meckler, Mr. Lazar, and Mr. Ben-Tzvi do not qualify as independent in accordance with the listing requirements of Nasdaq whereas Mr. Hayes, Mr. Jabbour, Mr. Maddaluna, Mr. Natan, and Dr. Pomerantz qualify as independent directors under Nasdaqs definition of independence. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our Board of Directors has made a subjective determination as to each independent director or director nominee that no relationships exist, which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director or director nominee. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors/director nominees and us with regard to each directors/director nominees business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors and director nominees or executive officers. **Director Candidates** The Nominating Committee is primarily responsible for recommending to the Board nominees for election as director, and the Board is responsible for selecting nominees for election. In identifying director candidates for the Board, the Nominating Committee may solicit current directors and executives of the Company for the names of potentially qualified candidates or ask directors and executives to pursue their own business contacts for the names of potentially qualified candidates. The Nominating Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates, or consider director candidates recommended by our stockholders. Once potential candidates are identified, the Nominating Committee reviews the backgrounds and qualifications of those candidates in light of the function and needs of the Board, evaluates candidates independence from the Company and potential conflicts of interest and determines if candidates meet the qualifications desired by the Nominating Committee for candidates for election as a director. The Nominating Committee and the Board utilize the same criteria for evaluating candidates regardless of the source of the referral. Stockholder recommendations of director candidates should be addressed to the Nominating Committee in care of the Secretary, c/o Indaptus Therapeutics, Inc., 3 Columbus Circle, 15th Floor, New York, NY 10019. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others. **Board Leadership Structure** Our Board is committed to promoting effective, independent governance of the Company. Our Board believes it is in the best interests of the stockholders and the Company for the Board to have the flexibility to select the best director to serve as Chairman at any given time, regardless of whether that director is an independent director or the Chief Executive Officer. Consequently, we do not have a policy governing whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. This decision is made by our Board, based on the best interests of the Company considering the circumstances at the time. | 74 | | | | | Following the Investment Transaction, the Company appointed David E. Lazar as the Chairman and Co-Chief Executive Officer of the Company. The independent directors on the Board use their collective experience, oversight, and expertise in determining the strategies and priorities the Company should follow. The Board believes that the combined role of Chairman and co-CEO will promote the best interests of the Company and will make the best use of the expertise of the Chairman/co-CEO and his unique insights into the challenges facing the Company, the opportunities available to the Company, and the operations of the Company. Together, we expect that the Chairman/co-CEO and independent directors will develop the strategic direction of the Company. The Board believes that this is the appropriate balance of having a fully informed Chairman and independent oversight. However, our Board of Directors will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate. **Role of the Board in Risk Oversight** One of the key functions of our Board is informed oversight of our risk management process. Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure. Our Board considers cybersecurity risk as part of its risk oversight function and oversees our cybersecurity and other information technology risks and managements implementation of our cybersecurity risk management program. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related person transactions. Our Compensation Committee assesses and monitors whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements. The Board does not believe that its role in the oversight of our risks affects the Boards leadership structure. **Clawback Policy** Our Board of Directors has adopted a Policy for Recovery of Erroneously Awarded Compensation, or the Clawback Policy, in accordance with the Nasdaq listing standards and Exchange Act Rule 10D-1, which applies to our current and former executive officers. Under the Clawback Policy, we are required to recoup the amount of any Erroneously Awarded Compensation (as defined in the Clawback Policy) on a pre-tax basis within a specified lookback period in the event of any Financial Restatement (as defined in the Clawback Policy), subject to limited impracticability exception. **Policies and Practices Related to the Grant of Certain Equity Awards** From time to time, we award stock options to our employees, including the named executive officers. Historically, we awarded new-hire option grants on or soon after a new hires employment start date and periodic annual refresh employee option grants, which refresh grants are typically approved at a meeting of the compensation committee or board. Non-employee directors receive automatic initial and annual stock option grants, at the time of a directors appointment or election to the board and at the time of each annual meeting of our stockholders, respectively. For additional information on our non-employee director compensation policy see below under the heading, Director Compensation. We do not otherwise maintain any written policies on the timing of awards of stock options, stock appreciation rights, or similar instruments with option-like features. It is the Companys practice to not grant any awards to its named executive officers when in possession of any material nonpublic information, and to wait until such material nonpublic information has been fully disclosed, widely disseminated to the public and at least two full business days have passed after such material nonpublic information has been disclosed. | 75 | | | | | **** **Code of Business Conduct and Ethics** We have a Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Business Conduct and Ethics is publicly available on our website at http://www.indaptusrx.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics, as well as Nasdaqs requirement to disclose waivers with respect to directors and executive officers, by posting such information on our website at the address and location specified above. The information contained on our website is not incorporated by reference into this Annual Report. **Insider Trading Policy** We have adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and certain other covered persons, and which is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. In addition, with regard to any trading in our own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing requirements. **Anti-Hedging Policy** Our insider trading policy prohibits our directors, officers and employees and any entities they control from engaging in short sales and transactions in put or call options and other forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, and other similar transactions, unless such transaction has been pre-approved by the Chief Financial Officer. **Attendance by Members of the Board of Directors at Meetings** There were seven meetings of the Board of Directors during the fiscal year ended December 31, 2025. During the fiscal year ended December 31, 2025, each director attended at least 75% of the aggregate of (i) all meetings of the Board of Directors and (ii) all meetings of the committees on which the director served during the period in which he or she served as a director. We do not maintain a formal policy regarding director attendance at the Annual Meeting however, members of our Board of Directors are encouraged to attend. One of our directors then serving attended the 2025 Annual Meeting of Stockholders. **Committees of the Board** Our Board has established four standing committees-Audit, Compensation, Nominating, and Science and Technology. Each of Audit, Compensation and Nominating Committee operates under a written charter that has been approved by our Board. The members of each of the Board committees and committee Chairpersons are set forth in the following chart. | Name | | Audit | | Compensation | | Nominating | | | William B. Hayes | | Chairperson | | X | | | | | David Natan | | X | | | | | | | Anthony J. Maddaluna | | | | Chairperson | | X | | | Roger Pomerantz | | X | | | | Chairperson | | | 76 | | | | | **Audit Committee** Our Audit Committees responsibilities include: | | appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm | | | | | | | | monitoring the rotation of the partners of our independent registered public accounting firm on our audit engagement team and considering periodically the rotation of auditing firms; | | | | | | | | overseeing the work of our independent registered public accounting firm | | | | | | | | reviewing and discussing with management and the independent registered public accounting firm the results of the annual audit, including our annual financial statements and related disclosures, and the results of the review by the independent registered public accounting firm of our quarterly financial statements and related disclosures | | | | | | | | discussing with management and the independent registered public accounting firm the adequacy of our internal control over financial reporting, disclosure controls and procedures, compliance with legal and regulatory requirements, and code of business conduct and ethics | | | | | | | | discussing with management and the independent registered public accounting firm our risk management policies | | | | | | | | establishing policies regarding hiring employees from the independent registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns | | | | | | | | meeting independently with our independent registered public accounting firm and management | | | | | | | | reviewing and providing oversight of any related person transactions, including establishing such policies and procedures