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Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Use of Estimates, Policy [Policy Text Block]

Use of Estimates

 

The Company makes estimates and assumptions in preparing its condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount expenses incurred during the reporting period. The Company evaluates its estimates on an ongoing basis, including those estimates related to common stock warrant liabilities, clinical trials and manufacturing agreements. Actual results could differ from these estimates and assumptions.
Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents and Concentration of Credit Risk

 

The Company invests in cash and cash equivalents. The Company considers highly liquid financial instruments with original maturities of three months or less to be cash equivalents. Highly liquid investments that are considered cash equivalents include money market accounts and funds, certificates of deposit, and U.S. Treasury securities. The Company maintains its cash and cash equivalents at one financial institution.
Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

 

The Company recognizes financial instruments in accordance with the authoritative guidance on fair value measurements and disclosures for financial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. The guidance also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

 

 

●

Level 1 includes quoted prices in active markets.

 

●

Level 2 includes significant observable inputs, such as quoted prices for identical or similar securities, or other inputs that are observable and can be corroborated by observable market data for similar securities. The Company uses market pricing and other observable market inputs obtained from third-party providers. It uses the bid price to establish fair value where a bid price is available. The Company does not have any financial instruments where the fair value is based on Level 2 inputs.

 

●

Level 3 includes unobservable inputs that are supported by little or no market activity. The Company does not have any financial instruments where the fair value is based on Level 3 inputs.

 

If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The fair value of cash and cash equivalents was based on Level 1 inputs at June 30, 2025 and December 31, 2024.

 

The fair value of common stock warrants of $6.71 per warrant was determined at distribution on January 3, 2024 using a Monte Carlo valuation model since the warrants were not traded on the open market on January 3, 2024. Warrant trading on Nasdaq began on January 4, 2024. Quantitative information regarding Level 3 fair value measurements for common stock warrants are as follows:

 

Exercise price per warrant

 $33.00 

Conversion rate - common shares per warrant

  1.50 

Closing price of common stock

 $23.72 

Volatility

  75%

Risk-free interest rate

  5.40%

Expected life of option (in years)

  0.3 

Dividend yield

 

zero

 

 

The common stock warrants stopped trading on Nasdaq after May 2, 2024 and subsequently had little or no market activity. As of May 7, 2024, the warrants were presumed to have no value since they were redeemed for a nominal payment of $0.001 per warrant.
Segment Reporting, Policy [Policy Text Block]

Business Segments

 

The Company reports segment information based on how it internally evaluates the operating performance of its business units, or segments. The Company’s operations are confined to one business segment: the development of novel drugs and diagnostics.

 

The Company’s reportable segment reflects the manner in which its chief operating decision maker ("CODM") allocates resources and assesses performance. The Company's CODM is the President and Chief Executive Officer. The primary measure used by the Company's CODM for purposes of allocating resources is based on net loss that also is reported on the consolidated statements of operations as consolidated net loss. The measure of segment assets is reported on the condensed consolidated balance sheets as cash and cash equivalents.

 

The Company has not generated any product revenue in the current period and expects to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through stages of development and clinical trials.

 

As such, the CODM uses cash forecast models in deciding how to invest in the development of novel drugs and diagnostics. 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, net cash used in operating activities for the period and cash on hand are used in assessing performance of the segment.

 

The following table summarizes expenses by category regularly reviewed by the CODM (in thousands):

 

  

Three months ended June 30,

  

Six months ended June 30,

 
  

2025

  

2024

  

2025

  

2024

 

Operating expenses

                

Research and development

 $(5,116) $(15,198) $(18,782) $(31,431)

General and administrative

  (40,276)  (46,204)  (51,196)  (49,905)

Other segment items(a)

  1,168   67,557   2,351   112,534 

Net income (loss)

 $(44,224) $6,155  $(67,627) $31,198 

 

(a) Other segment items include interest income, other income, net and gain from change in fair value of warrant liabilities.

 

The following table summarizes assets regularly reviewed by the CODM (in thousands):

 

    
  

June 30, 2025

  

December 31, 2024

 

Cash and cash equivalents

 $112,381  $128,574 

 

For the six months ended June 30, 2025 and 2024, the net cash used in operating activities was $16.3 million and $37.4 million, respectively.
Compensation Related Costs, Policy [Policy Text Block]

Stock-based Compensation 



The Company recognizes non-cash expense for the fair value of all stock options and other share-based awards. The Company uses the Black-Scholes option valuation model to calculate the fair value of stock options, using the single-option award approach and straight-line attribution method. This model requires the input of subjective assumptions including expected stock price volatility, expected life and estimated forfeitures of each award. These assumptions consist of estimates of future market conditions, which are inherently uncertain, and therefore, are subject to management's judgment. For all options granted, it recognizes the resulting fair value as expense on a straight-line basis over the vesting period of each respective stock option, generally one to four years.



