Executive Summary / Key Takeaways

• Cognition Therapeutics is pioneering a differentiated approach to neurodegenerative diseases by targeting the sigma-2 (σ-2) receptor complex with its lead candidate, zervimesine (CT1812), aiming to protect synapses from toxic oligomers.
• Recent Phase 2 data for zervimesine have shown promising efficacy signals in both mild-to-moderate Alzheimer's disease (SHINE study, including a 95% reduction in cognitive decline in a prespecified subgroup) and dementia with Lewy bodies (SHIMMER study, demonstrating significant improvements across behavioral, functional, cognitive, and motor measures).
• The company has strategically prioritized its dementia programs, discontinuing the dry AMD study to focus resources, and is preparing for End-of-Phase 2 meetings with the FDA for both AD and DLB to discuss the path to potential registrational trials.
• Financially, the company faces a significant funding requirement for future trials, with existing cash projected to fund operations into Q4 2025 (excluding ATM/equity line usage), and is actively pursuing partnerships and other capital sources while addressing a NASDAQ minimum bid price compliance issue.
• Key catalysts for investors include the outcomes of the upcoming FDA meetings, potential partnering announcements, and continued progress in the ongoing early Alzheimer's START trial, which could provide valuable combination therapy data.

Unlocking Synaptic Potential in Dementia

Cognition Therapeutics, Inc. is a clinical-stage biopharmaceutical company dedicated to confronting age-related degenerative diseases of the central nervous system and retina. Founded in 2007, the company has built its foundation on a unique combination of biological expertise and proprietary medicinal chemistry platforms focused on identifying novel drug targets and disease-modifying therapies. At the heart of its approach is the sigma-2 (σ-2) receptor (S2R) complex, which Cognition identifies as a key regulator of cellular damage implicated in neurodegenerative conditions.

The company's lead candidate, zervimesine (CT1812), is an orally delivered small molecule designed to penetrate the blood-brain barrier and selectively bind to the S2R complex. This mechanism is intended to antagonize the binding and toxicity of pathogenic protein oligomers, such as amyloid beta (Aβ) and alpha-synuclein, which are believed to drive synaptic dysfunction and neurodegeneration. By preventing these toxic interactions, zervimesine aims to protect synapses and potentially slow or halt the progression of cognitive and functional decline. This approach represents a mechanism functionally distinct from other strategies currently in clinical development, particularly antibody-based therapies that primarily target the removal of amyloid plaques.

In the competitive landscape of neurodegenerative disease, particularly Alzheimer's disease (AD), established players like Biogen (BIIB), Eli Lilly (LLY), and Roche (RHHBY) have focused on infused biologic therapies targeting amyloid plaques. While these therapies have shown efficacy in reducing amyloid burden and modestly slowing cognitive decline, they are associated with administration challenges (infusions vs. oral) and side effects like ARIA (Amyloid-Related Imaging Abnormalities). Cognition's oral small molecule approach with zervimesine offers potential advantages in convenience, accessibility, and potentially a different safety profile, having not observed ARIA in its studies to date. In dementia with Lewy bodies (DLB), the competitive landscape is notably sparse, with no currently approved treatments, presenting a significant unmet need that Cognition is actively pursuing.

Cognition's strategic journey has been shaped by its scientific focus and funding efforts. Since inception, the company has secured approximately $171 million in cumulative non-dilutive grant awards, primarily from the National Institute on Aging (NIA), alongside approximately $139.5 million in net proceeds from equity financings, including its 2021 IPO and subsequent offerings and ATM sales. This funding has been crucial in advancing its clinical pipeline.

Financial Performance and Liquidity

Cognition Therapeutics, like many clinical-stage biopharmaceutical companies, is pre-revenue, with its income primarily derived from grants. The company has incurred recurring losses since inception, resulting in an accumulated deficit of $183.64 million as of March 31, 2025.

For the three months ended March 31, 2025, the company reported a net loss of $8.48 million, compared to a net loss of $9.15 million for the same period in 2024. Operating expenses totaled $13.78 million in Q1 2025, a slight decrease from $14.10 million in Q1 2024. Research and development (R&D) expenses, the primary driver of costs, increased marginally to $10.79 million in Q1 2025 from $10.55 million in Q1 2024, reflecting increased Phase 2 trial activities and personnel costs, partially offset by lower manufacturing and preclinical expenses. General and administrative (G&A) expenses decreased to $2.99 million in Q1 2025 from $3.55 million in Q1 2024, mainly due to lower stock-based compensation. Grant income saw a modest increase to $5.09 million in Q1 2025, correlated with the increase in reimbursable clinical trial costs.

As of March 31, 2025, the company's cash and cash equivalents stood at $16.43 million, down from $25.01 million at the end of 2024. Net cash used in operating activities was $9.88 million for the first three months of 2025, an increase from $7.24 million in the prior year period, driven by changes in operating assets and liabilities, particularly an increase in grant receivables. Net cash provided by financing activities was $1.30 million in Q1 2025, significantly lower than the $11.99 million in Q1 2024, which benefited from net proceeds from a follow-on public offering.