as appropriate to facilitate such review and | | | | | | | | preparing the audit committee report required by the SEC rules. | | The Audit Committee charter is available on the Investors page of our website at *www.indaptusrx.com*. The members of the Audit Committee are Mr. Hayes, Mr. Natan, and Dr. Pomerantz. Mr. Hayes serves as the Chairperson of the committee. Our Board has affirmatively determined that each of Mr. Hayes, Mr. Natan, and Dr. Pomerantz is independent for purposes of serving on an audit committee under Rule 10A-3 promulgated under the Exchange Act and the Nasdaq Rules, including those related to Audit Committee membership. The members of our Audit Committee meet the requirements for financial literacy under the applicable Nasdaq rules. In addition, our Board of Directors has determined that Mr. Hayes qualifies as an audit committee financial expert, as such term is defined in Item 407(d)(5) of Regulation S-K, and under the similar Nasdaq Rules requirement that the Audit Committee have a financially sophisticated member. The Audit Committee met four times in 2025. | 77 | | | | | **Compensation Committee** Our Compensation Committee is responsible for assisting the Board in the discharge of its oversight responsibilities relating to the evaluation of our executive officers (including the Chief Executive Officer), determining the compensation of our executive officers, and overseeing the management of risks associated therewith. In fulfilling its purpose, our Compensation Committee has the following principal duties: | | reviewing and approving, or recommending for approval by the Board, our overall compensation strategy and policies, including evaluating risks associated with our compensation policies and practices; | | | | | | | | reviewing and approving, or recommending for approval by the Board, the compensation of our CEO and our other executive officers | | | | | | | | overseeing and administering our cash and equity incentive plans | | | | | | | | reviewing and making recommendations to the Board of Directors with respect to non-employee director compensation | | | | | | | | reviewing and discussing annually with management our Compensation Discussion and Analysis, to the extent required and | | | | | | | | preparing the annual compensation committee report, to the extent required by SEC rules. | | The Compensation Committee generally considers the Chief Executive Officers recommendations when making decisions regarding the compensation of executive officers (other than the Chief Executive Officer). Pursuant to the Compensation Committees charter, which is available on the Investors page of our website at *www.indaptusrx.com*, the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. The Compensation Committee did not engage the services of a compensation consultant in 2025. The Compensation Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The Compensation Committee may also delegate to an officer the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity plans. The members of our Compensation Committee are Mr. Maddaluna and Mr. Hayes. Mr. Maddaluna serves as the Chairperson of the Compensation Committee. Each member of the Compensation Committee qualifies as an independent director under Nasdaqs heightened independence standards for members of a compensation committee and as a non-employee director as defined in Rule 16b-3 of the Exchange Act. The Compensation Committee met three times in 2025. **Nominating Committee** Our Nominating Committees responsibilities include: | | identifying individuals qualified to become Board members | | | | | | | | recommending to the Board the persons to be nominated for election as directors and to each Board committee | | | | | | | | reviewing with the Chief Executive Officer and making recommendations to the Board with respect to our succession plans for the Chief Executive Officer and other executive officers | | | | | | | | reviewing and making recommendations to the Board the composition and chairperson of each Board committee and | | | | | | | | overseeing the evaluation of the Board and its committees. | | The Nominating Committee charter is available on the Investors page of our website at *www.indaptusrx.com*. The members of our Nominating Committee are Mr. Maddaluna and Mr. Pomerantz. Mr. Pomerantz serves as the Chairperson of the Nominating Committee. The Nominating Committee has the authority to consult with outside advisors or retain search firms to assist in the search for qualified candidates or consider director candidates recommended by our stockholders. | 78 | | | | | **** The Nominating Committee did not have any meetings in 2025. **** **Science and Technology Committee** Our Science and Technology Committees responsibilities include: | | reviewing and advising on our drug development strategy, including the selection of therapeutic targets, the design and execution of clinical trials, and the regulatory pathway for approval; | | | | | | | | assessing our research pipeline and recommending changes or improvements to ensure a sustainable and diverse portfolio of drug candidates; | | | | | | | | evaluating our intellectual property strategy and overseeing the implementation of appropriate measures to protect our discoveries and inventions; and | | | | | | | | reviewing our manufacturing strategy and overseeing the quality controls put in place to meet regulatory requirements. | | Mr. Maddaluna is the only current member of the Science and Technology committee. At present, no members have been appointed to replace Dr. Gilbert, Mr. Newman, and Mr. Martell following the special meeting. **Item 11. Executive Compensation.** Our named executive officers for 2025, which consist of our principal executive officer and the next two most-highly compensated executive officers who were serving as executive officers as of December 31, 2025 are: | | David E. Lazar, Co-Chief Executive Officer and Director | | | | | | | | Jeffrey A. Meckler, Co-Chief Executive Officer and Director | | | | | | | | Walt. A. Linscott, Esq., Chief Operating Officer; and | | | | | | | | Michael J. Newman, Chief Science Officer | | **Summary Compensation Table** The following table sets forth all of the compensation awarded to, earned by or paid to our named executive officers during 2025 and 2024. | | | | | | | | | | | | | | | | | | Non-equity | | | | | | | | | | | | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | | | | | | Stock | | | Option | | | Plan | | | All Other | | | | | | | Name and | | | | | Salary | | | Bonus | | | Awards | | | Awards(1) | | | Compensation | | | Compensation(2) | | | Total | | | | Principal Position | | Year | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | | Jeffrey A. Meckler, | | 2025 | | | | 458,646 | | | | | | | | | | | | | | | | 297,500 | | | | 1,441,025 | | | | 2,197,171 | | | | Co-Chief Executive Officer | | 2024 | | | | 575,000 | | | | | | | | | | | | 219,421 | | | | 287,500 | | | | 75,296 | | | | 1,157,217 | | | | David E. Lazar, | | 2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Co-Chief Executive Officer(3) | | 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Walt A. Linscott, Esq., | | 2025 | | | | 491,000 | | | | | | | | | | | | | | | | 245,500 | | | | 1,217,370 | | | | 1,953,870 | | | | Chief Operating Officer | | 2024 | | | | 475,000 | | | | | | | | | | | | 182,156 | | | | 237,500 | | | | 75,744 | | | | 970,400 | | | | Michael J. Newman | | 2025 | | | | 363,063 | | | | | | | | | | | | | | | | 235,500 | | | | 1,092,723 | | | | 1,691,286 | | | | Chief Science Officer | | 2024 | | | | 455,000 | | | | | | | | | | | | 134,828 | | | | 227,500 | | | | 17,485 | | | | 834,813 | | | | 79 | | | | | (1) The amounts reported do not reflect the amounts actually received by our named executive officers. Instead, in accordance with SEC rules, these amounts reflect the grant date fair value of stock options granted to our named executive officers during the fiscal year ended December 31 2024, as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transaction. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions used in the calculation of these amounts are included in Note 5 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025. Our named executive officers will only realize compensation with regard to these options to the extent the trading price of our common stock is greater than the exercise price of such options. (2) For 2024, referenced amount is for the Company paid portion of medical and life insurance premiums, and Company 401(k) contributions. For 2025, reference amount is for the Company paid portion of medical and life insurance premiums, and Company 401(k) contributions and cash and equity payments made pursuant to Modification Agreements as described below. (3) Mr. Lazar was appointed as Co-Chief Executive Officer effective December 23, 2025 and has not entered into an employment agreement with the Company as of the date of this Annual Report on Form 10-K. He received no compensation for the fiscal year ended December 31, 2025. **Narrative Description to Summary Compensation Table** **Base Salaries** In general, base salaries for our named executive officers are initially established through arms length negotiation at the time the executive is hired, taking into account such executives qualifications, experience and prior salary. Base salaries of our named executive officers are approved and reviewed annually by our Compensation Committee or Board of Directors and adjustments to base salaries are based on the scope of an executives responsibilities, individual contribution, prior experience and sustained performance. Decisions regarding salary increases may take into account an executive officers current salary, equity ownership, and the amounts paid to an executive officers peers inside our company by conducting an internal analysis, which compares the pay of an executive officer to other members of the management team. Base salaries are also reviewed in the case of promotions or other significant changes in responsibility. Base salaries are not automatically increased if the Board of Directors and Compensation Committee believe that other elements of the named executive officers compensation are more appropriate in light of our stated objectives. This strategy is consistent with our intent of offering compensation that is both cost-effective, competitive and contingent on the achievement of performance objectives. The actual base salaries paid to all of our named executive officers