{"url_path":"/sec/alzn/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A ****RISK FACTORS**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-22","source_url":"https://www.sec.gov/Archives/edgar/data/1677077/0001214659-26-008832-index.html","accession_number":"0001214659-26-008832","cik":"0001677077","ticker":"ALZN","issuer_name":"Alzamend Neuro, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1677077/0001214659-26-008832-index.html","primary_entity_key":"0001677077","primary_entity_name":"Alzamend Neuro, Inc."},"word_count":18586,"has_tables":true,"body_markdown":"**ITEM 1A.****RISK FACTORS**\n\n** **\n\n*Investing in our common stock involves a high\ndegree of risk. You should carefully consider the risks described below, as well as the other information in this Annual Report, including\nour financial statements and the related notes and the section of this Annual Report titled “Management’s Discussion and Analysis\nof Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any\nof the events or developments described below could harm our business, financial condition, results of operations and growth prospects.\nIn such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks\nand uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.*\n\n* *\n\n**Risks Related to Our Company, Early Stage of\nClinical Development and Financial Condition**\n\n** **\n\n**We need to obtain substantial additional\nfunding to complete the development and any commercialization of AL001 and ALZN002. If we are unable to raise this capital when needed,\nwe may be forced to delay, reduce or eliminate our research and development programs and other operations.**\n\n \n\nWe expect our expenses to\nincrease substantially during the next few years. The development of biotechnology product candidates is capital intensive. As we conduct\nnon-clinical research and clinical development of our product candidates, we will need substantial additional funds to maintain and expand\nour capabilities in a variety of areas including discovery and non-clinical research, clinical development, regulatory affairs, product\ndevelopment, product quality assurance, and pharmacovigilance. In addition, if we obtain marketing approval for any of our product candidates,\nwe expect to incur significant commercialization expenses for marketing, sales, manufacturing and distribution. Some of those commercialization\ninvestments may be made at-risk in advance of receiving an approval.\n\n \n\nAs of April 30, 2026, we had\n$711,000 in cash and cash equivalents. Based on our current operating plan, we believe that this funding will not be sufficient to fund\nour operations for the next twelve months. In particular, we need additional funds to allow us to fund Phase II clinical trials for AL001\nin Alzheimer’s, BD, MDD and PTSD and complete the Phase I/IIA clinical trial for ALZN002 to treat mild to moderate dementia of the\nAlzheimer’s type. However, changing circumstances or inaccurate estimates by us may cause us to use capital significantly faster\nthan we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.\nFor example, our ongoing clinical trial for ALZN002 or our planned clinical trials for AL001 may encounter technical, enrollment or other\nissues that could cause our development costs to increase more than we expect. We will not have sufficient funds to complete any of these\nplanned or ongoing clinical trials or the clinical development of either AL001 or ALZN002 through regulatory approval. We will need to\nraise substantial additional capital to complete the development and commercialization of each of those product candidates, which additional\ncapital, if available on reasonable terms if at all, may be raised through the sale of our common stock or other securities or through\nthe entering into of alternative strategic transactions, which could cause our stockholders to incur substantial dilution.\n\n \n\nOur future capital requirements\nwill depend on many factors, including:\n\n \n\n•the initiation, progress, timing, costs and results of our planned clinical trials for our product candidates;\n\n \n\n•the number and scope of indications we decide to pursue for product development;\n\n \n\n•the cost, timing and outcome of regulatory review of any NDA or BLA we may submit for our product candidates;\n\n \n\n•the costs and timing of manufacturing for our product candidates, if approved;\n\n \n\n•the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual\nproperty rights and defending intellectual property-related claims;\n\n \n\n•our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel,\nincluding personnel to support the development of our product candidates;\n\n \n\n•the costs associated with being a public company;\n\n \n\n•our ability to enter into partnerships or otherwise monetize our pipeline through strategic transactions\non a timely basis, on terms that are favorable to us, or at all;\n\n \n\n•the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; \n\n \n\n - 22 - \n\n \n\n \n\n•the extent to which we acquire or in-license other product candidates and technologies; and\n\n \n\n•the cost associated with commercializing our product candidates, if any are approved for commercial sale.\n\n \n\nOur future commercial revenues,\nif any, will be derived from sales of products that we do not expect to be commercially available for sale for at least the next several\nyears, if ever. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. Adequate\nadditional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable\nmarket conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If\nwe are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development\nprograms or other operations.\n\n \n\n**Our independent registered public accounting\nfirm has expressed substantial doubt about our ability to continue as a going concern.**\n\n \n\nOur independent registered\npublic accounting firm has issued a report on our financial statements for the year ended April 30, 2026, that contains an emphasis of\na matter paragraph expressing substantial doubt about our ability to continue as a going concern due to insufficient capital for us to\nfund our operations. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If\nwe are unable to successfully raise additional capital, we will need to create and implement alternate operational plans to continue as\na going concern, and investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable\nterms or at all.\n\n \n\n**We are at an early stage of clinical development\nand currently have no source of near-term revenue and may never become profitable.**\n\n \n\nWe are a clinical-stage biopharmaceutical\ncompany. We have initiated clinical trials for our AL001 and ALZN002 programs. To date, we have not initiated or completed a pivotal clinical\ntrial, obtained marketing approval for any product candidates, manufactured a commercial scale product or arranged for a third party to\ndo so on our behalf, or conducted sales and marketing activities necessary for successful product commercialization. Our ability to generate\nrevenue depends heavily on, among other developments:\n\n \n\n•demonstration to the satisfaction of the FDA and comparable regulatory bodies that AL001 and ALZN002 are\nsafe and effective in future clinical trials;\n\n \n\n•our ability to seek and obtain regulatory approvals, including with respect to the indications we are\nseeking;\n\n \n\n•if approved by the FDA, successful manufacture and commercialization of AL001 and ALZN002; and\n\n \n\n•market acceptance of AL001 and ALZN002.\n\n \n\nWe only have two product candidates,\nAL001 and ALZN002, which will require extensive clinical evaluation, regulatory review and approval, significant marketing efforts and\nsubstantial investment before either or both of them, and any respective successors, will provide us with any revenue. As a result, if\nwe do not successfully develop, achieve regulatory approval for and commercialize AL001 or ALZN002, we will be unable to generate any\nrevenue for many years, if at all. We do not anticipate that we will generate revenue for a least the next several years, if ever,\nor that we will achieve profitability for at least several years thereafter, if at all. If we are unable to generate revenue, we\nwill not become profitable, and we may be unable to continue our operations.\n\n \n\n**Risks Related to Our Product Candidates**\n\n \n\n**We have both operational and financial milestones\nthat must be met to maintain the licensing rights to our current technology and intellectual property from the Licensor.**\n\n \n\nThere are certain license\nfees and milestone payments required to be paid by us to the Licensor pursuant to the terms of license agreements we have entered into\nwith the Licensor. The license agreement for ALZN002 requires us to pay royalty payments of 4% on net sales of products developed from\nthe licensed technology for ALZN002, while the license agreements for AL001 require that we pay combined royalty payments of 4.5% on net\nsales of products developed from the licensed technology for AL001. We have already paid an initial license fee of $200,000 for ALZN002\nand an initial license fee of $200,000 for AL001. As an additional licensing fee for the license of ALZN002, the Licensor received 2,668\nshares of our common stock. As an additional licensing fee for the license of the AL001 technologies, the Licensor received 1,650 shares\nof our common stock. Minimum royalties required under the AL001 License Agreements are $40,000 on the first anniversary of the first commercial\nsale, $80,000 on the second anniversary of the first commercial sale and $100,000 on the third anniversary of the first commercial sale\nand every year thereafter, for the life of the AL001 License Agreements. Minimum royalties required for ALZN002 are $20,000 on the first\nanniversary of the first commercial sale, $40,000 on the second anniversary of the first commercial sale and $50,000 on the third anniversary\nof the first commercial sale and every year thereafter, for the life of the ALZN002 License Agreement. Minimum royalties required under\nthe November AL001 License Agreements are $40,000 on the first anniversary of the first commercial sale, $80,000 on the second anniversary\nof the first commercial sale and $100,000 on the third anniversary of the first commercial sale and every year thereafter, for the life\nof the November AL001 License Agreements. Additionally, we are required to pay milestone payments on the due dates to the Licensor for\nthe license of the AL001 technologies and for the ALZN002 technology, as follows:\n\n \n\n - 23 - \n\n \n\n \n\n**Original AL001 Licenses:**\n\n \n\n**Payment**\n**Due Date**\n \n\n$\n50,000*\n Pre-IND Meeting - **Completed** September 2019\n \n\n \n \n \n \n\n$\n65,000*\n IND application filing - **Completed** June 2021\n \n\n \n \n \n \n\n$\n190,000*\n Upon first dosing of patient in a clinical trial - **Completed** December 2021\n \n\n \n \n \n \n\n$\n500,000*\n Upon completion of first clinical trial - **Completed** March 2022\n \n\n \n \n \n \n\n$\n1,250,000\nUpon first patient treated in a Phase III clinical trial\n \n\n \n \n \n \n\n$\n10,000,000\nUpon FDA NDA approval\n \n\n*Milestone met and completed\n\n \n\n**ALZN002 License:**\n\n \n\n**Payment**\n**Due Date**\n\n$\n50,000*\nUpon IND application - **Completed** January 2022\n\n \n \n \n\n$\n50,000\nUpon first dosing of patient in first Phase I clinical trial\n\n \n \n \n\n$\n500,000\nUpon completion of first Phase IIB clinical trial\n\n \n \n \n\n$\n1,000,000\nUpon first patient treated in a Phase III clinical trial\n\n \n \n \n\n$\n10,000,000\nUpon first commercial sale\n\n*Milestone met and completed\n\n \n\n**Additional AL001 Licenses:**\n\n \n\n**Payment**\n**Due Date**\n\n$\n2,000,000\nUpon first patient treated in a Phase III clinical trial\n\n \n \n \n\n$\n16,000,000\nFirst commercial sale\n\n \n\nThese AL001 License Agreements\nhave an indefinite term that continue until the later of the date no licensed patent under the applicable agreement remains a pending\napplication or enforceable patent, the end date of any period of market exclusivity granted by a governmental regulatory body, or the\ndate on which the licensee’s obligations to pay royalties expire under the applicable license agreement.\n\n \n\n**If we fail to comply with our obligations\nin the agreements under which we license intellectual property and other rights from third parties or otherwise experience disruptions\nto our business relationships with the Licensor, we could lose license rights that are critical to our business.**\n\n \n\nWe are a party to license\nagreements with the Licensor and expect to enter into additional license agreements in the future. The existing license agreements impose,\nand we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us. If\nwe fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments\nto the Licensor, we may lose the exclusivity of our license, or the Licensor may have the right to terminate the license, in which event\nwe would not be able to develop or market products covered by the license and would be forced to cease our operations. The Licensor or\nany future licensor may take any of these actions, including terminating a license agreement. Additionally, the milestone and other payments\nassociated with these licenses will make it less profitable for us to develop our product candidates. If the Licensor were to terminate\na license agreement for whatever reason, it would materially and adversely affect our business, financial position and future prospects\nand you would likely lose the entirety of your investment in us.