CervoMed (DP8) Risk Analysis

We have invested almost all of our efforts and financial resources to date in the development of neflamapimod. To date, we have not initiated or completed a pivotal clinical trial, obtained marketing approval for any product candidate, manufactured a commercial scale product or arranged for a third party to do so on our behalf, or conducted sales and marketing activities necessary for successful product commercialization. Our future success is substantially dependent on our ability to successfully complete clinical development of, obtain regulatory approval for, and successfully commercialize neflamapimod as a treatment for DLB and additional indications, which may never occur. We expect a substantial portion of our efforts and expenditures over the next few years will be devoted to the advancement of neflamapimod's clinical development. In order to be successful, we will need to successfully manage clinical and manufacturing activities, the pursuit of regulatory approval in multiple jurisdictions, securing manufacturing supply, building a commercial organization, and significant marketing efforts, among other requirements, before we can generate any revenues from commercial sales. We cannot be certain that we will be able to successfully complete any or all of these activities. Furthermore, we have not submitted an NDA to the FDA or comparable applications to other regulatory authorities for neflamapimod, and we do not expect to be in a position to do so in the near future, if ever. Significant additional clinical testing and research will be required before we can file an NDA or any other application seeking approval of neflamapimod for the treatment of DLB, or any other indication. If we are unable to obtain the necessary regulatory approvals for and commercialize neflamapimod, it would materially adversely affect our financial position, and we may not be able to generate sufficient revenue to continue our business.

The risk of failure in drug development is high. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, a company must complete nonclinical development and conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical trials are expensive, difficult to design and implement and can take several years to complete, and their outcomes are inherently uncertain with the potential for failure at any time during the clinical development process. Nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in nonclinical studies and early-stage clinical trials have nonetheless failed to obtain marketing approval of their products. It is impossible to predict when or if neflamapimod will receive marketing approval. We may experience numerous unforeseen events during, or as a result of, our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize neflamapimod for DLB or any other indication. Clinical trials may be delayed, suspended or prematurely terminated because costs are greater than we anticipate or for a variety of other reasons, such as: - delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a trial design that we are able to execute;- delay or failure in obtaining authorization to commence a trial, including approval from the appropriate IRB or ethics committee at each clinical site to conduct testing of a candidate on human subjects, or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical trial;- delays in reaching, or failure to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;- inability, delay or failure in identifying and maintaining a sufficient number of trial sites, many of which may already be engaged in other clinical programs;- inability, delay or failure in identifying, recruiting, and training suitable clinical investigators;- delay or failure in recruiting, screening, and enrolling suitable subjects to participate in a trial;- delay or failure in having subjects complete a trial or return for post-treatment follow-up;- delays caused by operational issues at clinical trial sites, including insufficient staffing;- changes to the clinical trial protocols and/or changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;- clinical sites and investigators deviating from the clinical protocol, failing to conduct the trial in accordance with GCP or other regulatory requirements, or dropping out of a trial;- failure to initiate or delay of or inability to complete a clinical trial as a result of the authorizing IND or foreign clinical trial application being placed on temporary or permanent clinical hold by the FDA or comparable foreign regulatory authority;- lack of adequate funding to continue a clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional clinical trials and increased expenses associated with the services of our CROs and other third parties, or the cost of clinical trials being greater than we anticipated;- delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of DP for use in clinical trials or the inability to do any of the foregoing;- developments on trials conducted by competitors for related technology that raise FDA or foreign regulatory authority concerns about risk to patients of a technology or in any indication more broadly;- clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional nonclinical studies, clinical trials or abandon product development programs;- the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;- our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;- regulators, the IRB or a Data Safety Monitoring Board if one is used for our clinical trials, may require that we suspend or terminate our clinical trials for various reasons, including noncompliance with regulatory requirements, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, or a finding that the participants are being exposed to unacceptable health risks;- the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate;- transfer of manufacturing processes to larger-scale facilities operated by a CMO, and delays or failure by our CMOs or we to make any necessary changes to such manufacturing process;- the FDA or comparable foreign regulatory authorities may require us to submit additional data or impose other requirements before permitting us to initiate a clinical trial; or - changes in governmental regulations or administrative actions. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval for neflamapimod or any other future product candidates. Further, the FDA or comparable foreign regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials or may change the requirements for approval even after the FDA has reviewed and commented on the design for our clinical trials. If we are required to conduct additional clinical trials or other nonclinical studies of neflamapimod in various disease conditions beyond those that we currently contemplates, or we are unable to successfully complete clinical trials of our product candidates or other studies, or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: - be delayed in obtaining marketing approval for our product candidates;- not obtain marketing approval for our product candidates at all;- obtain approval for indications or patient populations that are not as broad as intended or desired;- obtain approval with labeling that includes significant use or distribution restrictions or safety warnings that would reduce the potential market for our products or inhibit our ability to successfully commercialize our products;- be subject to additional post-marketing restrictions or requirements, including post-marketing testing; or - have the product removed from the market after obtaining marketing approval. Any failure or delay in commencing or completing clinical trials or obtaining regulatory approvals for neflamapimod would delay our commercialization prospects, substantially increase the costs of commercializing neflamapimod, and severely harm our business and financial condition.