for 2025 are set forth in the Summary Compensation Table above. **Annual Cash Performance Bonuses** Each named executive officer is also eligible for a performance bonus based upon the achievement of certain corporate performance goals and objectives approved by our Compensation Committee and Board of Directors. Bonuses are set based on a percentage of the executives base salary as of the end of the bonus year and are expected to be paid out in the first quarter of the following year. The target level for 2025 executive bonuses was 50% for each named executive officer (except for Mr. Lazar). All final bonus payments to our named executive officers are determined by our Compensation Committee or our Board of Directors. The actual bonuses awarded in any year, if any, may be more or less than the target, depending on individual performance and the achievement of corporate objectives and may also vary based on other factors at the discretion of the Compensation Committee. | 80 | | | | | For 2025, the corporate performance objectives for our named executive officers were related to clinical milestones, research and development goals, business development opportunities, financing objectives and human capital management objectives. These performance objectives and areas of emphasis were used as a guide by the Compensation Committee and Board of Directors in determining overall corporate performance for these executives as they represented those areas in which they were expected to focus their efforts during the year. Both qualitative and quantitative guidelines were established for purposes of evaluating performance relating to these corporate objectives during 2025. Based on its review of our overall performance relative to our corporate objectives, the Compensation Committee determined that every goal was achieved or exceeded for annual bonus plan purposes. The overall achievement level was then used to determine each named executive officers bonus. The bonuses paid to our named executive officers for 2025 are set forth in the Summary Compensation Table above. In connection with the Investment Transaction, our named executive officers (other than Mr. Lazar) entered into Modification Agreements as described below pursuant to which they are no longer entitled to an annual bonus for 2026 and subsequent years. **Equity Compensation** The goals of our long-term, equity-based incentive awards are to align the interests of our named executive officers and other employees, non-employee directors and consultants with the interests of our stockholders. Because vesting is based on continued employment, our equity-based incentives also encourage the retention of our named executive officers through the vesting period of the awards. In determining the size of the long-term equity incentives to be awarded to our named executive officers, we take into account a number of internal factors, such as the relative job scope, the value of existing long-term incentive awards, individual performance history, prior contributions to us and the size of prior grants. To reward and retain our named executive officers in a manner that best aligns employees interests with stockholders interests, we use stock options as the primary incentive vehicles for long-term compensation. We believe that stock options are an effective tool for meeting our compensation goal of increasing long-term stockholder value by tying the value of the stock options to our future performance. Because employees are able to profit from stock options only if our stock price increases relative to the stock options exercise price, we believe stock options provide meaningful incentives to employees to achieve increases in the value of our stock over time. The exercise price of each stock option grant is the fair market value of our common stock on the grant date, as determined by our Board of Directors from time to time. Stock option awards granted to our named executive officers generally vest as to one-third of the total shares on the first anniversary of the grant date and thereafter the remaining shares vest in equal quarterly installments over the following 24 months. From time to time, our Compensation Committee may, however, determine that a different vesting schedule is appropriate. In April 2025, each of Mr. Meckler and Mr. Linscott mutually agreed with us to the cancellation of certain options with exercise prices that were significantly out of the money in consideration for $500. No option grants were made to our named executive officers during 2025. We have had no program, plan or practice pertaining to the timing of stock option grants to named executive officers coinciding with the release of material non-public information. Stock options granted to our named executive officers may be subject to accelerated vesting in certain circumstance. For additional discussion, please see Employment Agreements and Potential Payments on Employment Termination below. **Other Elements of Compensation** *Retirement Plans* Effective January 1, 2023, we maintain a 401(k) retirement savings plan that allows eligible employees to contribute a portion of their compensation, within limits prescribed by the Internal Revenue Code, on a pre-tax basis through contributions to the plan. Our named executive officers are eligible to participate in the 401(k) plan. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our named executive officers in accordance with our compensation policies. | 81 | | | | | *Employee Benefits and Perquisites* Our named executive officers are eligible to participate in our health and welfare plans. We pay for the health and welfare benefits of our named executive officers. We do not provide our named executive officers with any other significant perquisites or other personal benefits. *No Tax Gross-Ups* We do not make gross-up payments to cover our named executive officers personal income taxes that may pertain to any of the compensation paid or provided by our company. **Outstanding Equity Awards at Fiscal Year-End** The following table sets forth information concerning outstanding option awards as of December 31, 2025, for each named executive officer: | Name | | Grant Date | | | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Equity incentive plan awards: Number of Securities underlying unexercised unearned options (#) | | | Option Exercise Price ($) | | | Option Expiration Date(1) | | | | | | | | | | | | | | | | | | | | | | | | Jeffrey A. Meckler, | | | | | | | | | | | | | | | | | | | | | | | | | Co-Chief Executive Officer | | 08/04/21 | (1) | | | | 13,392 | | | | | | | | | | | | 248.36 | | | 8/4/2031 | | | | | 01/26/22 | (2) | | | | 7,142 | | | | | | | | | | | | 137.20 | | | 01/26/32 | | | | | 01/18/23 | (3) | | | | 3,273 | | | | 298 | | | | | | | | 45.08 | | | 01/18/33 | | | | | 01/22/24 | (4) | | | | 2,083 | | | | 1,488 | | | | | | | | 48.72 | | | 01/22/34 | | | | | 10/09/24 | (5) | | | | | | | | 2,678 | | | | | | | | 30.94 | | | 10/09/34 | | | Walt A. Linscott, Esq., | | | | | | | | | | | | | | | | | | | | | | | | | Chief Operating Officer | | 08/04/21 | (1) | | | | 7,500 | | | | | | | | | | | | 248.36 | | | 8/4/2031 | | | | | 01/26/22 | (2) | | | | 1,637 | | | | | | | | | | | | 137.20 | | | 01/26/32 | | | | | 01/18/23 | (3) | | | | 1,309 | | | | 119 | | | | | | | | 45.08 | | | 01/18/33 | | | | | 01/22/24 | (4) | | | | 1,562 | | | | 1,116 | | | | | | | | 48.72 | | | 01/22/34 | | | | | 10/09/24 | (5) | | | | | | | | 2,678 | | | | | | | | 30.94 | | | 10/09/34 | | | Michael J. Newman, | | | | | | | | | | | | | | | | | | | | | | | | | Chief Science Officer | | 08/04/21 | (1) | | | | 10,357 | | | | | | | | | | | | 248.36 | | | 8/4/2031 | | | | | 01/26/22 | (2) | | | | 1,548 | | | | | | | | | | | | 137.20 | | | 01/26/32 | | | | | 01/18/23 | (3) | | | | 1,415 | | | | 129 | | | | | | | | 45.08 | | | 01/18/33 | | | | | 01/22/24 | (4) | | | | 901 | | | | 643 | | | | | | | | 48.72 | | | 01/22/34 | | | | | 10/09/24 | (5) | | | | | | | | 2,678 | | | | | | | | 30.94 | | | 10/09/34 | | | 82 | | | | | (1) The options vest over a period of three years from August 4, 2021, 33.3% on the first anniversary of such date and 8.33% every three months thereafter, ending August 4, 2024. (2) The options vest over a period of three years from January 26, 2022, 33.3% on the first anniversary of such date and 8.33% every three months thereafter, ending January 26, 2025. (3) The options vest over a period of three years from January 18, 2023, 33.3% on the first anniversary of such date and 8.33% every three months thereafter, ending January 18, 2026. (4) The options vest over a period of three years from January 22, 2024, 33.3% on the first anniversary of such date and 8.33% every three months thereafter, ending January 18, 2027. (5) The options vest over a period of 18 months from October 9, 2024, with 100% vesting on April 9, 2026. **Employment Agreements and Potential Payments on Employment Termination** On December 22, 2025, in connection with the Investment Transaction, we entered into Modification Agreements with each of our named executive officers (other than Mr. Lazar). Pursuant to the terms of the Modification Agreements Mr. Meckler, Mr. Linscott and Mr. Newman will continue to remain employed in their existing roles except for Mr. Meckler who agreed to change his title to Co-Chief Executive Officer. Pursuant to the Modification Agreements, Mr. Meckler, Mr. Linscott and Mr. Newman agreed to reduce the notice period for termination for any reason to 10 days and waive the severance benefits in the event of a change of control under their original employment agreements in exchange for a combination of an equity settlement payment in lieu of cash payable in shares of common stock (based on $2.03 per share) and a cash payment (which includes 2025 bonuses) as follows: (i) in the case of Mr. Meckler, 216,617 shares of common stock and $1,263,843, (ii) in the case of Mr. Linscott, 54,421 shares of common stock and $1,307,101, and (iii) Mr. Newman, 52,204 shares of common stock and $1,189,275. The Modification Agreements contain a waiver and release of claims relating to or arising from each such officers employment agreements. Additionally, effective January 15, 2026, the Company made adjustments to salaries of Mr. Meckler and Mr. Newman in that each of their salaries were reduced to $60,000 per annum to be paid in accordance with the Companys standard payroll practice less applicable deductions. Set forth below is a description of the employment agreements with