\n\n \n\nIn some cases, patent prosecution\nof our licensed technology is controlled solely by the Licensor. If the Licensor fails to obtain and maintain patent or other protection\nfor the proprietary intellectual property we license, we could lose our rights to the intellectual property or our exclusivity with respect\nto those rights, and our competitors could market competing products using the intellectual property. Licensing of intellectual property\nis of critical importance to our business and involves complex legal, business and scientific issues. Disputes may arise regarding intellectual\nproperty subject to a licensing agreement, including but not limited to:\n\n \n\n•the scope of rights granted under the license agreement and other interpretation-related issues;\n\n \n\n - 24 - \n\n \n\n \n\n•the extent to which our technology and processes infringe on intellectual property of the Licensor that\nis not subject to the licensing agreement;\n\n \n\n•the sublicensing of patent and other rights;\n\n \n\n•our diligence obligations under each of the license agreements and what activities satisfy those diligence\nobligations;\n\n \n\n•the ownership of inventions and know-how resulting from the joint creation or use of intellectual property\nby our licensors and us and our collaborators; and\n\n \n\n•the priority of invention of patented technology.\n\n \n\nIf disputes over intellectual\nproperty and other rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable\nterms, we may be unable to successfully develop and commercialize the affected product candidates.\n\n \n\n**We are substantially dependent on the success\nof our product candidates, which may not receive regulatory approval or be successfully commercialized.** \n\n \n\nIn the future, we plan to\nsubmit AL001 and ALZN002 and, potentially, other product candidates for regulatory approval. Currently, however, neither AL001 nor ALZN002\nhas been submitted for regulatory approval, which would be required before we seek to initiate commercial distribution. To date, we have\ninvested nearly all of our resources in establishing our company, acquiring the intellectual property of our product candidates, AL001\nand ALZN002, and conducting certain preclinical studies and clinical trials. Our near-term prospects, including our ability to finance\nour company and to enter into strategic collaborations and, ultimately, to generate revenue, are directly dependent upon the successful\ndevelopment, FDA approval and commercialization of AL001 or ALZN002.\n\n \n\nThe development and commercial\nsuccess of our product candidates will depend on a number of factors, including, without limitation, the following:\n\n \n\n•our timely initiation and successful completion of preclinical studies and clinical trials for AL001 or\nALZN002;\n\n \n\n•our demonstration to the satisfaction of the FDA and comparable regulatory bodies of the safety and efficacy\nof AL001 or ALZN002, as well as to obtain regulatory and marketing approval for AL001 or ALZN002 in the United States, Europe, the United\nKingdom and elsewhere;\n\n \n\n•our continued compliance with all clinical and regulatory requirements applicable to AL001 and ALZN002;\n\n \n\n•our maintenance of an acceptable safety profile of AL001 and ALZN002 following regulatory approval;\n\n \n\n•competition with other treatments;\n\n \n\n•our creation, maintenance and protection of our intellectual property portfolio, including patents and\ntrade secrets, and regulatory exclusivity for AL001 and ALZN002;\n\n \n\n•the effectiveness of our and our eventual partners’ marketing, sales and distribution strategy and\noperations;\n\n \n\n•the ability of our third-party manufacturers to manufacture supplies of our product and product candidates\nand to develop, validate and maintain commercially viable manufacturing processes;\n\n \n\n•our ability to launch commercial sales of AL001 or ALZN002 following regulatory approval, whether alone\nor in collaboration with others; and\n\n \n\n•the acceptance of AL001 and ALZN002 by physicians, healthcare payers, patients and the medical community.\n\n \n\nMany of these factors are\nbeyond our control, and we cannot assure you that we will ever be able to generate sufficient revenue, or any revenue at all, from the\nsale of AL001 or ALZN002. Our failure in any of the above factors, or in successfully commercializing AL001 or ALZN002 on a timely basis,\ncould have a material adverse effect on our business, results of operations and financial condition, and the value of your investment\ncould substantially decline.\n\n \n\n**AL001 and ALZN002 may not achieve market acceptance, which would\nsignificantly limit our ability to generate revenue.**\n\n \n\nEven if we develop AL001 or\nALZN002 and gain regulatory approvals for either or both candidates, unless physicians and patients accept our product candidates, we\nmay not be able to sell them, whether directly or indirectly, and generate significant revenues. We cannot assure you that AL001, ALZN002\nor any other potential product candidates we may eventually develop will achieve market acceptance and revenue if and when they obtain\nthe requisite regulatory approvals. Market acceptance of any product candidate depends on a number of factors, including but not limited\nto:\n\n \n\n - 25 - \n\n \n\n \n\n•the indication and warnings approved by regulatory authorities in the product label;\n\n \n\n•continued demonstration to the FDA of safety and efficacy in commercial use;\n\n \n\n•physicians’ willingness to prescribe the product;\n\n \n\n•reimbursement from third-party payers such as government healthcare systems and insurance companies;\n\n \n\n•the price of the product;\n\n \n\n•the nature of any post-approval risk management plans mandated by regulatory authorities;\n\n \n\n•competition; and\n\n \n\n•the effectiveness of marketing and distribution support.\n\n \n\nAny failure by AL001 or ALZN002\nto achieve market acceptance or commercial success could have a material adverse effect on our business, results of operations and financial\ncondition.\n\n \n\n**Problems in the manufacturing process, failure\nto comply with manufacturing regulations or unexpected increases in manufacturing costs could harm our business, results of operations\nand financial condition.**\n\n \n\nWe are responsible for the\nmanufacture and supply of AL001 and ALZN002 independently of each other. The manufacturing of AL001 and ALZN002 necessitates compliance\nwith applicable regulatory requirements of the FDA and the European Union, as well as with international cGMP and other international\nregulatory requirements. As of the date of this Annual Report, we do not have our own manufacturing facilities. We have contracted with\na third-party manufacturer for the clinical supply of AL001 using GMP manufacturing for our planned AL001 clinical trials and plan to\ncontract with established third parties for the long-term commercial production of AL001 and ALZN002. The responsibility to obtain market\nauthorization for AL001 and ALZN002 remains with us. As such, even if we could potentially have a claim against one or more third parties,\nwe are legally liable for any noncompliance related to AL001 and ALZN002 and we expect to retain legal responsibility for any future product\ncandidates as well.\n\n \n\nAdditionally, we may have\nlimited control over the associated manufacturing costs and potential unexpected increases in those costs over time. If costs increase,\nwe may choose to pass on such costs to our customers, which could reduce our ability to compete by increasing the prices of our products\n(which we expect to be priced at a significant premium over competing generic products). See “Risks Related to Our Business and\nIndustry — We expect to face substantial competition, with other entities possibly discovering, developing or commercializing\nproducts before, or more successfully than, we do.” If we cannot pass on all such costs to our customers, then our profitability\nwould be adversely affected.\n\n \n\nIf we are unable to manufacture,\nor contract to manufacture, AL001 and ALZN002 in accordance with regulatory specifications, or if there are disruptions in the manufacturing\nprocess due to damage, loss or failure to meet regulatory requirements (including passing inspections) of manufacturing facilities, we\nmay not be able to meet the demand for our products or supply sufficient product for use in clinical trials, and this may harm our ability\nto commercialize AL001 and ALZN002 on a timely or cost-competitive basis, or preclude us from doing so at all, which could harm our business,\nresults of operations and financial condition.\n\n \n\nBefore we or any future commercial\npartners can begin commercial manufacture of AL001 and ALZN002 or any other product candidate that we may develop in the future, we must\nobtain FDA regulatory approval for the product, which requires a successful FDA inspection of our manufacturing facilities (or those\nwe contract with) and the development of quality systems, among other requirements. Even if we successfully pass an FDA Pre-Approval\nInspection of any manufacturing facilities we may establish or contract with, our pharmaceutical facilities would be subject to unannounced\ninspection by the FDA and foreign regulatory authorities to ensure ongoing manufacturing compliance, even after product approval. Due\nto the complexity of the processes that we anticipate will eventually be used to manufacture AL001 and ALZN002, we may be unable to pass\nfederal, state or international regulatory inspections in a cost-effective manner, whether initially or at any time thereafter. If we\nare unable to comply with manufacturing regulations, we may be subject to fines, unanticipated compliance expenses, recall or seizure\nof any approved products, or legal actions such as injunctions or criminal or civil prosecution. These possible sanctions could materially\nand adversely affect our business, results of operations and financial condition. See also “Risks Related to Development and Regulatory\nApproval of Our Product.” The regulatory approval process is uncertain, requires us to utilize significant financial, physical\nand human resources, and may prevent us or our future commercial partners from obtaining approvals for the commercialization of some\nor all of our product candidates. \n\n \n\n - 26 - \n\n \n\n \n\n**Serious adverse events or other safety risks\ncould require us to abandon development and preclude, delay or limit approval of AL001 or ALZN002, or limit the scope of any approved\nlabel or market acceptance.**\n\n \n\nIf AL001, ALZN002 or any other\nproduct candidate that we may develop in the future, prior to or after any approval for commercial sale, causes serious or unexpected\nside effects, or become associated with other safety risks such as misuse, abuse or diversion, a number of potentially significant negative\nconsequences could result, including, without limitation, that:\n\n \n\n•regulatory authorities may interrupt, delay or halt clinical trials;\n\n \n\n•regulatory authorities may deny regulatory approval of AL001 or ALZN002;\n\n \n\n•regulatory authorities may require certain labeling statements, such as warnings or contraindications\nor limitations on the indications for use, or impose restrictions on distribution in the form of REMS in connection with approval, if\nany;\n\n \n\n•regulatory authorities may withdraw their approval, require more onerous labeling statements or impose\na more restrictive REMS of any product that is approved;\n\n \n\n•we may be required to change the way the product is administered or conduct additional clinical trials;\n\n \n\n•any relationships that we may be able to form in the future with any commercial partners may suffer;\n\n \n\n•we could be sued and held liable for harm caused to patients; and\n\n \n\n•our reputation may suffer.\n\n \n\nWe may voluntarily suspend\nor terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants or if preliminary data\ndemonstrate that either AL001 or ALZN002 is unlikely to receive regulatory approval or is unlikely to be successfully commercialized.\nIn addition, regulatory agencies, an Ethics Committee or an IRB, or data safety monitoring boards may at any time recommend the temporary\nor permanent discontinuation of our clinical trials or request that we cease using investigators in the clinical trials if they believe\nthat the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present an unacceptable\nsafety risk to participants. If we elect or are forced to suspend or terminate a clinical trial of AL001, ALZN002 or any other product\ncandidate that we may in the future develop, the commercial prospects for that product will be harmed and our ability to generate product\nrevenue from that product may be delayed or eliminated. Furthermore, any of these events could prevent us or our partners from achieving\nor maintaining market acceptance of the affected product and could substantially increase the costs of commercializing AL001 or ALZN002\nand materially impair our ability to generate revenue from the commercialization of AL001 or ALZN002 either by us or by any future commercial\npartners with which we may develop a relationship, which and could have a material adverse effect on our reputation, business, results\nof operations and financial condition.\n\n \n\n**If we fail to obtain and sustain an adequate\nlevel of reimbursement for our products by third-party payers, sales and profitability will be adversely affected.**\n\n \n\nThe course of medical treatment\nfor human patients is, and will continue to be, expensive. We expect that most patients and their families will not be capable of paying\nfor our potential products themselves.\n\n \n\nAccordingly, it is unlikely\nthat there will be a commercially viable market for AL001 or ALZN002, if approved, without reimbursement and coverage from third-party\npayers. Obtaining reimbursement approval and coverage from third-party payers is a time consuming and expensive process, and we cannot\nbe certain that reimbursement will be approved and coverage obtained for our current product candidates or any other product candidate\nwe may develop. Additionally, even if there is some form of reimbursement and coverage from third-party payers, if the level of third-party\nreimbursement is insufficient from the patient’s perspective or coverage is limited, our revenue and gross margins will be materially\nand adversely affected.\n\n \n\nA current trend in the U.S.