The Company has granted share-based awards that vest upon achievement of certain performance criteria (“Performance Awards”). The Company multiplies the number of Performance Awards by the fair value of its common stock on the date of grant to calculate the fair value of each award. It estimates an implicit service period for achieving performance criteria for each award. The Company recognizes the resulting fair value as expense over the implicit service period when it concludes that achieving the performance criteria is probable. It periodically reviews and updates as appropriate its estimates of implicit service periods and conclusions on achieving the performance criteria. Performance Awards vest and common stock is issued upon achievement of the performance criteria.
Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) per Share



Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive securities outstanding during the period using the treasury stock method. Potentially dilutive securities are excluded from the computations of diluted earnings per share if their effect would be anti-dilutive. A net loss causes all potentially dilutive securities to be anti-dilutive. Potentially dilutive securities consist of outstanding common stock options, warrants and Performance Awards. There is no difference between the Company’s net income (loss) and comprehensive net income (loss). The numerators and denominators in the calculation of basic and diluted net loss per share were as follows (in thousands, except net loss per share data):

 

  

Three months ended

  

Six months ended

 
  

June 30,

  

June 30,

 
  

2025

  

2024

  

2025

  

2024

 

Numerator, basic:

                

Net income (loss)

 $(44,224) $6,155  $(67,627) $31,198 

Denominator, basic:

                

Weighted average common shares outstanding

  48,308   46,202   48,285   44,601 

Net income (loss) per share, basic

 $(0.92) $0.13  $(1.40) $0.70 
                 

Numerator, diluted:

                

Net income (loss)

 $(44,224) $6,155  $(67,627) $31,198 

Adjustment for change in fair value of warrant liabilities

  —   —   —   (43,793)

Adjusted numerator, diluted

 $(44,224) $6,155  $(67,627) $(12,595)

Denominator, diluted:

                

Weighted average common shares outstanding

  48,308   46,202   48,285   44,601 

Dilutive effect of common stock warrants

  —   —   —   551 

Weighted average dilutive common shares

  48,308   46,202   48,285   45,152 

Net income (loss) per share, diluted

 $(0.92) $0.13  $(1.40) $(0.28)
                 

Dilutive common stock options excluded from net income (loss) per share, diluted

  4,176   2,703   3,910   2,674 

Dilutive Performance Awards excluded from net income (loss) per share, diluted

  7   7   7   7 

 

The Company excluded common stock options and Performance Awards outstanding for the three and six months ended June 30, 2025 and 2024 from the calculation of net loss per share, diluted, because the effect of including outstanding options and Performance Awards would have been anti-dilutive. Warrants were included for the calculation of net loss per share, diluted, for the period ended  June 30, 2024 assuming each warrant was exercisable for one and one-half shares of common stock.
Derivatives, Policy [Policy Text Block]

Warrant Liabilities

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and in accordance with the Financial Accounting Standards Board (“FASB“) Accounting Standards Codification (“ASC“) 480, “Distinguishing Liabilities from Equity” (“ASC 480“), and ASC 815, “Derivatives and Hedging” (“ASC 815“). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

 

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value of the date of issuance, and each condensed consolidated balance sheet date thereafter. Changes in the estimated fair value of liability classified warrants are recognized as a non-cash gain or loss on the statements of operations. Costs associated with issuing the warrants classified as derivative liabilities are charged to operations when the warrants are issued.

 

There were no warrants outstanding at June 30, 2025 or December 31, 2024.

 
Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments 

 

Financial instruments include accounts payable, accrued expenses, accrued development expense and other liabilities. The estimated fair value of certain financial instruments may be determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value; therefore, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of using different market assumptions and/or estimation methodologies may be material to the estimated fair value amounts. The carrying amounts of accounts payable, accrued expenses, accrued development expense and other liabilities are at cost, which approximates fair value due to the short maturity of those instruments.
Research and Development Expense, Policy [Policy Text Block]

Research Contracts, Prepaids and Accruals

 

The Company has entered into various research and development contracts with research institutions and other third-party vendors. These agreements are generally cancelable. Related payments are recorded as research and development expenses as incurred. The Company records prepaids and accruals for estimated ongoing research costs. When evaluating the adequacy of prepaid expenses and accrued liabilities, the Company analyzes progress of the studies including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the prepaid and accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical prepaid and accrual estimates have not been materially different from actual costs.
Share-Based Payment Arrangement [Policy Text Block]

Incentive Bonus Plan

 

In 2020, the Company established the 2020 Cash Incentive Bonus Plan (the “CIB Plan”) to incentivize CIB Plan participants. Awards under the CIB Plan are accounted for as liability awards under ASC 718 “Stock-based Compensation”. The fair value of each potential CIB Plan award will be determined once a grant date occurs and will be remeasured each reporting period. Compensation expense associated with the CIB Plan will be recognized over the expected achievement period for each CIB Plan award, when a Performance Condition (as defined below) is considered probable of being met. See Note 9 for further discussion of the CIB Plan.
Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

 

Property and equipment are recorded at cost, net of accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. Owned buildings and related improvements have estimated useful lives of 39 years and approximately 10 years, respectively. Tenant improvements are amortized using the straight-line method over the useful lives of the improvements or the remaining term of the corresponding leases, whichever is shorter.