our named executive officers (other than Mr. Lazar) and a summary of the benefits that would be payable upon termination of employment or in connection with a change in control to such named executive officers under their employment agreements with us, that was in effect prior to the entry of the Modification Agreements. *Jeffrey A. Meckler* We have entered into an employment agreement with Jeffrey A. Meckler, or the Meckler Employment Agreement, which superseded and replaced his employment agreement dated December 11, 2017 with Intec Pharma, Inc., a subsidiary of Intec Israel, to serve as our Chief Executive Officer. The Meckler Employment Agreement provides for an annual base salary, subject to review for an upward adjustment on at least an annual basis. Mr. Meckler is eligible to participate in an annual executive bonus plan, pursuant to which he may earn an annual target bonus of up to 50% of his base salary, based on the achievement of certain individual and company-wide objectives, which shall be established by our Board of Directors on an annual basis. The Board may, in its discretion, grant Mr. Meckler a bonus in excess of the target bonus if the performance criteria are exceeded or for such additional contributions that the Board may choose to recognize. Upon termination of Mr. Mecklers employment by us without cause or Mr. Mecklers resignation for good reason, Mr. Meckler will be entitled to a severance benefit equal to (i) twelve months of his base salary as in effect prior to the termination date, payable in bi-monthly installments and (ii) an amount equal to Mr. Mecklers cost of continued health insurance coverage for twelve months. In addition, if Mr. Meckler is entitled to receive a bonus for the year of termination based on the achievement of pre-determined performance goals (and ignoring any continuation of employment requirements), Mr. Meckler (or his representatives) shall be entitled to receive such bonus on the same basis as the other participants in the bonus plan, except that the bonus amount shall be prorated based on the percentage of days Mr. Meckler was employed relative to the total number of days in the bonus earning period. | 83 | | | | | If Mr. Mecklers employment is terminated by us without cause or by Mr. Meckler for good reason during the one year period immediately following a change in control or six months before a change in control, then Mr. Meckler will be entitled to receive, (i) eighteen months of his base salary as in effect prior to the termination date, payable in bi-monthly installments, (ii) an amount equal to Mr. Mecklers cost of continued health insurance coverage for eighteen months, (iii) his target annual bonus for the year of termination, which shall be paid within 30 days of termination, and (iv) full accelerated vesting of all of outstanding equity incentive awards upon the later of the change in control or Mr. Mecklers termination of employment. In the event that Mr. Mecklers employment terminates by reason of his death or disability, and Mr. Meckler is entitled to receive a bonus for the year of termination based on the achievement of pre-determined performance goals (and ignoring any continuation of employment requirements), Mr. Meckler (or his representatives) shall be entitled to receive such bonus on the same basis as the other participants in the bonus plan, except that the bonus amount shall be prorated based on the percentage of days Mr. Meckler was employed relative to the total number of days in the bonus earning period. *Walt A. Linscott, Esq.* We have entered into an employment agreement with Walt A. Linscott, Esq., or the Linscott Employment Agreement, which supersedes and replaces his employment agreement dated October 23, 2017 with Intec Pharma, Inc., a subsidiary of Intec Israel. The Linscott Employment Agreement provides for an annual base salary, subject to review for an upward adjustment on at least an annual basis. Mr. Linscott is eligible to participate in an annual executive bonus plan, pursuant to which he may earn an annual target bonus of up to 50% of his base salary, based on the achievement of certain individual and company-wide objectives, which shall be established by the Companys Board of Directors on an annual basis. The Board may, in its discretion, grant Mr. Linscott a bonus in excess of the target bonus if the performance criteria are exceeded or for such additional contributions that the Board may choose to recognize. Upon termination of Mr. Linscotts employment by us without cause or Mr. Linscotts resignation for good reason, Mr. Linscott will be entitled to a severance benefit equal to (i) twelve months of his base salary as in effect prior to the termination date, payable in bi-monthly installments and (ii) an amount equal to Mr. Linscotts cost of continued health insurance coverage for twelve months. In addition, if Mr. Linscott is entitled to receive a bonus for the year of termination based on the achievement of pre-determined performance goals (and ignoring any continuation of employment requirements), Mr. Linscott (or his representatives) shall be entitled to receive such bonus on the same basis as the other participants in the bonus plan, except that the bonus amount shall be prorated based on the percentage of days Mr. Linscott was employed relative to the total number of days in the bonus earning period. If Mr. Linscotts employment is terminated by us without cause or by Mr. Linscott for good reason during the one year period immediately following a change in control or six months before a change in control, then Mr. Linscott will be entitled to receive, (i) eighteen months of his base salary as in effect prior to the termination date, payable in bi-monthly installments, (ii) an amount equal to Mr. Linscotts cost of continued health insurance coverage for eighteen months, (iii) his target annual bonus for the year of termination, which shall be paid within 30 days of termination, and (iv) full accelerated vesting of all of outstanding equity incentive awards upon the later of the change in control or Mr. Linscotts termination of employment. In the event that Mr. Linscotts employment terminates by reason of his death or disability, and Mr. Linscott is entitled to receive a bonus for the year of termination based on the achievement of pre-determined performance goals (and ignoring any continuation of employment requirements), Mr. Linscott (or his representatives) shall be entitled to receive such bonus on the same basis as the other participants in the bonus plan, except that the bonus amount shall be prorated based on the percentage of days Mr. Linscott was employed relative to the total number of days in the bonus earning period. | 84 | | | | | *Michael J. Newman* We have entered into an employment agreement with Michael J. Newman, or the Newman Employment Agreement, to serve as Chief Science Officer effective August 4, 2021. The Newman Employment Agreement provides for an annual base salary, subject to review for an upward adjustment on at least an annual basis. Mr. Newman is eligible to participate in an annual executive bonus plan, pursuant to which he may earn an annual target bonus of up to 50% of his base salary, based on the achievement of certain individual and company-wide objectives, which shall be established by our Board of Directors on an annual basis. The Board may, in its discretion, grant Mr. Newman a bonus in excess of the target bonus if the performance criteria are exceeded or for such additional contributions that the Board may choose to recognize. Upon termination of Mr. Newmans employment by us without cause or Mr. Newmans resignation for good reason, Mr. Newman will be entitled to a severance benefit equal to (i) twelve months of his base salary as in effect prior to the termination date, payable in bi-monthly installments and (ii) an amount equal to Mr. Newmans cost of continued health insurance coverage for twelve months. In addition, if Mr. Newman is entitled to receive a bonus for the year of termination based on the achievement of pre-determined performance goals (and ignoring any continuation of employment requirements), Mr. Newman (or his representatives) shall be entitled to receive such bonus on the same basis as the other participants in the bonus plan, except that the bonus amount shall be prorated based on the percentage of days Mr. Newman was employed relative to the total number of days in the bonus earning period. If Mr. Newmans employment is terminated by us without cause or by Mr. Newman for good reason during the one year period immediately following a change in control or six months before a change in control, then Mr. Newman will be entitled to receive, (i) eighteen months of his base salary as in effect prior to the termination date plus his annual target bonus, payable in bi-monthly installments, (ii) an amount equal to Mr. Newmans cost of continued health insurance coverage for eighteen months the current year bonus at the target level, which shall be paid within 30 days of termination, (iii) the current year bonus at the target level at a prorated basis, which shall be paid within 30 days of termination, and (iv) full accelerated vesting of all of outstanding equity incentive awards upon the later of the change in control or Mr. Newmans termination of employment. In the event that Mr. Newmans employment terminates by reason of his death or disability, and Mr. Newman is entitled to receive a bonus for the year of termination based on the achievement of pre-determined performance goals (and ignoring any continuation of employment requirements), Mr. Newman (or his representatives) shall be entitled to receive such bonus on the same basis as the other participants in the bonus plan, except that the bonus amount shall be prorated based on the percentage of days Mr. Newman was employed relative to the total number of days in the bonus earning period. **Securities Authorized for Issuance under Equity Compensation Plans** The following table gives information as of December 31, 2025 about shares of our common stock that may be issued upon the exercise of options under the Indaptus Therapeutics, Inc. 2021 Stock Incentive Plan, or the 2021 Plan: | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | | | | Equity compensation plan approved by security holders(2) | | | 123,907 | | | $ | 104.7 | | | | 4,383 | | | | Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | | | (1) Represents stock options outstanding under the 2021 Plan. | 85 | | | | | (2) Our 