\nhealthcare industry, as well as in other countries around the world, is toward cost containment. Large public and private payers, managed\ncare organizations, group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding\nthe use of, and reimbursement levels for, particular treatments. Third-party payers, such as government programs, including Medicare in\nthe United States, and private healthcare insurers, carefully review and have increasingly been challenging the coverage of, and prices\ncharged for, medical products and services. Many third-party payers limit coverage of or reimbursement for newly-approved healthcare products.\nReimbursement rates and coverage from private health insurance companies vary depending on the company, the insurance plan and other factors.\nCost-control initiatives could decrease the price we or our partners establish for products, which could result in lower product revenue\nand profitability.\n\n \n\nReimbursement systems in international\nmarkets vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis. Our eventual\npartners may elect to reduce the price of our products in order to increase the likelihood of obtaining reimbursement approvals. In many\ncountries, products cannot be commercially launched until reimbursement is approved and the negotiation process in some countries can\nexceed 12 months. In addition, pricing and reimbursement decisions in certain countries can be affected by decisions taken in other\ncountries, which can lead to mandatory price reductions and/or additional reimbursement restrictions across a number of other countries,\nwhich may adversely affect our sales and profitability. If countries set prices that are not sufficient to allow us or our partners to\ngenerate a profit, our partners may refuse to launch the product in such countries or withdraw the product from the market, which would\nadversely affect our sales and profitability and could materially and adversely affect our business, results of operations and financial\ncondition.\n\n \n\n - 27 - \n\n \n\n \n\n**Risks Related to Development and Regulatory\nApproval of Our Drug Candidates**\n\n \n\n**We rely on third parties to conduct our\npreclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual\nduties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize\nour medicines and drug candidates and our business could be substantially harmed.**\n\n** **\n\nWe have relied upon and plan\nto continue to rely upon third-party CROs to monitor and manage data and provide other services for our ongoing preclinical and clinical\nprograms. We rely on these parties for execution of our preclinical and clinical studies, and control only certain aspects of their activities.\nNevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal\nand regulatory requirements and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.\nWe, our CROs for our clinical programs and our clinical investigators are required to comply with GCPs, which are regulations and guidelines\nenforced by the FDA for all of our drug candidates in clinical development. The FDA enforces these regulations through periodic inspections\nof study sponsors, principal investigators, study sites and other contractors. If we or any of our CROs or clinical investigators\nfail to comply with applicable regulations, the clinical data generated in our clinical studies may be deemed unreliable and the FDA may\nrequire us to perform additional clinical studies before approving our marketing applications. In addition, our pivotal clinical trials\nmust be conducted with drug product produced under GMP regulations. We cannot assure you that upon inspection by a given regulatory authority,\nsuch regulatory authority will determine that any of our clinical studies comply with GCP regulations. In addition, our clinical studies\nmust be conducted with product candidates which are produced under cGMP regulations. Our failure to comply with these regulations may\nrequire us to repeat clinical studies, which would delay the regulatory approval process. We could also be subject to government investigations\nand enforcement actions.\n\n \n\nIf any of our relationships\nwith these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially\nreasonable terms. For example, in February 2024, Biorasi, our CRO for our Phase I/IIA clinical trial for ALZN002 to treat mild to moderate\ndementia of the Alzheimer’s type, terminated our contract with it. While we are currently pursuing the engagement of a replacement\nCRO on this clinical study, as a result of the novel nature of the clinical study, we have been unable to find a suitable CRO with the\nrequisite experience and expertise to manage the study.\n\n \n\nIn addition, our CROs are\nnot our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they\ndevote sufficient time and resources to our ongoing clinical and nonclinical programs. If CROs do not successfully carry out their contractual\nduties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they\nor our clinical investigators obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or\nfor other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for\nor successfully commercialize our drug candidates. As a result, our results of operations and the commercial prospects for our drug candidates\nwould be harmed, our costs could increase and our ability to generate revenues could be delayed.\n\n \n\nSwitching or adding additional\nCROs involves additional cost and delays, which can materially influence our ability to meet our desired clinical development timelines.\nThere can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will\nnot have a material adverse effect on our business, financial condition and prospects.\n\n** **\n\n**The regulatory approval process is uncertain,\nrequires us to utilize significant resources, and may prevent us or our future commercial partners from obtaining approvals for the commercialization\nof AL001 or ALZN002.**\n\n \n\nThe research, testing, manufacturing,\nlabeling, approval, sale, marketing and testing of AL001 and ALZN002 are and will be subject to extensive regulation by regulatory authorities\nin the United States, Europe and elsewhere, and regulatory requirements applicable to our product differ from country to country. Neither\nwe nor any commercial partner will be permitted to market any of our current or future product candidates in the United States until we\nreceive approval from the FDA of either an NDA or a BLA for AL001 and ALZN002, respectively. Obtaining approval of an NDA or a BLA is\nan uncertain process that requires us to utilize significant resources. Furthermore, regulatory authorities possess broad discretion regarding\nprocessing time and usually request additional information and raise questions which have to be answered. There is considerable uncertainty\nregarding the times at which products may be approved and we have no control over the FDA review process. In addition, failure to comply\nwith FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions,\nincluding: warning letters, civil and criminal penalties, injunctions, withdrawal of approved products from the market, product seizure\nor detention, product recalls, total or partial suspension of production, and refusal to approve pending applications or supplements to\napproved applications.\n\n \n\nEven if we fully comply with\nall applicable laws and regulations, the FDA may still determine that our clinical data are insufficient for final approval of an NDA\nor a BLA. The process required by the FDA and most foreign regulatory authorities before human healthcare pharmaceuticals may be marketed\ngenerally involves nonclinical laboratory and, in some cases, animal testing; submission of an IND, which must become effective before\nclinical trials may begin; adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug\nfor its intended use or uses; pre-approval inspection of manufacturing facilities and clinical trial sites; and FDA approval of an NDA\nor BLA, which must occur before a drug can be marketed or sold, as discussed above.\n\n \n\nRegulatory approval of an\nNDA or a BLA, or any supplement thereof, is not guaranteed, and the approval process requires us to utilize significant resources, could\ntake several years, and is subject to the substantial discretion of the FDA. Despite the time and expense exerted, failure can occur\nat any stage, and we could encounter problems that cause us to abandon or have to repeat or perform additional studies. If our product\nor any of our future product candidates fails to demonstrate safety and efficacy in our studies, or for any other reason does not gain\nregulatory approval, our business and results of operations will be materially and adversely harmed.\n\n \n\n - 28 - \n\n \n\n \n\nIn addition, separate regulatory\napprovals are required in order to market any product in many jurisdictions, including the United States, the United Kingdom, European\nEconomic Area, which consists of the 27 Member States (known as the “EU Member States”) of the European Union plus Norway,\nIceland and Liechtenstein, and others. Approval procedures vary among countries and can involve additional studies and testing, and the\ntime required to obtain approval may differ from that required to obtain FDA approval. Studies conducted in one country may not be accepted\nby regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries,\nand approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries\nor by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory\nprocess in others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may\nbe unable to file for regulatory approvals or do so on a timely basis and, even if we are able to, we may not receive necessary approvals\nto commercialize our products in any market. Any of these results could have a material adverse effect on our business, results of operations\nand financial condition.\n\n \n\n**There is a high rate of failure for drug\ncandidates proceeding through clinical trials.**\n\n \n\nGenerally speaking, there\nis a high rate of failure for drug candidates proceeding through clinical trials. We may suffer significant setbacks in our clinical trials\nsimilar to the experience of a number of other companies in the pharmaceutical and biotechnology industries, even after receiving promising\nresults in earlier trials. Further, even if we view the results of a clinical trial to be positive, the FDA or other regulatory authorities\nmay disagree with our interpretation of the data. For instance, any such differing interpretation could cause the FDA to require additional\ntrials. In the event that:\n\n \n\n(i)we obtain negative or inconclusive results from the AL001 or ALZN002 from a clinical trial;\n\n \n\n(ii)the FDA places a clinical hold on our clinical trials due to potential chemistry, manufacturing and controls\nissues or other hurdles; or\n\n \n\n(iii)the FDA does not approve our NDA for AL001 or our BLA for ALZN002, then:\n\n \n\n•we may not be able to generate sufficient revenue or obtain financing to continue our operations;\n\n \n\n•our ability to execute our current business plan will be materially impaired;\n\n \n\n•our reputation in the industry and in the investment community would likely be significantly damaged;\nand\n\n \n\n•the price of our common stock would likely decrease significantly.\n\n \n\nAny of these results could\nmaterially and adversely affect our business, results of operations or financial condition.\n\n \n\n**Most attempts at drug approval for Alzheimer’s\nhave failed.**\n\n \n\nDespite billions of dollars\ninvested by the NIH and the biopharmaceutical industry in research programs to develop novel therapeutics for Alzheimer’s, the FDA\nhas approved only four new drugs for Alzheimer’s since 2003; in June 2021, aducanumab (Biogen, Inc) received approval from the FDA\nfor the treatment of Alzheimer’s using the accelerated approval pathway; in July 2023, Leqembi (Eisai) received full approval by\nthe FDA for treatment of Alzheimer’s; in July 2024, Kisunla (Eli Lilly) received full approval by the FDA for treatment of Alzheimer’s\nand in April 2026, Auvelity (Axsome Therapeutics) received full approval by the FDA for treatment of agitation associated with Alzheimer’s\ndementia. Since 2003, many new types and classes of drugs have been developed and tested in Alzheimer’s, including monoclonal antibodies,\ngamma secretase modulators and inhibitors, β-site amyloid precursor protein cleaving enzyme inhibitors, receptor for advanced glycation\nend-products inhibitors, nicotinic partial agonists and allosteric modulators, serotonin subtype receptor antagonists, and others. Except\nfor Biogen’s, Eisai’s Eli Lilly’s and Axsome Therapeutics’ approvals referred to above, virtually all of these\nscientific programs have failed in clinical testing.\n\n \n\n**Clinical trials for AL001 or ALZN002 can\nbe expensive, time consuming, uncertain and susceptible to change, delay or termination.**\n\n \n\nClinical trials are expensive,\ntime consuming and difficult to design and implement. The result of a clinical trial may be undesirable and can result in a clinical trial\ncancellation or the need for re-evaluation and supplementation. Even if the results of our clinical trials are favorable, the clinical\ntrials for AL001 or ALZN002 are expected to continue for a few years and may even take significantly longer to complete. In addition,\nwe, the FDA, an IRB, or other regulatory authority, whether in the United States, European Union or elsewhere, may suspend, delay or terminate\nour clinical trials at any time, for various reasons, including, without limitation:\n\n \n\n•lack of effectiveness of AL001 or ALZN002 during clinical trials;\n\n \n\n•discovery of serious or unexpected toxicities or side effects experienced by trial participants or other\nsafety issues;\n\n \n\n•slower than expected rates of subject recruitment and enrollment rates in clinical trials;\n\n \n\n - 29 - \n\n \n\n \n\n•difficulty in retaining subjects who have initiated a clinical trial but may have withdrawn due to adverse\nside effects from the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason;\n\n \n\n•delays or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical\ntrials due to manufacturing or regulatory constraints;\n\n \n\n•inadequacy of or changes in our manufacturing process or product formulation;\n\n \n\n•delays in obtaining regulatory authorization to commence a trial, including experiencing “clinical\nholds” or delays requiring suspension or termination of a trial by a regulatory agency, such as the FDA, before or after a trial\nis commenced;\n\n \n\n•changes in applicable regulatory policies and regulations;\n\n \n\n•delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with\nprospective clinical trial sites;\n\n \n\n•delay or failure to supply product for use in clinical trials which conforms to regulatory specification;\n\n \n\n•unfavorable results from ongoing preclinical studies and clinical trials;\n\n \n\n•failure of any CROs that we may partner with in the future, or other third-party contractors, to comply\nwith all contractual requirements or to perform their services in a timely or acceptable manner;\n\n \n\n•failure by us, our employees, any CROs or their employees to comply with all applicable FDA or other regulatory\nrequirements relating to the conduct of clinical trials;\n\n \n\n•scheduling conflicts with participating clinicians and clinical institutions;\n\n \n\n•failure to design appropriate clinical trial protocols; or\n\n \n\n•regulatory concerns with pharmaceutical products generally and the potential for abuse.