 

Property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If property and equipment are considered to be impaired, an impairment loss is recognized.
Commitments and Contingencies, Policy [Policy Text Block]

Insurance Recoveries

 

We record proceeds from our insurance policies when the loss event has occurred, and proceeds are estimable and probable of being recovered. Insurance recoveries and proceeds received are recorded as a reduction to general and administrative expense. There were no insurance recoveries during the three and six months ended June 30, 2025. There was approximately $5.8 million and $8.8 million of insurance recoveries recorded during the three and six months ended  June 30, 2024, respectively.
Related Party Transaction [Policy Text Block]

Related Party Transactions

 

On July 15, 2024, our former President and Chief Executive Officer resigned from the Company, effective as of September 13, 2024 (the “Effective Date”). Pursuant to the terms of his employment agreement, our former President and Chief Executive Officer is receiving severance compensation equal to $1.23 million paid ratably over twelve months following the Effective Date. The full amount of severance compensation was included in general and administrative expense in the period the resignation was tendered and no severance compensation relating to this agreement was recognized in the three and six months ended June 30, 2025 or 2024.

 

On July 16, 2024, our former Senior Vice President (SVP), Neuroscience agreed to step down from her employment with the Company, effective immediately. Our former SVP, Neuroscience is the spouse of our former President and Chief Executive Officer. Pursuant to a separation agreement, our former SVP, Neuroscience is receiving severance compensation equal to $0.5 million paid in quarterly installments over twelve months. The full amount of severance compensation was included in research and development expense in the period the agreement providing for severance was executed and no severance compensation relating to this agreement was recognized in the three and six months ended June 30, 2025 or 2024.

 

Included in accrued compensation and benefits at June 30, 2025 and December 31, 2024 is approximately $0.3 and $1.2 million, respectively, of accrued severance costs for the two former senior officers.

 

On July 16, 2024, the Company entered into a one-year consulting agreement with the Company’s former SVP, Neuroscience. Pursuant to the terms of the consulting agreement, the consultant is providing services for purposes of providing information and support for scientific research and/or obtaining governmental approval for the Company’s products. The Company agreed to pay $500 per hour for such consulting services. The Company incurred fees totaling $20,000 under the consulting agreement during the three and six months ended June 30, 2025. The Company did not incur any fees under the consulting agreement during the three and six months ended June 30, 2024.

 

On June 20, 2025, the Company entered into a one-year consulting agreement with James W. Kupiec, M.D., the Company’s former Chief Medical Officer. Pursuant to the terms of the consulting agreement, the consultant is providing services relating to Company manuscripts and publications. The Company agreed to pay a fixed fee totaling $42,000 for such consulting services. The Company incurred fees totaling $21,000 under the consulting agreement during the three and six months ended June 30, 2025.

 
Income Tax, Policy [Policy Text Block]

Income Taxes 

 

The Company accounts for income taxes under the asset and liability method.  Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted to reflect tax rates based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. The Company has accumulated significant deferred tax assets that reflect the tax effects of net operating loss and tax credit carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. The Company is uncertain about the timing and amount of any future earnings. Accordingly, the Company offsets these deferred tax assets with a valuation allowance.

 

The Company accounts for uncertain tax positions in accordance with ASC 740, “Income Taxes”, which clarifies the accounting for uncertainty in tax positions. These provisions require recognition of the impact of a tax position in the Company’s condensed consolidated financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected as a component of income tax expense.
New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

 

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU includes amendments that require entities to bifurcate specified expense line items on the income statement into underlying components, including employee compensation, depreciation, and intangible asset amortization, as applicable. Qualitative descriptions of the remaining components are required. These enhanced disclosures are required for both interim and annual periods. In January 2025, the FASB subsequently issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, to provide clarification on the ASU's effective date. The new standard is effective for fiscal years beginning after December 15, 2026 on a prospective basis with the option to apply it retrospectively, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced disclosures around income statement expenses.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as reconciling items that meet a quantitative threshold. Further, the ASU requires additional disclosures on income tax expense and taxes paid, net of refunds received, by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply it retrospectively. Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced income tax related disclosures.