2021 Plan has an evergreen provision that allows for an annual increase on each January 1 from January 1, 2025 and ending on and including January 1, 2029, equal to the lesser of (A) 5% of the aggregate number of shares of our shares of common stock outstanding on the final day of the immediately preceding calendar year or (B) such smaller number of shares as is determined by our Board of Directors. **Pay Versus Performance Table** The following table sets forth information concerning the compensation of our named executive officers, or NEOs, the compensation actually paid to our NEOs, as determined under SEC rules (and described below), our total shareholder return and our net loss, in each case for each of the fiscal years ended December 31, 2023, 2024 and 2025: | (a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (h) | | | | Year | | Summary Compensation Table Total for PEO ($) | | | Compensation Actually Paid to PEO ($)(1) | | | Average Summary Compensation Table Total for non-PEO NEOs ($) | | | Average Compensation Actually Paid to Non-PEO NEOs ($)(1) | | | Value of Initial Fixed $100 Investment Based on: Total Shareholder Return ($) | | | Net Loss ($) | | | | 2025 | | $ | 2,197,171 | | | $ | 2,094,767 | | | $ | 1,822,578 | | | $ | 1,742,715 | | | $ | 12 | | | $ | (20,848,916 | ) | | | 2024 | | $ | 1,157,217 | | | $ | 1,029,281 | | | $ | 949,640 | | | $ | 845,621 | | | $ | 48 | | | $ | (15,022,027 | ) | | | 2023 | | $ | 1,001,249 | | | $ | 1,122,094 | | | $ | 744,039 | | | $ | 799,786 | | | $ | 121 | | | $ | (15,423,471 | ) | | | (1) | Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our remaining NEOs for the relevant fiscal year, as determined under SEC rules, which includes the individuals indicated in the table below for each fiscal year: | | | Year | | PEO | | Non-PEO NEOs | | | 2025 | | Jeffrey A. Meckler | | Walt A. Linscott, Esq. and Michael J. Newman, Ph.D. | | | 2024 | | Jeffrey A. Meckler | | Walt A. Linscott, Esq. and Roger Waltzman M.D. | | | 2023 | | Jeffrey A. Meckler | | Walt A. Linscott, Esq. and Michael J. Newman, Ph.D. | | The amounts reported in the Compensation Actually Paid to PEO and Average Compensation Actually Paid to Non-PEO NEOs columns do not reflect the actual compensation paid to or realized by our PEO or our non-PEO NEOs during each applicable year. The calculation of compensation actually paid for purposes of this table includes point-in-time fair values of stock awards and these values will fluctuate based on our stock price and various accounting valuation assumptions. See the Summary Compensation Table for certain other compensation of our PEO and our non-PEO NEOs for each applicable fiscal year. Compensation actually paid to our NEOs represents the Total compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted as follows: | | | 2025 | | | | Adjustments | | PEO | | | Average non-PEO NEOs | | | | | | | | | | | | | Deduction for Amounts Reported under the Stock Awards and Option Awards Columns in the Summary Compensation Table for Applicable FY | | $ | | | | $ | | | | | | | | | | | | | | | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | | | | | | | | | | | | | | | | | | | | | | Decrease for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | | | (80,936 | ) | | | (67,183 | ) | | | | | | | | | | | | | | Increase for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | | | (21,468 | ) | | | (12,680 | ) | | | | | | | | | | | | | | TOTAL ADJUSTMENTS | | $ | (102,404 | ) | | $ | (79,863 | ) | | Fair value or change in fair value, as applicable, of equity awards in the Compensation Actually Paid columns was determined by reference to a Black Scholes value as of the applicable year-end or vesting date(s), determined based on the same methodology as used to determine grant date fair value but using the closing stock price on the applicable revaluation date as the current market price and with an estimated expected life using the simplified method, and in all cases based on volatility and risk free rates determined as of the revaluation date based on the expected life period and based on an expected dividend rate of 0%. | 86 | | | | | **Narrative Disclosure to Pay Versus Performance Table** **Relationship Between Financial Performance Measures** The graph below compares the compensation actually paid to our PEO and the average compensation actually paid to our remaining NEOs, with our cumulative TSR for the fiscal years ended December 31, 2023, 2024 and 2025. TSR amounts reported in the graph assume an initial fixed investment of $100. We do not pay dividends. The graph below compares the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs, with our net loss for the fiscal years ended December 31, 2023, 2024 and 2025. | 87 | | | | | **Director Compensation** **** The following table provides certain information concerning the compensation for services rendered in all capacities by each non-employee director serving on our Board during the year ended December 31, 2025, other than Mr. Meckler and David Lazar, our Co-Chief Executive Officers, and Michael Newman, our Chief Science Officer, who did not receive additional compensation for their service as a director and whose compensation is set forth in the Summary Compensation Table under the section entitled Executive Compensation above. | Name | | Fees earned ($) | | | Stock awards ($) | | | Option awards ($)(1) | | | All other compensation ($) | | | Total ($) | | | | Roger J. Pomerantz | | | 81,250 | | | | | | | | 8,721 | | | | | | | | 89,971 | | | | Hila Karah* | | | 35,480 | | | | | | | | 3,634 | | | | | | | | 39,114 | | | | Anthony J. Maddaluna | | | 37,375 | | | | | | | | 3,634 | | | | | | | | 41,009 | | | | William B. Hayes | | | 38,458 | | | | | | | | 3,634 | | | | | | | | 42,092 | | | | Robert E. Martell* | | | 33,313 | | | | | | | | 3,634 | | | | | | | | 36,947 | | | | Mark Gilbert** | | | 29,250 | | | | | | | | 3,634 | | | | | | | | 32,884 | | | | Avraham Ben-Tzvi*** | | | | | | | | | | | | | | | | | | | | | | * Ms. Karah and Dr. Martell resigned as directors on December 22, 2025 and December 23, 2025, respectively. ** Mr. Gilbert resigned effective as of February 26, 2026. *** Mr. Ben-Tzvi was appointed as a director on December 23, 2025. (1) The amounts reported do not reflect the amounts actually received by our non-employee directors. Instead, in accordance with SEC rules, these amounts reflect the grant date fair value of stock options granted to our non-employee directors during the fiscal year ended December 31, 2025, as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transaction. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our non-employee directors who have received options will only realize compensation with regard to these options to the extent the trading price of our common stock is greater than the exercise price of such options. As of December 31, 2025, our non-employee directors and former directors held the following numbers of stock options: Dr. Pomerantz, 7,569 stock options; Ms. Karah 2,320 stock options, Mr. Maddaluna 2,320 stock options, Mr. Hayes 2,320 stock options, Mr. Martell 1,606 stock options, and Dr. Gilbert 2,543 stock options. Pursuant to our director compensation policy, the annual retainer for non-employee directors is $50,000 and the annual retainer for the chair of the Board of Directors is $150,000. Annual retainers for committee membership are as follows: | Audit committee chairperson | | $ | 15,000 | | | | Audit committee member | | $ | 7,500 | | | | Compensation committee chairperson | | $ | 10,000 | | | | Compensation committee member | | $ | 6,000 | | | | Nominating committee chairperson | | $ | 8,000 | | | | Nominating committee member | | $ | 5,000 | | | | Scientific and technology committee chairperson | | $ | 8,000 | | | | Scientific and technology committee member | | $ | 4,000 | | | The annual retainers are earned on a quarterly basis based on a calendar quarter and are payable in cash by in arrears not later than the fifteenth day following the end of each calendar quarter. In the event a non-employee director does not serve as a non-employee director, or in the applicable position, for an entire calendar quarter, the annual retainer paid to such non-employee director shall be prorated for the portion of such calendar quarter actually served as a non-employee director, or in such position, as applicable. Non-employee directors are also reimbursed for reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board of Directors and any committee of the Board of Directors on which they serve and in connection with other business related to the Board of Directors. Directors may also be reimbursed for reasonable out-of-pocket business expenses authorized by the Board of Directors or a committee that are incurred in connection with attending conferences or meetings with management in accordance with a travel policy, as may be in effect from time to time. In March 2023, the Board amended our director compensation policy to provide that, on the date an individual is first elected or appointed as a non-employee director, such individual will receive a grant of 25,000 stock options, and that, on the date of each annual meeting of stockholders, commencing with the annual meeting of stockholders for 2023, each non-employee director (other than the board chair) will receive a grant of 12,500 stock options and the board chair will receive 30,000 stock options. The initial stock options vest in over three years from the grant date in equal quarterly installments, subject to continued service on the Board and the options shall also vest in full immediately upon a directors death, disability or a change of control. The annual stock options vest in full on the first anniversary of the grant date, subject to continued service on the Board and the options shall also vest in full immediately upon a directors death, disability or a change of control. | 88 | | | | | **Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.** The following table sets forth certain information with respect to holdings of our common stock by (i) stockholders who beneficially owned more than 5% of the outstanding shares of our common stock, and (ii) each of our directors , each of our named executive officers and all directors and executive officers as a group as of March 16, 2026, unless otherwise indicated. The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Applicable percentage ownership is based on 2,242,324 shares of common stock outstanding as of March 16, 2026. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options, or other rights held by such person that are currently exercisable or will become exercisable within 60 days of March 16, 2026 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed below is 3 Columbus Circle, 15th Floor, New York, NY 10019. We believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable. | Name of Beneficial Owner | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | | | Persons or entities holding 5% or more our outstanding common stock | | | | | | | | | | | Matthew Joseph Nachtrab Revocable Trust dtd 12/15/2014 | | | 621,053 | (1) | | | 23.5 | % | | | Yehuda Shimoni | | | 240,578 | (2) | | | 10.1 | % | | | Thomas Mollick | | | 287,669 | (3) | | | 12.0 | % | | | | | | | | | | | | | Named executive officers,and directors | | | | | | | | | | Michael J. Newman, Ph.D. | | | 118,359 | (4) | | | 5.2 | % | | | Jeffrey A. Meckler | | | 276,108 | (5) | | | 12.1 | % | | | Walt A. Linscott, Esq. | | | 69,678 | (6) | | | 3.1 | % | | | David E. Lazar | | | 111,000,000 | (7) | | | 98.0 | % | | | Avraham Ben-Tzvi | | | 25,100 | | | 1.1 | % | | | Anthony J. Maddaluna | | | 1,897 | (8) | | | * | | | | William B. Hayes | | | 1,874 | (9) | | | * | | | | Dr. Roger J. Pomerantz | | | 6,498 | (10) | | | * | | | | David Natan | | | 2,083 | (11) | | | * | | | | Jerome Jabbour | | | 2,083 | (11) | | | * | | | | Matthew McMurdo | | | 25,000 | | | | 1.1 | % | | | All executive officers and directors as a group (12 persons) | | | 111,564,007 | (12) | | | 98.4 | % | | * Less than one percent. | (1) | Consists of (i) 219,770 shares of common stock, and (ii) 401,283 shares of common stock issuable upon exercise of warrants which are subject to either a 4.99% or 9.99% beneficial ownership limitation. The amounts and percentages in the table do not give effect to such beneficial ownership limitation. | | | | | | | (2) | Consists of (i) 91,492 shares of common stock, and (ii) 149,086 shares of common stock issuable upon exercise of warrants which are subject to either a 4.99% or 9.99% beneficial ownership limitation. The amounts and percentages in the table do not give effect to such beneficial ownership limitation. | | | (3) | Consists of (i) 125,919 shares of common stock, and (ii) 161,750 shares of common stock issuable upon exercise of warrants which are subject to either a 4.99% or 9.99% beneficial ownership limitation. The amounts and percentages in the table do not give effect to such beneficial ownership limitation. | | | | | | | (4) | Consists of (i) 100,111 shares of common stock held by the Michael J. Newman Trust, dated January 21, 2008, Michael J. Newman, Trustee (ii) 963 shares of common stock held by Janet Lee Harris, Trustee of the Janet Harris Living Trust, executed on March 25, 2009. Ms. Harris is the spouse of Dr. Newman, and as such, Dr. Newman is deemed to beneficially own such shares; and (iii) 17,285 shares of common stock issuable upon exercise of outstanding options, of which 2,807 will vest within 60 days of March 16, 2026. | | | | | | | (5) | Consists of (i) 229,929 shares of common stock, (ii) 16,688 shares of common stock issuable upon exercise of warrants, and (iii) 29,491 shares of common stock issuable upon exercise of outstanding options, of which 2,976 will vest within 60 days of March 21, 2026. | | | | | | | (6) | Consists of (i) 54,426 shares of common stock and, (ii) 15,252 shares of common stock issuable upon exercise of outstanding options, of which 2,901 will vest within 60 days of March 16, 2026. | | | | | | | (7) | Consists of 111,000,000 shares of common stock issuable upon conversion of the Preferred Stock. | | | | | | | (8) | Consists of (i) 23 shares of common stock and (ii) 1,874 shares of common stock issuable upon exercise of outstanding options. | | | | | | | (9) | Consists of 1,874 shares of common stock issuable upon exercise of outstanding options. | | | | | | | (10) | Consists of 6,498 shares of common stock issuable upon exercise of outstanding options. | | | | | | | (11) | Consists of 2,083 shares of common stock issuable upon exercise of outstanding options. | | | | | | | (12) | Consists of (i) 462,310 shares of common stock, (ii) 16,688 shares of common stock issuable upon exercise of warrants, (iii) 111,000,000 shares of common stock issuable upon conversion of the Preferred Stock, and (iv) 85,009 shares of common stock issuable upon exercise of outstanding options, of which 15,647 will vest within 60 days of March 16, 2026. | | | 89 | | | | | **Item 13. Certain Relationships and Related Transactions, and Director Independence.** **Policies and Procedures for Related Person Transactions** In accordance with our audit committee charter, the Audit Committee is required to approve related party transactions. In general, the Audit Committee will review any proposed transaction that has been identified as a related person transaction under Item 404 of Regulation S-K, which means a transaction, arrangement or relationship in which we and any related person (as defined below) are participants in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Companys total assets at fiscal year-end for the last two completed fiscal years, and in which any related person had, has or will have a direct or indirect material interest. A related person includes (i) a director, director nominee or executive officer of the Company, (ii) any immediate family member of the foregoing, or (iii) a security holder known to be a beneficial owner of more than 5% of any class of our voting securities. Other than the compensation agreements and other arrangements described under Executive Compensation and the transactions described below, since January 1, 2024, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a participant in which the amount involved exceeded, or will exceed, $120,000 (or, if less, 1% of the average of our total assets at December 31, 2025 and 2024) and in which any related person, had, or will have, a direct or indirect material interest. **Consulting Agreement with Mr. Ben-Tzvi** On January 20, 2026, the Company entered into a consulting agreement with N.L.T. Management and Asset Holdings Company Ltd., an entity owned by the spouse of Mr. Ben-Tzvi, current director of the Company, in which Mr. Ben-Tzvi has an indirect pecuniary interest. Under the consulting agreement, Mr. Ben-Tzvi will offer general business advice and services pertaining to business development activities and potential ongoing operations to the Company. For his services, Mr. Ben-Tzvi will receive $41,000 per year in consulting fees (paid on monthly basis), a $50,000 signing bonus in cash, and 25,000 shares of restricted stock that vested 100% on the date of grant. The shares were valued at approximately $75,500 and in accordance with the SEC rules, represented the grant date fair value of common stock, as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transaction. **Employment Agreement with Mr. Matthew McMurdo** On January 9, 2026, the Company entered into an employment agreement with Matthew McMurdo, then a director nominee and currently a director. Pursuant the employment agreement, Mr. McMurdo is the Vice President, New Strategies and reports to our Co-Chief Executive Officers. For his services, Mr. McMurdo will receive $41,000 per year in salary (paid on monthly basis), a $50,000 signing bonus in cash, and 25,000 shares of restricted stock that vested 100% on the date of grant. The shares were valued at approximately $75,500 and in accordance with the SEC rules, represented the grant date fair value of common stock, as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transaction. **Warrant Repricing Agreements** On February 11, 2026, the Company entered into Repricing Agreements with the following beneficial owners of more than 5% of our outstanding shares as of the date of the Repricing Agreements, pursuant to which the Company reduced the exercise prices of warrants to purchase shares of our common stock ranging between $8.30 and $47.60 to $1.75, which is equal to the Minimum Price as calculated in accordance with Nasdaq listing rules: Matthew Joseph Nachtrab Revocable Trust dtd 12/15/2014 holding an aggregate of 401,283 warrants, Yehuda Shimoni holding an aggregate of 149,086 warrants, and Thomas Mollick holding an aggregate of 161,750 warrants. As a condition to the Exercise Price Reduction, the Executing Holders agreed to enter into a voting agreement pursuant to which the Executing Holders agreed to vote all of the shares of common stock held by the Executing Holders in favor of all proposals at the special meeting of stockholders held on February 26, 2026. | 90 | | | | | **January 2025 Private Placement** On January 16, 2025, we completed a private placement, or the January 2025 Private Placement, pursuant to which we sold and issued to certain investors 75,335 unregistered shares of our common stock and unregistered warrants to purchase 75,335 shares of our common stock. The warrants are immediately exercisable at an exercise price of $26.32 per share and expire five years from the date of issuance. In connection with the January 2025 financing, we issued to the placement agent and its designees placement agent warrants to purchase an aggregate of 5,273 shares of common stock at an exercise price per share equal to $32.90. The placement agent warrants are exercisable six months from the date of issuance and expire on the fifth anniversary of the issue date. Purchasers included beneficial owners of more than 5% of our outstanding shares who acquired the following securities: Matthew Joseph Nachtrab Revocable Trust dtd 12/15/2014 who acquired 8,383 shares of common stock and a warrant to purchase 8,383 shares of common stock; Yehuda Shimoni who acquired 5,030 shares of common stock and a warrant to purchase 5,030 shares of common stock; and Thomas Mollick who acquired 16,767 shares of common stock and a warrant to purchase 16,767 shares of common stock. **June 2025 Private Placement** In June 2025, we completed a private placement, pursuant to which we sold and issued to certain investors, including our then Chief Executive Officer, (i) convertible notes in the aggregate principal amount of approximately $2.3 million, which automatically converted into 501,566 shares of our common stock at a conversion price of $8.302 per share, (ii) pre-funded warrants to purchase 190,795 shares of our common stock, and (iii) warrants to purchase 1,384,722 shares of our common stock, immediately exercisable at $8.302 per