\n\n \n\nThe occurrence of any of the\nforegoing could have a material adverse effect on our business, results of operations and financial condition. See the risk factor “There\nis a high rate of failure for drug candidates proceeding through clinical trials” above.\n\n \n\n**If our products do not receive breakthrough\ntherapy designation, it could potentially increase the FDA’s review time and adversely impact our development timeline. Even if\nthe FDA grants breakthrough therapy designation, it does not guarantee faster product development or FDA review and does not necessarily\nincrease the likelihood of the product candidates receiving approval from the FDA.**\n\n \n\nBreakthrough therapy designation\nis reserved for drug or biologic products that are intended to treat serious conditions and for which preliminary clinical evidence indicates\nthat the candidate may demonstrate a substantial improvement on one or more clinically significant endpoints over currently available\ntherapies. The benefits of receiving the designation include additional guidance from FDA throughout the development process, assistance\nwith designing clinical trials, and coordination with FDA senior managers and experienced review staff. We plan to seek breakthrough therapy\ndesignation for both AL001 and ALZN002.   However, we have neither received breakthrough therapy designation nor have we qualified\nfor expedited development, and no assurance can be given that we will. Even if we qualify for breakthrough therapy designation or expedited\ndevelopment, it may not actually lead to faster development or expedited regulatory review and approval or necessarily increase the likelihood\nthat we will receive FDA approval.\n\n \n\nEven if we believe that our\nproducts are strong candidates for breakthrough therapy designation, it is possible that the FDA may determine that our preliminary clinical\nevidence is insufficient to justify breakthrough therapy designation. Without this designation, we would not be able to benefit from the\nincreased FDA guidance and assistance throughout the development process, and it is possible that our development timeline could be extended.\n\n \n\nThe breakthrough therapy designation,\nwhile at times advantageous for the development process for the reasons identified above, may nevertheless have little or no positive\nimpact on our development process. There is no guarantee that, even with the FDA’s assistance through the breakthrough therapy designation,\nthat the development process will be accelerated, the FDA will review or approve our submissions in a timely manner, or that our product\ncandidates will ultimately receive approval from the FDA.\n\n \n\nIn summary, we cannot guarantee\nthat our product candidates will receive breakthrough therapy designations and, even if one does, we cannot guarantee that such designations\nwill have any bearing on the FDA’s review or approval of our product candidates.\n\n \n\n - 30 - \n\n \n\n \n\n**Even if we receive regulatory approval for\nany of our future product candidates, we will be subject to ongoing FDA and other regulatory body obligations and continued regulatory\nreview, which may result in significant additional expense. Additionally, our product candidates, if approved, will be subject to labeling\nand manufacturing requirements and could be subject to other restrictions. Failure to comply with these regulatory requirements or the\noccurrence of unanticipated problems with our products could result in significant penalties.**\n\n \n\nAny regulatory approvals that\nwe or any of our collaborators receive for AL001, ALZN002 or any future product candidate may be subject to conditions of approval or\nlimitations on the approved indicated uses for which the product may be marketed or may contain requirements for potentially costly surveillance\nto monitor the safety and efficacy of the product candidate. In addition, AL001, ALZN002 and any of our future product candidates, if\napproved by the FDA or other regulatory bodies, will be subject to extensive and ongoing regulatory requirements regarding the manufacturing\nprocesses, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping. These requirements\nwill include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with\ncGMP, Good Laboratory Practice and Good Clinical Practice, the three types of audits related to the progressive stages needed to bring\na pharmaceutical product to market, for any studies that we conduct post-approval. Later discovery of previously unknown problems with\na product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes,\nor failure to comply with regulatory requirements, may result in, among other things:\n\n \n\n•restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market,\nor voluntary or mandatory product recalls;\n\n \n\n•fines, warning letters or holds on target studies;\n\n \n\n•refusal by the FDA or other applicable regulatory body to approve pending applications or supplements\nto approved applications filed by us or our strategic collaborators, or suspension or revocation of product license approvals;\n\n \n\n•product seizure or detention, or refusal to permit the import or export of products; and\n\n \n\n•injunctions or the imposition of civil or criminal penalties.\n\n \n\nThe policies of the FDA and\nother regulatory bodies may change, and additional government regulations may be promulgated that could prevent, limit or delay regulatory\napproval of AL001 or ALZN002. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation\nor administrative action, either in the United States or elsewhere. If we are slow or unable to adapt to changes in existing requirements\nor the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval\nthat we may have obtained, and we may not achieve or sustain profitability, which would materially and adversely affect our business,\nresults of operations and financial condition.\n\n \n\n**AL001 or ALZN002 and any of our future product\ncandidates, if approved, may cause or contribute to adverse medical events that we are required to report to the FDA and regulatory authorities\nin other countries and, if we fail to do so, we could be subject to sanctions that would materially harm our business.**\n\n \n\nIf we are successful in commercializing\nAL001, ALZN002 or any of our future product candidates, regulations promulgated by the FDA and by the regulatory authorities in other\ncountries require that we report certain information about adverse medical events if those products may have caused or contributed to\nthose adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event as well\nas the nature of the event. We may fail to report adverse events we become aware of within the prescribed timeframe. We may also fail\nto appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if\nit is an adverse event that is unexpected or removed in time from the use of our products. If we fail to comply with our reporting obligations,\nthe FDA and regulatory authorities in other countries could take action including criminal prosecution, the imposition of civil monetary\npenalties, seizure of our products, or delay in approval or clearance of future products, which could have a material adverse effect on\nour business, results of operations and financial condition.\n\n \n\n**Legislative or regulatory reforms with respect\nto products may make it more difficult and costly for us to obtain regulatory clearance or approval of AL001, ALZN002 or any of our future\nproduct candidates and to produce, market, and distribute our products after clearance or approval is obtained.**\n\n \n\nFrom time to time, legislation\nis drafted and introduced in the U.S. Congress and lawmaking bodies in states and other countries that could significantly change the\nstatutory provisions governing the testing, regulatory clearance or approval, manufacture, and marketing of regulated products. In addition,\nFDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our\nproducts. Similar changes in regulations can occur in other countries. Any new regulations or revisions or reinterpretations of existing\nregulations in the United States or in other countries may impose additional costs or lengthen review times of AL001, ALZN002 and any\nof our future product candidates. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies,\nwhen and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require:\n\n \n\n•requests for additional endpoints or studies;\n\n \n\n•changes to manufacturing methods;\n\n \n\n - 31 - \n\n \n\n \n\n•recall, replacement, or discontinuance of certain products; and\n\n \n\n•additional record keeping.\n\n \n\nEach of these would likely\nentail substantial time and cost and could have a material adverse effect on our ability to obtain regulatory approval for our product\ncandidates. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products could materially\nand adversely affect our business, results of operations and financial condition.\n\n \n\n**Our ability to market AL001, ALZN002 and\nany future product candidates in the United States, if approved, will be limited to use for the treatment of the indications for which\nthey are approved, and if we want to expand the indications for which we may market AL001, ALZN002 and any future product candidates,\nwe will need to obtain additional FDA approvals, which may not be granted.**\n\n \n\nWe plan to seek full FDA approval\nin the United States for AL001 and ALZN002 to treat neurodegenerative diseases and psychiatric disorders, including Alzheimer’s,\nBD, MDD and PTSD. If AL001 or ALZN002 is approved, the FDA will restrict our ability to market or advertise it for the treatment of indications\nother than the one for which it is approved, which would limit its use. If we decide to attempt to develop, promote and commercialize\nnew treatment indications and protocols for AL001, ALZN002 and potentially other product candidates in the future, we could not predict\nwhen, or if, we would ever receive the approvals required to do so. We would be required to conduct additional studies to support such\napplications for additional use, which would consume additional resources and may produce results that do not result in FDA approvals.\nIf we do not obtain additional FDA approvals, our ability to expand our business in the United States would be adversely affected, which\ncould materially and adversely affect our business, results of operations and financial condition.\n\n \n\n**The anticipated development of a REMS for\nAL001 or ALZN002 could cause delays in the approval process and would add additional layers of regulatory requirements that could impact\nour ability to commercialize AL001 and ALZN002 in the United States and reduce their market potential.**\n\n \n\nAs a condition of approval\nof an NDA or a BLA, the FDA may require a REMS to ensure that the benefits of the drug outweigh the potential risks. REMS elements can\ninclude medication guides, communication plans for healthcare professionals, and elements to assure safe use (“ETASU”). ETASU’s\ncan include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances,\nspecial monitoring, and the use of patient registries. Moreover, product approval may require substantial post-approval testing and surveillance\nto monitor the drug’s safety or efficacy. We may be required to adopt a REMS for AL001 or ALZN002 to ensure that the benefits outweigh\nthe risks of abuse, misuse, diversion and other potential safety concerns. Even if the risk of abuse, misuse or diversion are not as high\nas for some other products, there can be no assurance that the FDA will approve a manageable REMS for AL001 or ALZN002, which could create\nmaterial and significant limits on our ability to successfully commercialize AL001 and ALZN002 in the U.S. Delays in the REMS approval\nprocess could result in delays in the NDA or BLA approval process, respectively. In addition, as part of the REMS, the FDA could require\nsignificant restrictions, such as restrictions on the prescription, distribution and patient use of the product, which could significantly\nimpact our ability to effectively commercialize AL001 or ALZN002, and dramatically reduce their market potential thereby adversely impacting\nour business, financial condition and results of operations. Even if initial REMS are not highly restrictive, if, after launch, AL001,\nALZN002 and other drug candidates were to become subject to significant abuse/non-medical use or diversion from licit channels, this could\nlead to negative regulatory consequences, including a more restrictive REMS, which could materially and adversely affect our business,\nresults of operations and financial condition.\n\n \n\n**If we are found in violation of “fraud\nand abuse” laws, we may be subject to criminal and civil penalties and/or be suspended or excluded from participation in government-run\nhealthcare programs, which may adversely affect our business, financial condition and results of operations.