Drug development in the field of brain diseases, including age-related brain disorders and other neurodegenerative diseases in particular, has seen very limited success historically. There have been limited efforts by biopharmaceutical and pharmaceutical companies to develop treatments for DLB and there are no therapies available for patients that have been approved with a specific indication to treat DLB. Only symptomatic therapies that are approved for other diseases, generally either AD or PD, are currently utilized to manage patients with DLB. In addition, many potential disease-modifying therapies have been evaluated in other neurodegenerative diseases, particularly in AD, and these have encountered challenges in their development and, as a result, only recently two disease-modifying treatments to treat AD have been approved in the US Developing a product candidate for treatment of these brain diseases is extremely difficult and subjects us to a number of challenges, including obtaining regulatory approval from the FDA and other regulatory authorities who have only a limited set of precedents to rely on. Our approach to the treatment of DLB focuses in large part on neflamapimod's ability to inhibit the intra-cellular enzyme p38a. The expression of p38a is considered to be a critical contributor in the toxicity of inflammation, alpha-synuclein, amyloid-beta and tau to neurons and synapses, which we and other scientific experts believe leads to synaptic dysfunction. Synaptic dysfunction, specifically impaired synaptic plasticity, leads to disruption of episodic memory and is a significant event in the development and symptomatology of DLB. However, we cannot be certain that our approach will lead to the development of approvable or marketable products. To date, there has never been an approval of a drug in DLB and therefore, there are no regulatory precedents for endpoints in that indication. Consequently, the FDA has a limited set of products to rely upon in evaluating neflamapimod. This could result in a longer than expected regulatory review process, increased expected development costs or the delay or prevention of commercialization of neflamapimod for the treatment of DLB. Moreover, given the history of clinical failures in this field, future clinical or regulatory failures by us or others may result in further negative perception of the likelihood of success in this field, which may significantly and adversely affect our business and the market price of our common stock.

Data results from our non-Phase 3 studies do not constitute, and should not be interpreted as, regulatory evidence of safety or efficacy for neflamapimod in DLB or any other indication. Rigorous evidence for drug safety and efficacy is derived from one or more large, randomized, placebo-controlled studies. The size and open-label design of portions of our non-Phase 3 studies may introduce clinical or statistical bias or may generate results that may not fully distinguish between drug effects and random variation. Different methods of statistical analysis on clinical data from the same study may lead to objectively different numerical results. These and other statistical and clinical features of our non-Phase 3 studies add complexity or limitations to the scope of data interpretation. In addition, conclusions based on data from analyses of Phase 1 and Phase 2 clinical studies and open-label results may not be reproduced when implemented in large, well-controlled, randomized clinical trials. Particular caution should be exercised when interpreting preliminary data, data relating to a small number of patients and data from open-label uncontrolled studies, which are generally not capable of providing interpretable evidence of efficacy. There can be no assurance that future large, well-controlled, multi-dose studies will demonstrate the safety, tolerability or efficacy of neflamapimod to treat patients with any indication, including DLB. Even if our clinical trials for neflamapimod are completed as planned, we cannot be certain that their results will support the substantial evidence of safety and efficacy needed to obtain regulatory approval. The failure of neflamapimod to show safety, tolerability or efficacy in any future clinical studies would significantly harm our business.

The timely completion of clinical trials in accordance with their protocols depends on, among other things, our ability to enroll a sufficient number of research participants who remain in the study until its conclusion. We may encounter delays in enrolling, or be unable to enroll, a sufficient number of individuals to complete any of our clinical trials, and even once enrolled we may be unable to retain a sufficient number of participants to complete any of our trials. Subject enrollment and retention in clinical trials depends on many factors, including: - the eligibility criteria defined in the protocol;- the size of the patient population required for analysis of the trial's primary endpoints;- the nature of the trial protocol;- the proximity of potential subjects to clinical sites;- the existing body of safety and efficacy data with respect to the product candidate;- Our ability to recruit clinical trial investigators with the appropriate competencies and experience;- clinicians' and patients' perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies;- competing clinical trials being conducted by other companies or institutions;- the risk that participants enrolled in clinical trials will drop out of the trials before completion; and - the operational efficiency of trial sites, including sufficient staffing. In addition, the US Congress recently amended the FDCA to require sponsors of a Phase 3 clinical trial or other "pivotal study" of a new drug or biologic to support MA, to design and submit a diversity action plan for such clinical trial. The action plan must describe appropriate diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them. Although none of our product candidates has reached Phase 3 of clinical development, we or our licensing partners must submit a diversity action plan to the FDA by the time a Phase 3 trial, or pivotal study, protocol is submitted to the agency for review, unless we or our licensing partners are able to obtain a waiver for some or all of the requirements for a diversity action plan. Initiation of such trials may be delayed if the FDA objects to a proposed diversity action plans for any future Phase 3 trial of our product candidates. We or our licensing partners may experience difficulties recruiting a diverse population of patients in attempting to fulfill the requirements of any approved diversity action plan. Furthermore, any negative results we may report in clinical trials may make it difficult or impossible to recruit and retain subjects in other clinical trials of that same product candidate. Delays or failures in planned enrollment or retention of clinical trial subjects may result in increased costs or program delays, which could have a harmful effect on our ability to develop a product candidate or could render further development impossible.