share and expiring five years from the date of issuance. In connection with the June 2025 financing, we issued to the placement agent and its designees placement agent warrants to purchase an aggregate of 83,083 shares of common stock at an exercise price per share equal to $8.302. The placement agent warrants are immediately exercisable and expire five years from the date of issuance. One of the purchasers was Jeffrey Meckler, our then Chief Executive Officer and director, who acquired 6,068 shares of common stock and warrants to purchase 12,136 shares of common stock upon conversion of the convertible notes (at the same price and upon the same terms as the other purchasers). Other purchasers included beneficial owners of more than 5% of our outstanding shares who acquired the following securities following conversion of the notes: Matthew Joseph Nachtrab Revocable Trust dtd 12/15/2014 who acquired 72,270 shares of common stock, a pre-funded warrant to purchase 109,243 shares of common stock and a warrant to purchase 363,026 shares of common stock; Yehuda Shimoni who acquired 60,630 shares of common stock and a warrant to purchase 121,260 shares of common stock; and Thomas Mollick who acquired 45,203 shares of common stock, a pre-funded warrant to purchase 15,391 shares of common stock and a warrant to purchase 121,188 shares of common stock. **November 2024 Financing** On November 25, 2024, we completed a registered direct offering, pursuant to which we sold and issued to certain investors 64,893 shares of our common stock. In addition, in a concurrent private placement, we issued to the investors unregistered warrants to purchase 64,893 shares of our common stock. The warrants are immediately exercisable at an exercise price of $29.40 per share and expire five years from the date of issuance. The combined purchase price for one share of common stock and one warrant was $32.90, resulting in gross proceeds of approximately $2.13 million, before deducting placement agent and other offering expenses in the amount of approximately $0.35 million. One of the purchasers was Jeffrey Meckler, our then Chief Executive Officer and director, who purchased 1,519 shares of common stock and warrants to purchase 1,519 shares of common stock (at the same price and upon the same terms as the other purchasers).Other purchasers included beneficial owners of more than 5% of our outstanding shares who acquired the following securities: Matthew Joseph Nachtrab Revocable Trust dtd 12/15/2014 who acquired 15,197 shares of common stock and a warrant to purchase 15,197 shares of common stock; Yehuda Shimoni who acquired 22,796 shares of common stock and a warrant to purchase 22,796 shares of common stock; and Thomas Mollick who acquired 9,118 shares of common stock and a warrant to purchase 9,118 shares of common stock. **August 2024 Financing** On August 8, 2024, we completed a registered direct offering, pursuant to which we sold and issued to certain investors 58,708 shares of our common stock. In addition, in a concurrent private placement, we issued to the investors unregistered warrants to purchase 58,708 shares of our common stock. The warrants are immediately exercisable at an exercise price of $47.60 per share and expire five years from the date of issuance. The combined purchase price for one share of common stock and one warrant was $51.10, resulting in gross proceeds of approximately $3.0 million, before deducting placement agent and other offering expenses in the amount of approximately $0.5 million. One of the purchasers was Jeffrey Meckler, our then Chief Executive Officer and director, who purchased 3,033 shares of common stock and warrants to purchase 3,033 shares of common stock (at the same price and upon the same terms as the other purchasers). Other purchasers included beneficial owners of more than 5% of our outstanding shares who acquired the following securities: Matthew Joseph Nachtrab Revocable Trust dtd 12/15/2014 who acquired 14,677 shares of common stock and a warrant to purchase 14,677 shares of common stock; and Thomas Mollick who acquired 14,677 shares of common stock and a warrant to purchase 14,677 shares of common stock. | 91 | | | | | **Director and Officer Indemnification and Insurance** We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us or will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the persons services as a director or executive officer. We also maintain an insurance policy that insures our directors and executive officers against certain liabilities, including liabilities arising under applicable securities laws. **** **Item 14. Principal Accountant Fees and Services.** The following table summarizes the fees of Haskell & White LLP, our independent registered public accounting firm, billed to us for their professional services for each of the last two fiscal years: | Fee Category | | 2025 | | | 2024 | | | | Audit Fees | | $ | 205,500 | | | $ | 221,000 | | | | Audit Related Fees | | | 73,555 | | | | - | | | | Tax Fees | | | - | | | | - | | | | All Other Fees | | | - | | | | - | | | | Total Fees | | $ | 279,055 | | | $ | 221,000 | | | **Audit Fees** Audit fees for the fiscal years ended December 31, 2025 and 2024 include fees for professional services rendered for the audit and review of our financial statements included in our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC, and services provided in connection with SEC filings, including consents and comfort letters. **Audit Committee Pre-Approval Policy and Procedures** On a periodic basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may be provided by Haskell & White LLP without first obtaining specific pre-approval from the Audit Committee. The Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. Our Audit Committee pre-approves all audit, review, and attest services proposed to be performed by our independent auditor that have not been generally pre-approved, including the scope of services to be performed and the compensation to be paid to the auditor, prior to commencement of such engagements of the independent auditor. Our Audit Committee has authorized all auditing and non-auditing services provided by Haskell & White LLP during the fiscal year ended December 31, 2025 and the fees paid for such services. **PART IV** **Item 15. Exhibits and Financial Statement Schedules.** **(a)(1) Financial Statements.** The financial statements required by this item are listed in Item 8. Financial Statements and Supplementary Data in this Annual Report. **(a)(2) Financial Statement Schedules.** The financial statement schedules are omitted because they are either not applicable or the information required is presented in the financial statements and notes thereto under Item 8. Financial Statements and Supplementary Data in this Annual Report. **(a)(3) Exhibits.** The following is a list of exhibits filed as part of this Annual Report. | 92 | | | | | **Exhibit Index** | Exhibit No. | | Exhibit Description | | | 2.1++ | | Agreement and Plan of Merger and Reorganization, dated as of March 15, 2021, by and among Intec Pharma Ltd., Intec Parent, Inc., Dillon Merger Sub Inc., Domestication Merger Sub Ltd., and Decoy Biosystems, Inc. (incorporated herein by reference to Exhibit 2.1 to Intec Israels Report on Form 8-K filed with the SEC on March 15, 2021) | | | 2.2 | | Agreement and Plan of Merger, dated as of April 27, 2021, by and among Intec Pharma Ltd., Intec Parent, Inc. and Domestication Merger Sub Ltd. (incorporated herein by reference to Exhibit 2.1 to Intec Israels Report on Form 8-K filed with the SEC on April 30, 2021) | | | 3.1 | | Amended and Restated Certificate of Incorporation of Indaptus Therapeutics, Inc., dated as of July 23, 2021 (incorporated herein by reference to Exhibit 3.1 of the Companys Current Report on Form 8-K filed with the SEC on July 23, 2021) | | | 3.2 | | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Indaptus Therapeutics, Inc. dated August 3, 2021 (incorporated herein by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on August 6, 2021) | | | 3.3 | | Certificate of Amendment to Amended And Restated Certificate of Incorporation of Indaptus Therapeutics, Inc. (incorporated herein by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on June 26, 2025) | | | 3.4 | | Certificate of Amendment to Amended And Restated Certificate of Incorporation of Indaptus Therapeutics, Inc. (incorporated herein by reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on February 27, 2026) | | | 3.5 | | Amended and Restated Bylaws of Indaptus Therapeutics, Inc., dated as of January 22, 2024 (incorporated herein by reference to Exhibit 3.1 of the Companys Current Report on Form 8-K filed with the SEC on January 23, 2024) | | | 3.6* | | Certificate of Designation of Preferences, Rights and Limitations of Series AA Preferred Stock | | | 3.7* | | Certificate of Designation of Preferences, Rights and Limitations of Series AAA Preferred Stock | | | 4.1* | | Description of Securities Registered under Section 12 | | | 4.2 | | Form of Ordinary Share Purchase Warrant of Intec Parent, Inc. (incorporated herein by reference to Exhibit 10.2 to Intec Israels Current Report on Form 8-K filed with the SEC on May 6, 2020) | | | 4.3 | | Form of Series A Common Stock Purchase Warrant of Intec Parent, Inc. (incorporated herein by reference to Exhibit 10.3 to Indaptus Current Report on Form 8-K filed with the SEC on July 29, 2021) | | | 10.1+ | | Indaptus Therapeutics, Inc. Amended and Restated 2021 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Indaptus Current Report on Form 8-K filed with the SEC on June 7, 2024) | | | 10.2+ | | Form of Option Award Agreement (incorporated herein by reference to Exhibit 10.2 of the Companys Annual Report on Form 10-K filed with the SEC on March 13, 2024) | | | 10.3+ | | Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.5 of the Companys Current Report on Form 8-K filed with the SEC on August 6, 2021) | | | 10.4+ | | Employment Agreement between Jeffrey Meckler and Indaptus Therapeutics, Inc., effective as of August 4, 2021 (incorporated herein by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed with the SEC on August 6, 2021) | | | 10.5+ | | Employment Modification Agreement, dated as of December 22, 2025, by and between the Company and Jeffrey A. Meckler (incorporated herein by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.6+ | | Salary Adjustment Agreement dated January 20 between the Company and Jeffrey A. Meckler (incorporated herein