**\n\n \n\nIf we are successful in obtaining\nmarketing approval for our products in the United States and elsewhere, we will be subject to various healthcare “fraud and abuse”\nlaws, including anti-kickback laws, false claims laws and other laws intended to reduce fraud and abuse in government-run healthcare programs,\nwhich could materially and adversely affect us, particularly upon successful commercialization of our products in the United States. For\nexample, the federal Anti-Kickback Statute makes it illegal for any person, including a prescription drug manufacturer (or a party acting\non its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce the referral of\nbusiness, including the purchase, order or prescription of a particular drug for which payment may be made under a U.S. healthcare program\nsuch as Medicare or Medicaid. Under U.S. federal government regulations, some arrangements, known as safe harbors, are deemed not to violate\nthe Anti-Kickback Statute. Compliance with every element of a safe harbor regulation is required for the arrangement to be protected.\nHowever, arrangements that do not comply with a safe harbor are not per se illegal. Instead, they will be analyzed on a case-by-case basis.\nAlthough we intend to seek to structure our business arrangements in compliance with all applicable requirements, these laws are broadly\nwritten, and it is often difficult to determine precisely how the law will be applied in specific circumstances. Accordingly, it is possible\nthat our practices may be challenged under the Anti-Kickback Statute and similar laws in other jurisdictions.\n\n \n\nFurther, false claims laws\nprohibit anyone from knowingly and willfully presenting or causing to be presented for payment to third-party payers, including government\npayers, reimbursement claims for drugs or services that are false or fraudulent, claims for items or services that were not provided as\nclaimed, or claims for medically unnecessary items or services. Cases have been brought under false claims laws alleging that off-label\npromotion of pharmaceutical products or the payment of kickbacks by pharmaceutical providers has resulted in the submission of false claims\nto governmental healthcare programs. Under laws such as the Health Insurance Portability and Accountability Act of 1996 in the United\nStates, we are prohibited from knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private\npayers, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or\nfraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Violations of fraud and\nabuse laws may be punishable by criminal and/or civil sanctions, including fines and/or exclusion or suspension from government-run healthcare\nprograms such as Medicare and Medicaid and debarment from contracting with the U.S. and other governments. In addition, in the United\nStates, individuals have the ability to bring actions on behalf of the government and potentially share in the recovery under the federal\nFalse Claims Act as well as under state false claims laws.\n\n \n\n - 32 - \n\n \n\n \n\nMany states in the United\nStates have adopted fraud and abuse laws similar to their federal counterparts, including laws similar to the Anti-Kickback Statute, some\nof which apply to the referral of patients for healthcare services reimbursed by any source, not just governmental payers. In addition,\nCalifornia and some other states in the United States have passed laws that require pharmaceutical companies to comply with the April 2003\nOffice of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers\nof America Code on Interactions with Health Care Professionals. In addition, several states impose other marketing restrictions or require\npharmaceutical companies to make marketing or price disclosures to the state. There are ambiguities as to what is required to comply with\nthese state requirements and if we fail to comply with an applicable state law requirement, we could be subject to penalties.\n\n \n\nWe have yet to receive definitive\nguidance on the application of fraud and abuse laws to our business. Law enforcement authorities are increasingly focused on enforcing\nthese laws, and it is possible that some of our future practices may be challenged under these laws. While we believe we will be able\nto structure our business arrangements to comply with these laws, it is possible that the government could in the future allege violations\nof, or convict us of violating, these laws. If we are found in violation of one of these laws, we could be required to pay a penalty and\ncould be suspended or excluded from participation in certain government-run healthcare programs, and our business, results of operations\nand financial condition may be materially and adversely affected.\n\n** **\n\n**Risks Related to Our Business and Industry**\n\n \n\n**If we fail to attract and keep senior management\nand key scientific personnel, we may be unable to successfully develop AL001, ALZN002 or any future product candidates, conduct our in-licensing\nand development efforts or commercialize AL001, ALZN002 or any of our future product candidates.**\n\n \n\nOur future growth and success\ndepend in part on our continued ability to attract, retain and motivate highly qualified management and scientific personnel. We are highly\ndependent upon our senior management, particularly Stephan Jackman, our Chief Executive Officer, David J. Katzoff, our Chief Financial\nOfficer, and Henry Nisser, our Executive Vice President and General Counsel. The loss of services of any of these individuals could delay\nor prevent the successful development of our current or future product pipeline, completion of our planned development efforts or the\ncommercialization of AL001 or ALZN002. It is possible that current or former employees of ours could put forward claims for an alleged\nright to our patents and demand compensation therefor. If one or more of the key personnel were to leave us and engage in competing operations,\nour business, results of operations and financial condition could be materially and adversely affected.\n\n \n\n**We expect to face substantial competition,\nwith other entities possibly discovering, developing or commercializing products before, or more successfully than we do.**\n\n \n\nThe development, FDA approval\nand commercialization of new therapy and vaccine products is highly competitive. We will face competition with respect to AL001, ALZN002\nand any other product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty\npharmaceutical companies and biotechnology companies worldwide. In addition to existing therapeutic treatments for the indications we\nare targeting with AL001 and ALZN002, we also face potential competition from other drug candidates in development by other companies.\nOur potential competitors include, without limitation, large healthcare companies, such as AbbVie, Axesome Therapeutics, Inc., Biogen\nInc., Eisai Co., Ltd., Takeda Pharmaceuticals, Bristol Myers Squibb, Pfizer Inc., Merck & Co., Inc., Sanofi S.A., Eli Lilly and Company,\nBayer AG, Novartis AG, Johnson and Johnson and Boehringer Ingelheim GmbH.   We also know of several smaller early-stage companies\nthat are developing products for use in our segment of the market. Some of the potential competitive compounds referred to above are being\ndeveloped by large, well-financed and established pharmaceutical and biotechnology companies or have been partnered with such companies,\nwhich may give them development, regulatory and marketing advantages over our products.\n\n \n\nOur commercial opportunity\ncould be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less\nsevere side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain\nFDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors\nestablishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many\ncases by insurers or other third-party payers seeking to encourage the use of generic products. If AL001 or ALZN002 achieves marketing\napproval, we expect that it will be priced at a significant premium over competing generic products.\n\n \n\nSome of the companies against\nwhich we are competing or against which we may compete in the future have significantly greater financial, physical and human resources\nand expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals\nand marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in\neven more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove\nto be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties\ncompete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient\nregistration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.\n\n \n\n - 33 - \n\n \n\n \n\nIf we are unable to compete\nsuccessfully, we may be unable to grow and sustain our revenue, which could materially and adversely affect our business, results of operations\nand financial condition.\n\n \n\n**Changes in funding for the FDA and other\ngovernment agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent our product\ncandidates from being developed or commercialized in a timely manner, which could negatively impact our business.**\n\n \n\nWe rely on the FDA to assist\nwith the development of our product candidates. The ability of the FDA to review and approve new drug products can be affected by a variety\nof factors outside of our control, including government budget and funding levels, the FDA’s ability to hire and retain key personnel\nand accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated\nin recent years as a result. In addition, government funding of other government agencies that fund research and development activities\nis subject to the political process, which is inherently fluid and unpredictable.\n\n \n\nDisruptions at the FDA and\nother agencies may also slow the time necessary for our product candidates to be reviewed and/or potentially approved by necessary government\nagencies, which would adversely affect our business. For example, over the last several years, including for 35 days beginning on December\n22, 2018, and 43 days between October 1 and November 12, 2025, the U.S. government has shut down several times and certain regulatory\nagencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government shutdown\noccurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have\na material adverse effect on our business. If the timing of FDA’s review and approval of new products is delayed, the estimated\ntiming of our drug development program may be delayed, which would materially increase costs of drug development and harm our operations\nor business.\n\n \n\n**Risks Related to Our Intellectual Property**\n\n \n\n**We may be forced to litigate to enforce\nor defend our intellectual property rights, or the intellectual property rights of our licensors.**\n\n \n\nWe may be forced to litigate\nto enforce or defend our intellectual property rights against infringement and unauthorized use by competitors. In so doing, we may place\nour intellectual property at risk of being invalidated, held unenforceable, or narrowed in scope. Further, an adverse result in any litigation\nor defense proceedings may place pending applications at risk of non-issuance. In addition, if any licensor fails to enforce or defend\nits intellectual property rights, this may adversely affect our ability to develop and commercialize AL001 or ALZN002 as well as our ability\nto prevent competitors from making, using, and selling competing products. Any such litigation could be very costly and could distract\nour management from focusing on operating our business. The existence or outcome of any such litigation could harm our business, results\nof operations and financial condition.\n\n \n\nFurthermore, because of the\nsubstantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential\nand proprietary information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements\nof the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results\nto be negative, it could have a material adverse effect on the price of our common stock.\n\n \n\n**We may be unable to adequately prevent disclosure\nof trade secrets and other proprietary information.**\n\n \n\nWe rely on trade secrets to\nprotect our proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable.\nHowever, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside\nscientific collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information. These\nagreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized\ndisclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information.\nCostly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. Failure to obtain\nor maintain trade secret protection or failure to adequately protect our intellectual property could enable competitors to develop generic\nproducts or use our proprietary information to develop other products that compete with our products or cause additional, material adverse\neffects upon our business, results of operations and financial condition.\n\n \n\nThe transfer of technology\nand knowledge to contract manufacturers pursuant to the production of our products also creates a risk of uncontrolled distribution and\ncopying of concepts, methods and processes relating to our products. Such uncontrolled distribution and copying could have a material\nadverse effect on the value of our products if used for the production of competing drugs or otherwise used commercially without our obtaining\nfinancial compensation.\n\n \n\n**We may become subject to third parties’\nclaims alleging infringement of patents and proprietary rights or seeking to invalidate our patents or proprietary rights, which would\nbe costly, time-consuming and, if successfully asserted against us, delay or prevent the development and commercialization of AL001 or\nALZN002.**\n\n \n\nThere has been substantial\nlitigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical industry, as well as patent\nchallenge proceedings, including interference and administrative law proceedings before the USPTO and the European Patent Office (“EPO”),\nand oppositions and other comparable proceedings in other jurisdictions. Recently, under U.S. patent reform laws, new procedures including\ninter partes review and post grant review have been implemented. As stated below, the novel implementation of such laws presents uncertainty\nregarding the outcome of challenges to our patents in the future.\n\n \n\n - 34 - \n\n \n\n \n\nWe cannot assure you that\nAL001, ALZN002 or any of our future product candidates will not infringe existing or future patents. We may be unaware of patents that\nhave already been issued that a third party might assert are infringed by AL001, ALZN002 or one of our future product candidates. Because\npatent applications can take many years to issue and may be confidential for 18 months or more after filing, there may be applications\npending of which we are unaware of and which may later result in issued patents that we may infringe by commercializing AL001, ALZN002\nor any of our future product candidates. In addition, third parties may obtain patents in the future and claim that use of our technologies\ninfringes upon these patents. Moreover, we may face claims from non-practicing entities (commonly referred to as patent trolls), which\nhave no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect.\n\n \n\nWe may be subject to third-party\nclaims in the future against us or our collaborators that would cause us to incur substantial expenses and, if successful against us,\ncould cause us to pay substantial damages, including treble damages and attorneys’ fees if we are found to be willfully infringing\na third party’s patents. If a patent infringement suit were brought against us or our collaborators, we or our collaborators could\nbe forced to stop or delay research, development, manufacturing or sales of AL001 or ALZN002. As a result of patent infringement claims,\nor in order to avoid potential claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party\nand would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or\nat all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors\naccess to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or forced to redesign it,\nor to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators\nare unable to enter into licenses on acceptable terms. Even if we are successful in defending such claims, infringement and other intellectual\nproperty litigation can be expensive and time-consuming to litigate and divert management’s attention from our core business. Any\nof these events could harm our business significantly.\n\n \n\nIn addition to infringement\nclaims against us, if third parties have prepared and filed patent applications in the U.S. that also claim technology to which we have\nrights, we may have to participate in interference proceedings in the USPTO to determine the priority of invention. Third parties may\nalso attempt to initiate reexamination, post grant review or inter partes review of our patents in the USPTO. We may also become involved\nin similar opposition proceedings in the EPO or comparable offices in other jurisdictions regarding our intellectual property rights with\nrespect to our products and technology. Any of these claims could have a material adverse effect on our business, results of operations\nand financial condition.\n\n \n\n**If our efforts to protect the proprietary\nnature of our intellectual property related to AL001, ALZN002 or any of our potential future product candidates are not adequate, we may\nnot be able to compete effectively in our market.**\n\n \n\nWe expect to rely upon a combination\nof patents, trade secret protection as well as confidentiality and license agreements to protect the intellectual property related to\nour product and our current product candidates and our development programs.\n\n \n\nComposition-of-matter patents\non an active pharmaceutical ingredient are generally considered to be the strongest form of intellectual property protection for pharmaceutical\nproducts, as such patents provide protection without regard to any particular method of use or manufacture. We cannot be certain that\nthe claims in any patent application that we may submit covering composition-of-matter of AL001, ALZN002 and any potential future product\ncandidates will be considered patentable by the USPTO and courts in the U.S., or by the patent offices and courts in foreign countries.\nMethod-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making\nand marketing a product that is identical to our product for an indication that is outside the scope of the patented method.\n\n \n\nThe strength of patents involves\ncomplex legal and scientific questions and can be uncertain. The patent applications that we may in the future own or license may fail\nto result in issued patents in the United States or in other foreign countries. Even if the patents are successfully issued, third parties\nmay challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated or held unenforceable.\nFurthermore, even if they are unchallenged, any of our future patents and patent applications may not adequately protect our intellectual\nproperty or prevent others from designing around our claims. If the breadth or strength of protection provided by the patent applications\nwe may own, license or pursue with respect to AL001, ALZN002 or any future product candidates is threatened, it could threaten our ability\nto commercialize AL001, ALZN002 or any future product candidates. Further, if we encounter delays in our development efforts, the period\nof time during which we could market AL001, ALZN002 or any future product candidates under patent protection would be reduced. Since patent\napplications in the U.S. and most other countries are confidential for a period of time after filing, we cannot be certain that we were\nthe first to file any patent application related to AL001, ALZN002 or any future product candidates.\n\n \n\nEven where laws provide protection,\ncostly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and the outcome\nof such litigation would be uncertain. Moreover, any actions we may bring to enforce our intellectual property against our competitors\ncould lead them to bring counterclaims against us, and many of our competitors have substantially greater intellectual property portfolios\nthan we do.\n\n \n\n - 35 - \n\n \n\n \n\nWe will also rely on trade\nsecret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are\ndifficult to enforce and any other elements of our product development processes that involve proprietary know-how, information or technology\nthat is not covered by patents. Although we endeavor to execute confidentiality agreements with all of our employees, consultants, advisors\nand any third parties who have access to our proprietary know-how, information or technology, we cannot be certain that we have executed\nsuch agreements with all parties who may have helped to develop our intellectual property or had access to our proprietary information,\nnor that our agreements will not be breached. We cannot guarantee that our trade secrets and other confidential proprietary information\nwill not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent\ninformation and techniques. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the\nsame manner as the laws of the United States or the European Union. As a result, we may encounter significant problems in protecting and\ndefending our intellectual property not only in the United States and the European Union, but elsewhere as well. If we are unable to prevent\nmaterial disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or maintain\na competitive advantage in our market, which could materially and adversely affect our business, results of operations and financial condition\nand any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly\nduplicate or surpass our technological achievements, thus eroding our competitive position in our market.\n\n** **\n\n**Changes in patent law could diminish the\nvalue of patents in general, thereby impairing our ability to protect AL001 and ALZN002.**\n\n \n\nAs is the case with other\nbiopharmaceutical companies, our success will be heavily dependent on intellectual property, particularly patents. Obtaining and enforcing\npatents in the biopharmaceutical industry involves both technological and legal complexity. Therefore, obtaining and enforcing biopharmaceutical\npatents is costly, time-consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging\npatent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of\npatent protection available in certain circumstances or weakening the rights of patent owners in other situations. In addition to increasing\nuncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect\nto the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations\ngoverning patents could change in ways that would weaken our ability to obtain patents and to enforce patents that we might obtain in\nthe future. Similarly, changes in EU patent law and elsewhere could negatively affect the value of our patents registered outside of the\nU.S.\n\n** **\n\n**Obtaining and maintaining our patent protection\ndepends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent\nagencies, and our patent protection could be reduced or eliminated for non-compliance with any of these requirements.**\n\n \n\nThe USPTO and various foreign\ngovernmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the\npatent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting\nin partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market\nearlier than would otherwise have been the case, which could have a material adverse effect on our business, results of operations and\nfinancial condition.\n\n**  **\n\n**We may not be able to protect our intellectual\nproperty rights throughout the world.**\n\n \n\nFiling, prosecuting and defending\npatents on AL001, ALZN002 and any future product candidates throughout the world is prohibitively expensive. Competitors may use our technologies\nin jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing\nproducts to territories where we have patent protection, but where enforcement is not as strong as that in the U.S. These products may\ncompete with our products in jurisdictions where we do not have any issued or licensed patents and our patent claims or other intellectual\nproperty rights may not be effective or sufficient to prevent them from competing.\n\n \n\nMany companies have encountered\nsignificant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries,\nparticularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly\nthose relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing\nproducts in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result\nin substantial cost and divert our efforts and attention from other aspects of our business.\n\n \n\n - 36 - \n\n \n\n \n\n**Risks Relating to Legal Matters**\n\n \n\n**If product liability lawsuits are brought\nagainst us, we will incur substantial liabilities and may be required to limit the commercialization of AL001 or ALZN002.**\n\n \n\nWe and our partners face potential\nproduct liability exposure related to the testing of AL001 or ALZN002 in clinical trials. We will face exposure to claims by an even greater\nnumber of persons if we begin to market and distribute our products commercially in the U.S. and elsewhere, including those relating to\nmisuse of AL001 or ALZN002. Now, and in the future, an individual may bring a liability claim against us alleging that AL001 or ALZN002\ncaused an injury. While we intend to take what we believe to be appropriate precautions, we may be unable to avoid significant liability\nif any product liability lawsuit is brought against us. If we cannot successfully defend ourselves against product liability claims, we\nwill incur substantial liabilities. Even if we successfully defend any such action, the costs associated with such defense could prove\nexorbitant. Regardless of merit or eventual outcome, liability claims may result in:\n\n \n\n•decreased demand for AL001 or ALZN002 (if such product candidate had been approved and gone to market);\n\n \n\n•injury to our reputation;\n\n \n\n•withdrawal of clinical trial participants;\n\n \n\n•costs of related litigation;\n\n \n\n•substantial monetary awards to patients and others;\n\n \n\n•increased cost of liability insurance;\n\n \n\n•loss of revenue; and\n\n \n\n•our inability to successfully commercialize our products.\n\n \n\nFurther, in the future there\nmay be a need to expand the scope of our insurance coverage, which could result in significantly increased costs or the inability to obtain\nsufficient insurance coverage. Any of these occurrences could have a material adverse effect on our business, results of operations and\nfinancial condition.\n\n \n\n**Risks Relating to Ownership of Our Common Stock**\n\n \n\n**We are not in compliance\nwith the Nasdaq continued listing requirements. If we are unable to regain compliance with, or thereafter maintain compliance with, the\ncontinued listing requirements of The Nasdaq Capital Market, our Common Stock could be delisted, which would adversely affect our Common\nStock’s market price and liquidity and reduce our ability to raise capital.**\n\n \n\nOn March 20,\n2026, we were notified by the staff of The Nasdaq Stock Market LLC (“Nasdaq”) that that our stockholders’\nequity as reported in its Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2026 (the “Form 10-Q”), did\nnot satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that\na listed company’s stockholders’ equity be at least $2.5 million. As reported on its Form 10-Q, our stockholders’ equity\nas of January 31, 2026 was approximately $2.2 million. As reported in this Annual Report, our stockholders’ equity as of April 30,\n2026 was approximately $0.7 million.\n\n \n\nIn accordance\nwith Nasdaq Listing Rules, we were provided an initial period of 45 calendar days, or until May 4, 2026, to submit a plan to regain compliance.\nOn May 4, 2026, we submitted a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1) to Nasdaq. On May 19, 2026, Nasdaq granted\nus an extension of time to regain compliance on or before September 16, 2026.\n\n \n\nThere can\nbe no assurance that we will be able to regain compliance with the minimum stockholders’ equity requirement on or before September\n16, 2026, or if we do, that we will in the future be able to maintain compliance with the stockholders’ equity requirement or any\nother Nasdaq listing standard.