by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed with the SEC on January 20, 2026) | | | 10.7+ | | Employment Agreement between Michael J. Newman, Ph.D. and Indaptus Therapeutics, Inc., effective as of August 4, 2021 (incorporated herein by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the SEC on August 6, 2021) | | | 10.8+ | | Employment Modification Agreement, dated as of December 22, 2025, by and between the Company and Michael J. Newman, Ph.D. (incorporated herein by reference to Exhibit 10.3 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.9+ | | Salary Adjustment Agreement dated January 20 between the Company and Michael J. Newman, Ph.D. (incorporated herein by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the SEC on January 20, 2026) | | | 10.10+ | | Employment Agreement between Walt Linscott and Indaptus Therapeutics, Inc., effective as of August 4, 2021 (incorporated herein by reference to Exhibit 10.3 of the Companys Current Report on Form 8-K filed with the SEC on August 6, 2021) | | | 10.11+ | | Employment Modification Agreement, dated as of December 22, 2025, by and between the Company and Walt A. Linscott, Esq. (incorporated herein by reference to Exhibit 10.5 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.12+ | | Employment Agreement between Nir Sassi and Indaptus Therapeutics, Inc., effective as of January 1, 2022 (incorporated herein by reference to Exhibit 10.6 of the Companys Annual Report on Form 10-K filed with the SEC on March 21, 2022) | | | 10.13+ | | Employment Modification Agreement, dated as of December 22, 2025, by and between the Company and Nir Sassi (incorporated herein by reference to Exhibit 10.4 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.14+ | | Employment Agreement between Roger J. Waltzman and Indaptus Therapeutics, Inc., effective as of August 7, 2023 (incorporated herein by reference to Exhibit 10.8 of the Companys Annual Report on Form 10-K filed with the SEC on March 13, 2024) | | | 10.15+ | | Separation Agreement, dated as of December 22, 2025, by and between the Company and Roger Waltzman (incorporated herein by reference to Exhibit 10.6 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.16 | | Form of Voting Agreement with Executive Officers (incorporated herein by reference to Exhibit 10.7 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.17+ | | Indaptus Therapeutics, Inc. Non-Employee Director Compensation Program (Effective April 2, 2023) (incorporated herein by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed with the SEC on May 11, 2023) | | | 10.18 | | Form of Securities Purchase Agreement, dated July 23, 2021, between Intec Parent, Inc. and each purchaser identified on the signature pages hereto (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the SEC on July 29, 2021) | | | 10.19 | | Form of Registration Rights Agreement, dated July 23, 2021, between Intec Parent, Inc. and each purchaser identified on the signature pages hereto (incorporated herein by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K filed with the SEC on July 29, 2021) | | | 10.20 | | At the Market Offering Agreement, dated June 1, 2022, by and between Indaptus Therapeutics, Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 1.2 of the Companys Registration Statement on Form S-3 filed on September 1, 2022) | | | 93 | | | | | | 10.21 | | Placement Agent Agreement, dated as of July 23, 2024, by and between Indaptus Therapeutics, Inc. and Paulson Investment Company, LLC (incorporated by reference to Exhibit 1.1 to the Companys Current Report on Form 8-K filed on August 8, 2024) | | | 10.22 | | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on August 8, 2024) | | | 10.23 | | Form of Warrant (incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on August 8, 2024) | | | 10.24 | | Placement Agent Agreement, dated as of October 29, 2024, by and between Indaptus Therapeutics, Inc. and Paulson Investment Company, LLC, and Amendment No. 1 to Placement Agent Agreement, dated as of November 20 2024 (incorporated by reference to Exhibit 1.1 to the Companys Current Report on Form 8-K filed on November 22, 2024) | | | 10.25 | | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on November 22, 2024) | | | 10.26 | | Form of Warrant (incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on November 22, 2024) | | | 10.27 | | Form of Placement Agent Warrant (incorporated by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed on November 22, 2024) | | | 10.28 | | Placement Agent Agreement, dated as of January 12, 2025, by and between Indaptus Therapeutics, Inc. and Paulson Investment Company, LLC as amended by the First Amendment to the Placement Agent Agreement, dated as of December 30, 2024 (incorporated by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K filed on January 14, 2025) | | | 10.29 | | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on January 14, 2025) | | | 10.30 | | Form of Warrant (incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on January 14, 2025) | | | 10.31 | | Form of Placement Agent Warrant (incorporated by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed January 14, 2025) | | | 10.32 | | Form of Standby Equity Purchase Agreement dated as of February 12, 2025 by and between the Company and YA II PN Ltd. (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed February 12, 2025) | | | 10.33 | | Form of Securities Purchase Agreement, dated as of June 12, 2025, between the Company and the investors signatory thereto (incorporated herein by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed with the SEC on June 13, 2025) | | | 10.34 | | Form of Convertible Promissory Note (incorporated herein by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the SEC on June 13, 2025) | | | 10.35 | | Form of Common Warrant (incorporated herein by reference to Exhibit 10.3 of the Companys Current Report on Form 8-K filed with the SEC on June 13, 2025) | | | 10.36 | | Form of Placement Agent Agreement, dated as of May 9, 2025, by and between Indaptus Therapeutics, Inc. and Paulson Investment Company, LLC (incorporated herein by reference to Exhibit 10.4 of the Companys Current Report on Form 8-K filed with the SEC on June 13, 2025) | | | 10.37 | | Securities Purchase Agreement, dated as of December 22, 2025, by and between the Company and David Lazar (incorporated herein by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed with the SEC on December 23, 2025) | | | 10.38 | | Form of Warrant Repricing Agreement (incorporated herein by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed with the SEC on February 12, 2026) | | | 10.39 | | Form of Voting Agreement with Warrant Holders (incorporated herein by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the SEC on February 12, 2026) | | | 19.1 | | Insider Trading Policy (incorporated herein by reference to Exhibit 19.1 of the Companys Annual Report on Form 10-K filed with the SEC on March 13, 2025) | | | 21.1 | | List of Subsidiaries (incorporated herein by reference to Exhibit 21.1 to the Companys Annual Report on Form 10-K filed with the SEC on March 13, 2025) | | | 23.1* | | Consent of Haskell & White LLP, independent registered public accounting firm | | | 31.1* | | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | 31.2* | | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | 31.3* | | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | 32.1# | | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 | | | 32.2# | | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 | | | 32.3# | | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 | | | 97.1 | | Indaptus Therapeutics, Inc. Policy for Recovery of Erroneously Awarded Compensation (incorporated herein by reference to Exhibit 97.1 of the Companys Annual Report on Form 10-K filed with the SEC on March 13, 2024) | | | 101.INS* | | Inline XBRL Instance Document (the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document) | | | 101.SCH* | | Inline XBRL Taxonomy Extension Schema Document | | | 101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | 101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | 101.LAB* | | Inline XBRL Taxonomy Extension Labels Linkbase Document | | | 101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101) | | | | * | Filed herewith | | | | | | | | | # | Furnished herewith | | | | | | | | | + | Indicates management contract or compensatory plan. | | | | | | | | | ++ | The schedules to the agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the SEC upon request. | | **Item 16. Form 10-K Summary** None. | 94 | | | | | **** **SIGNATURES** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized**.** | | Indaptus Therapeutics, Inc. | | | | | | | Date: March 17, 2026 | By: | /s/ Jeffrey A. Meckler | | | | | Jeffrey A. Meckler | | | | | Co-Chief Executive Officer (Principal Executive Officer) | | | | | | | | | By: | /s/ David E. Lazar | | | | | David E. Lazar | | | | | Co-Chief Executive Officer | | | | | (Principal Executive Officer) | | **POWER OF ATTORNEY** KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Jeffrey Meckler and Nir Sassi, and each of them acting individually, as his attorney-in-fact, each with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney to any and all amendments to said Report. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. | Name | | Title | | Date | | | | | | | | | | /s/ David E. Lazar | | Co-Chief Executive Officer and Chairman | | March 17, 2026 | | | David E. Lazar | | (Principal Executive Officer) | | | | | | | | | | | | /s/ Jeffrey A. Meckler | | Co-Chief Executive Officer and Director | | March 17, 2026 | | | Jeffrey A. Meckler | | (Principal Executive Officer) | | | | | | | | | | | | /s/ Nir Sassi | | Chief Financial Officer | | March 17, 2026 | | | Nir Sassi | | (Principal Financial and Accounting Officer) | | | | | | | | | | | | /s/ David Natan | | Director | | March 17, 2026 | | | David Natan /s/ Roger J. Pomerantz, M.D. | | Director | | March 17, 2026 | | | Dr. Roger J. Pomerantz, M.D. | | | | | | | | | | | | /s/ Avraham Ben-Tzvi | | Director | | March 17, 2026 | | | Avraham Ben-Tzvi | | | | | | | | | | | | /s/ Anthony J. Maddaluna | | Director | | March 17, 2026 | | | Anthony J. Maddaluna | | | | | | | | | | | | /s/ Jerome Jabbour | | Director | | March 17, 2026 | | | Jerome Jabbour | | | | | | | | | | | | /s/ William B. Hayes | | Director | | March 17, 2026 | | | William B. Hayes | | | | | | | | | | | | /s/ Matthew McMurdo | | Director | | March 17, 2026 | | | Matthew McMurdo | | | | | 95 | |