\n\n \n\nIf our common\nstock is delisted, it could be more difficult to buy or sell our common stock and to obtain accurate quotations, and the price of our\ncommon stock could suffer a material decline. Delisting could also impair the liquidity of our common stock and could harm our ability\nto raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in potential loss of confidence\nby investors, employees, and fewer business development opportunities.\n\n** **\n\n**We do not know whether an active market\nwill be sustained; as a result, it may be difficult for you to sell your shares of our common stock.**\n\n** **\n\nIf an active market for our\ncommon stock is not sustained, it may be difficult for you to sell your shares of common stock at an attractive price or at all. We cannot\npredict the prices at which our common stock will trade. It is possible that in one or more future periods our results of operations and\nprogression of our product pipeline may not meet the expectations of public market analysts and investors and, as a result of these and\nother factors, the price of our common stock may fall.\n\n \n\n**The market price of our common stock is\nvolatile, which could result in substantial losses for investors.**\n\n \n\nOur common stock is listed\non the Nasdaq Capital Market. Since our initial public offering last year, our trading price has fluctuated widely, depending on many\nfactors that may have little to do with our operations or business prospects. During the year ended April 30, 2026, our stock closed at\nprices between $0.86 per share and $6.12 per share, as reported on Nasdaq.com.\n\n \n\n - 37 - \n\n \n\n \n\nStock markets, in general,\nhave experienced, and continue to experience, significant price and volume volatility, and the market price of our common stock may continue\nto be subject to similar market fluctuations unrelated to our operating performance or prospects. This increased volatility, coupled with\ndepressed economic conditions, could continue to have a depressive effect on the market price of our common stock. The following factors,\nmany of which are beyond our control, may influence our stock price:\n\n \n\n•announcements of the failure to obtain regulatory approvals or receipt of a “complete response letter”\nfrom the FDA;\n\n \n\n•announcements of restricted label indications or patient populations, or changes or delays in regulatory\nreview processes;\n\n \n\n•announcements of therapeutic innovations or new products by us or our competitors;\n\n \n\n•adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply\nchain or sales and marketing activities;\n\n \n\n•changes or developments in laws or regulations applicable to our product candidates;\n\n \n\n•any failure of our testing and clinical trials;\n\n \n\n•product liability claims, other litigation or public concern about the safety of our product candidates\nor future products;\n\n \n\n•any adverse changes to our relationship with licensors, manufacturers or suppliers;\n\n \n\n•the loss of any of our key scientific or management personnel;\n\n \n\n•any major changes to our Board or management;\n\n \n\n•the failure to obtain new commercial partners;\n\n \n\n•announcements concerning our competitors or the pharmaceutical industry in general;\n\n \n\n•the failure to achieve expected product sales and profitability;\n\n \n\n•the failure to obtain reimbursements for our product candidates as part of any healthcare insurance plan,\nor reductions in such reimbursements;\n\n \n\n•actual or anticipated fluctuations in our cash position or operating results;\n\n \n\n•manufacturing, supply or distribution shortages related to our current or future product candidates for\nour development programs and commercialization;\n\n \n\n•changes in financial estimates or recommendations by securities analysts;\n\n \n\n•the termination of any of our existing license agreements;\n\n \n\n•announcements relating to future licensing or development agreements;\n\n \n\n•potential acquisitions;\n\n \n\n•the trading volume of shares on The Nasdaq Capital Market;\n\n \n\n•sales of our shares by us, our executive officers or directors or our shareholders;\n\n \n\n•fluctuations in the U.S. equity markets;\n\n \n\n•changes in accounting principles;\n\n \n\n•market conditions in the healthcare sector; and\n\n \n\n•general economic conditions in the United States and elsewhere.\n\n \n\nIn recent years, each\nof the stock market in general, and the market for pharmaceutical and biotechnology companies in particular, has experienced significant\nprice and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies\nwhose stock is experiencing those price and volume fluctuations. Broad market and industry factors may seriously affect the market price\nof our common stock, regardless of our actual operating performance. Following periods of such volatility in the market price of a company’s\nsecurities, securities class action litigation has often been brought against that company. Because of the potential volatility of our\nstock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs\nand divert management’s attention and resources from our business.\n\n** **\n\n****\n\n - 38 - \n\n \n\n** **\n\n**If there are substantial sales of shares of our common stock,\nthe price of our common stock could decline.**\n\n \n\nThe price of our common stock\ncould decline if there are substantial sales of our common stock, particularly sales by our directors, executive officers and significant\nstockholders, or if there is a large number of shares of our common stock available for sale and the market perceives that sales will\noccur. As of July 22, 2026, we had 4,791,525 shares of our common stock outstanding. Shares held by directors, executive officers and\nother affiliates will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements. We have\nregistered shares of common stock that we have issued and may issue under our employee equity incentive plans, which shares may be sold\nfreely in the public market upon issuance. Sales of our common stock by current stockholders may make it more difficult for us to sell\nequity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, and make it more difficult\nfor other stockholders to sell shares of our common stock.\n\n \n\nThe market price of the shares\nof our common stock could decline as a result of the sale of a substantial number of our shares of common stock in the public market or\nthe perception in the market that the holders of a large number of shares intend to sell their shares. We are unable to predict the effect\nthat sales may have on the prevailing market price of our common stock.\n\n** **\n\n**Our bylaws provide that the Court of Chancery\nof the State of Delaware and the federal district courts of the United States are the exclusive forums for substantially all disputes\nbetween us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with\nus or our directors, officers or employees.**\n\n \n\nOur bylaws provides that the\nCourt of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf;\nany action asserting a breach of fiduciary duty; any action asserting a claim against us arising under the Delaware General Corporation\nLaw, our certificate of incorporation or our bylaws; any action to interpret, apply, enforce or determine the validity of our certificate\nof incorporation or our bylaws; and any action asserting a claim against us that is governed by the internal affairs doctrine. This provision\nwould not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal\ncourts have exclusive jurisdiction.\n\n \n\nOur bylaws further provide\nthat the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action\narising under the Securities Act. The enforceability of similar exclusive federal forum provisions in other companies’ organizational\ndocuments has been challenged in legal proceedings, and while the Delaware Supreme Court has ruled that this type of exclusive federal\nforum provision is facially valid under Delaware law, there is uncertainty as to whether other courts would enforce such provisions and\nthat investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.\n\n \n\nThese exclusive forum provisions\nmay limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,\nofficers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively,\nif a court were to find either exclusive forum provision in our bylaws to be inapplicable or unenforceable in an action, we may incur\nfurther significant additional costs associated with resolving such action in other jurisdictions, all of which could have a material\nadverse effect on our business, financial condition, and results of operations.\n\n \n\n**Certain provisions of our certificate of\nincorporation allow concentration of voting power, which may, among other things, delay or frustrate the removal of incumbent directors\nor a takeover attempt, even if such events may be beneficial to our stockholders.**\n\n \n\nProvisions of our certificate\nof incorporation may delay or frustrate the removal of incumbent directors and may prevent or delay a merger, tender offer or proxy contest\ninvolving our Company that is not approved by our Board, even if those events may be perceived to be in the best interests of our stockholders.\nFurther, we may designate and issue separate classes of preferred stock that may entitle their holder(s) to exercise significant control\nover us. Consequently, anyone to whom or which these shares are or were issued could have sufficient voting power to significantly influence\nif not control the outcome of all corporate matters submitted to the vote of our common stockholders. Those matters could include the\nelection of directors, changes in the size and composition of our Board, and mergers and other business combinations involving us. In\naddition, through any such person’s control of our Board and voting power, the affiliate may be able to control certain decisions,\nincluding decisions regarding the qualification and appointment of officers, dividend policy, access to capital (including borrowing from\nthird-party lenders and the issuance of additional debt or equity securities), and the acquisition or disposition of assets by us. In\naddition, the concentration of voting power in the hands of an affiliate could have the effect of delaying or preventing a change in control\nof our Company, even if the change in control could benefit our stockholders and may adversely affect the future market price of our common\nstock.\n\n \n\n**General Risk Factors**\n\n \n\n**We must effectively manage the growth of\nour operations, or our Company will suffer.**\n\n \n\nOur initiation of operations\nhas resulted in significantly higher operating expenses. Expansion of our operations, to include the development of AL001 and ALZN002,\nmay also cause a significant demand on our management, finances and other resources. Our ability to manage the anticipated future growth,\nshould it occur, will depend upon a significant expansion of our accounting and other internal management systems and the implementation\nand subsequent improvement of a variety of systems, procedures and controls. In addition, we intend to expand our scientific advisory\nboard. There can be no assurance that significant problems in these areas will not occur. Any failure to expand these areas and implement\nand improve AL001 or ALZN002 or our procedures and controls in an efficient manner at a pace consistent with our business could have a\nmaterial adverse effect on our business, financial condition and results of operations. There can be no assurance that our attempts to\nexpand our marketing, sales, manufacturing and customer support efforts will be successful or will result in additional sales or profitability\nin any future period.\n\n** **\n\n****\n\n - 39 - \n\n \n\n** **\n\n**We may not be successful in our efforts\nto expand our pipeline of product candidates.**\n\n \n\nOne element of our strategy\nis to expand our pipeline of pharmaceuticals based on our technology and advance these product candidates through clinical development\nfor the treatment of a variety of indications. Although our research and development efforts to date have resulted in a number of development\nprograms based on our technology, we may not ultimately be able to develop product candidates that are safe and effective. Even if we\nare successful in continuing to expand our pipeline, the potential product candidates that we identify may not be suitable for clinical\ndevelopment, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely\nto receive marketing approval and achieve market acceptance. In addition, if we attempt to apply our technology to develop product candidates\nfor indications outside of Alzheimer’s, we will need to evaluate the preclinical data and determine if additional data are needed\nto support the new indications. If we do not successfully develop and commercialize product candidates based upon our technological approach,\nwe will not be able to obtain product revenue in future periods, which would make it impossible for us to ever achieve profitability.\n\n** **\n\n**We may experience product recalls or inventory\nlosses caused by unforeseen events, cold chain interruption and testing difficulties.**\n\n \n\nAL001 and ALZN002, individually,\nwill be manufactured and distributed, if ever, using technically complex processes requiring specialized facilities, highly specific raw\nmaterials and other production constraints. The complexity of these processes, as well as the strict company and government standards\nfor the manufacture of our products, will subject us to production risks. While product batches released for use in clinical trials or\nfor commercialization undergo sample testing, some defects may only be identified following product release. In addition, process deviations\nor unanticipated effects of approved process changes may result in these intermediate products not complying with stability requirements\nor specifications. Most of our products must be stored and transported at temperatures within a certain range, which is known as “strict\ncold chain” storage and transportation. If these environmental conditions deviate from the norm, our products’ remaining shelf\nlives could be impaired or their quality could become adversely affected, making them no longer suitable for use. The occurrence or suspected\noccurrence of production and distribution difficulties can lead to lost inventories, and in some cases product recalls, with consequential\nreputational damage and the risk of product liability. The investigation and remediation of any identified problems can cause production\ndelays, substantial expense, lost sales and delays of new product launches, any of which could have a material adverse effect on our business,\nresults of operations and financial condition.\n\n \n\n**Because we do not intend to pay dividends\non our common stock, you must rely on stock appreciation for any return on your investment.**\n\n \n\nWe presently intend to retain\nany future earnings and do not expect to pay any dividends in the foreseeable future. As a result, you must rely on stock appreciation\nand a liquid trading market for any return on your investment. If an active and liquid trading market does not develop, you may be unable\nto sell your shares of common stock at or above the initial public offering price or at the time you would like to sell.\n\n \n\n**We have identified material weaknesses in\nour internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain\nan effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to\nmeet our periodic reporting obligations.**\n\n \n\nWe are required to comply\nwith certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). Section 404 requires that\nwe document and test our internal control over financial reporting and issue management’s assessment of our internal control over\nfinancial reporting. Management assessed the effectiveness of our internal control over financial reporting as of April 30, 2026. In making\nthis assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal\nControl — Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over\nfinancial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements\nwill not be prevented or detected on a timely basis. Based on our assessment, as of April 30, 2026, we concluded that our internal control\nover financial reporting contained a material weakness.\n\n \n\nThe weakness will not be considered\nremediated, however, until the applicable controls operate for a sufficient period of time and our management has concluded, through testing,\nthat these controls are operating effectively. If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the\naccuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors\nto lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.\nIn addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance\nof fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements,\neach of which could have a material adverse effect on our business, results of operations and financial condition.\n\n \n\n - 40 - \n\n \n\n \n\n**We may have trouble hiring additional qualified\npersonnel.**\n\n \n\nAs we expand our development\nand commercial activities, we will need to hire additional personnel and could experience difficulties attracting and retaining qualified\nemployees. Competition for qualified personnel in the biopharmaceutical field is intense due to the limited number of individuals who\npossess the skills and experience required by that industry. We may not be able to attract and retain quality personnel on favorable terms,\nor at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that such personnel have been\nimproperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their\nresearch output. Any of these difficulties could have a material adverse effect on our business, results of operations and financial condition.\n\n** **\n\n**Failure of our information technology systems\ncould significantly disrupt the operation of our business.**\n\n \n\nOur ability to execute our\nbusiness plan and to comply with regulatory requirements with respect to data control and data integrity depends, in part, on the continued\nand uninterrupted performance of our information technology systems, or IT systems. These systems are vulnerable to damage from a variety\nof sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security\nand back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar\ndisruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems,\nthere are no assurances that electronic break-ins, computer viruses and similar disruptive problems, and/or sustained or repeated system\nfailures or problems arising during the upgrade of any of our IT systems that interrupt our ability to generate and maintain data will\nnot occur. The occurrence of any of the foregoing with respect to our IT systems could have a material adverse effect on our business,\nresults of operations or financial condition.\n\n** **\n\n**We are subject to various claims and legal\nactions arising in the ordinary course of our business.**\n\n \n\nWe are subject to various\nclaims and legal actions arising in the ordinary course of our business. Any such litigation could be very costly and could distract our\nmanagement from focusing on operating our business. The existence of any such litigation could harm our business, results of operations\nand financial condition. Results of actual and potential litigation are inherently uncertain. An unfavorable result in a legal proceeding\ncould adversely affect our reputation, financial condition and operating results.\n\n** **\n\n**We will be subject to the U.S. Foreign Corrupt\nPractices Act and other anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our\nanticipated operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures,\nand legal expenses, which could adversely affect our business, results of operations and financial condition.**\n\n \n\nOur operations, if initiated,\nwill be subject to certain anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”), and other anti-corruption\nlaws that apply in countries where we do business. The FCPA and other anti-corruption laws generally prohibit us and our employees and\nintermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain\nbusiness or gain some other business advantage. We and any future commercial partners may operate in a number of jurisdictions that pose\na high risk of potential FCPA violations and we may participate in collaborations and relationships with third parties whose actions could\npotentially subject us to liability under the FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope or\neffect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might\nbe administered or interpreted.\n\n \n\nWe also anticipate becoming\nsubject to other laws and regulations governing our international operations, including regulations administered in the U.S. and in the\nEU, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange\nregulations (collectively, “Trade Control Laws”).\n\n \n\nThere can be no assurance\nthat we will be completely effective in ensuring our compliance with all applicable anticorruption laws, including the FCPA or other legal\nrequirements, such as Trade Control Laws. Any investigation of potential violations of the FCPA, other anti-corruption laws or Trade Control\nLaws by the United States, the European Union or other authorities could have an adverse impact on our reputation, our business, results\nof operations and financial condition. Furthermore, should we be found not to be in compliance with the FCPA, other anti-corruption laws\nor Trade Control Laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, as well\nas the accompanying legal expenses, any of which could have a material adverse effect on our reputation and liquidity, as well as on our\nbusiness, results of operations and financial condition.\n\n** **\n\n**Certain provisions of our certificate of\nincorporation, bylaws and Delaware law make it more difficult for a third party to acquire us and make a takeover more difficult to complete,\neven if such a transaction were in the stockholders’ interest.**\n\n \n\nOur certificate of incorporation,\nbylaws and certain provisions of Delaware law could have the effect of making it more difficult or more expensive for a third party to\nacquire, or discouraging a third party from attempting to acquire, control of our Company, even when these attempts may be in the best\ninterests of our stockholders. For example, we are governed by Section 203 of the Delaware General Corporation Law. In general, Section 203\nprohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder”\nfor a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business\ncombination is approved in a prescribed manner. A “business combination” includes mergers, asset sales or other transactions\nresulting in a financial benefit to the stockholder. An “interested stockholder” is a person who, together with affiliates\nand associates, owns, or within the past three years did own, 15% or more of the corporation’s outstanding voting stock. These\nprovisions may have the effect of delaying, deferring or preventing a change in control of our Company.\n\n \n\n - 41 - \n\n \n\n \n\n**Failure to build our finance infrastructure\nand improve our accounting systems and controls could impair our ability to comply with the financial reporting and internal controls\nrequirements for publicly traded companies.**\n\n \n\nAs a public company, we operate\nin an increasingly demanding regulatory environment, which requires us to comply with the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley\nAct, the regulations of The Nasdaq Capital Market, the rules and regulations of the SEC, expanded disclosure requirements, accelerated\nreporting requirements and more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing\ncorporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal\ncontrols are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. We must perform\nsystem and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness\nof our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.\n\n \n\nWe anticipate that the process\nof building our accounting and financial functions and infrastructure will require significant additional professional fees, internal\ncosts and management efforts. We expect that we will need to implement a new internal system to combine and streamline the management\nof our financial, accounting, human resources and other functions. However, such a system would likely require us to complete many processes\nand procedures for the effective use of the system or to run our business using the system, which may result in substantial costs. Any\ndisruptions or difficulties in implementing or using such a system could adversely affect our controls and harm our business. Moreover,\nsuch disruption or difficulties could result in unanticipated costs and diversion of management attention. In addition, we may discover\nweaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of\nour financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control\nsystem, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s\nobjectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance\nthat misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.\n\n \n\nIf we are not able to comply\nwith the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective\ninternal controls, we may not be able to produce timely and accurate financial statements. If we cannot provide reliable financial reports\nor prevent fraud, our business and results of operations could be harmed, investors could lose confidence in our reported financial information\nand we could be subject to sanctions or investigations by The Nasdaq Capital Market, the SEC or other regulatory authorities.\n\n \n\n**If securities analysts do not publish research\nor reports about our business or if they publish negative evaluations of our stock, the price of our common stock could decline.**\n\n \n\nThe trading market for our\ncommon stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do\nnot currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of\nus, the trading price of our common stock could decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering\nour business downgrade their evaluations of our stock, the price of our common stock could decline. If one or more of these analysts cease\nto cover our stock, we could lose visibility in the market for our common stock, which in turn could cause our stock price to decline.\n\n** **\n\n**Our charter provides for limitations of\ndirector liability and indemnification of directors and officers and employees.**\n\n \n\nOur certificate of incorporation\nlimits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation\nwill not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:\n\n \n\n•breach of their duty of loyalty to us or our stockholders;\n\n \n\n•act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;\n\n \n\n•unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174\nof the Delaware General Corporation Law; or\n\n \n\n•transaction from which the directors derived an improper personal benefit.\n\n \n\nThese limitations of liability\ndo not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies\nsuch as injunctive relief or rescission.\n\n \n\nOur bylaws provide that we\nwill indemnify our directors, officers and employees to the fullest extent permitted by law. Our bylaws also provide that we are obligated\nto advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. We believe that\nthese provisions are necessary to attract and retain qualified persons as directors and officers.\n\n \n\nThe limitation of liability\nin our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their\nfiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action,\nif successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition may be harmed to\nthe extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.\n\n \n\n - 42 - \n\n \n\n \n\n**We could be subject to securities class\naction litigation.**\n\n \n\nIn the past, securities class\naction litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially\nrelevant for us because biopharmaceutical companies have experienced significant stock price volatility in recent years. If we face such\nlitigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business."}