The company explicitly states in its May 7, 2025 10-Q filing that its cash and cash equivalents as of March 31, 2025, are not sufficient to fund operations for the period through one year after the filing date, indicating substantial doubt about its ability to continue as a going concern. This underscores the critical need for additional funding. While the company has access to potential capital through its ATM facility ($20.37 million available as of March 31, 2025) and the Lincoln Park equity line ($34.80 million available), and approximately $47 million in obligated NIA grant funds remain available for specific expenses, securing substantial, non-dilutive capital or a significant partnership is paramount to fund future, larger registrational trials.

Clinical Progress and Strategic Outlook

Cognition's strategic focus has sharpened following recent clinical trial readouts. The company's pipeline is centered around zervimesine across multiple indications:

• SHINE Study (Phase 2, Mild-to-Moderate AD): This study met its primary endpoints of safety and tolerability. Top-line results reported in July/October 2024 showed a mean 38% slowing of cognitive decline at six months compared to placebo in the overall population (ADAS-Cog 11), although this did not reach statistical significance. Crucially, a prespecified analysis identified plasma p-tau217 as a potential biomarker for therapeutic response; participants with baseline levels below the median experienced a remarkable 95% reduction of cognitive decline at week 26 relative to placebo. Consistent trends favoring zervimesine were observed across other cognitive and functional measures. Biomarker analysis also showed reductions in GFAP, NfL, Aβ, and p-Tau217, particularly pronounced in the p-tau217 subgroup, supporting a disease-modifying effect. The safety profile was favorable, with liver enzyme elevations observed only at the higher 300mg dose, but not at the 100mg dose, suggesting potential for dose optimization.
• SHIMMER Study (Phase 2, DLB): Top-line results presented in January 2025 demonstrated that the study met its primary endpoints of safety and tolerability. Zervimesine treatment resulted in strong therapeutic responses across multiple key DLB symptom measures, with patients scoring an average of 86% better than placebo on the NPI A-L (behavioral symptoms), 52% better on the ADCS-ADL (activities of daily living), 91% better on the CAF (cognitive fluctuations), and 62% better on the UPDRS Part III (motor function). These results are particularly significant given the lack of approved DLB treatments and the broad impact across diverse symptoms.
• SEQUEL Study (Phase 2, EEG in AD): This exploratory study provided neurophysiological evidence that zervimesine improved brain activity and connectivity, consistent with restoring wave patterns towards those of healthy adults, supporting the synapse function mechanism.
• START Study (Phase 2, Early AD): This ongoing 540-participant study, funded by an $81 million NIA grant and conducted in collaboration with the ACTC, is actively recruiting patients with early AD. The trial design allows for participants on stable background therapy with approved monoclonal antibodies (lecanemab and donanemab), offering the potential for valuable real-world evidence on combination therapy.
• MAGNIFY Study (Phase 2, Dry AMD): In a strategic move announced in January 2025, the company voluntarily discontinued this study. This decision was made to focus resources entirely on the promising AD and DLB programs, despite the study having previously passed a masked futility analysis suggesting potential efficacy in slowing lesion growth.

The positive signals from SHINE and SHIMMER have propelled the company's strategic focus squarely onto its dementia programs. Cognition is now preparing comprehensive data packages from both studies for submission to the FDA and has requested two separate End-of-Phase 2 meetings to discuss the requirements and design for potential future registrational trials in AD and DLB. Management anticipates these meetings will provide crucial clarity on the regulatory path forward.

To support the transition to later-stage development, the company is taking steps to ensure Phase III readiness, including developing a novel chemical process for zervimesine manufacturing, for which provisional patents have been filed. This process is expected to support both future clinical and commercial supply needs, and the company is working with a domestic contract manufacturing organization (CMO) capable of producing commercial quantities.

The outlook is heavily dependent on securing the necessary funding for large-scale trials. Management estimates that existing resources, combined with expected grant income, will fund operations into the fourth quarter of 2025, assuming no usage of the ATM or Lincoln Park facilities. They are actively engaged in business development discussions and anticipate announcements regarding partnering or other funding sources.

Risks and Challenges

Despite the promising clinical data and strategic focus, Cognition Therapeutics faces significant risks. The most pressing is the need for substantial additional funding to advance zervimesine into and through registrational trials. The company's "going concern" warning highlights the urgency of this need. Failure to secure adequate capital on acceptable terms could force delays, reductions, or even termination of product development programs, materially impacting the business and the investment thesis. Raising funds through equity could result in significant dilution for existing stockholders, while debt financing could impose restrictive covenants.

Regulatory risks are also pertinent. The timing and outcome of the End-of-Phase 2 meetings with the FDA are critical in defining the path forward. Furthermore, potential disruptions to FDA and other government agency operations, including funding uncertainties (such as the continuing resolution expiring September 30, 2025) or policy changes under a new administration, could delay regulatory reviews and approvals.

Clinical trial execution carries inherent risks, including potential delays, unforeseen costs, challenges with enrollment (though the START trial is actively recruiting), and the possibility that results from larger, later-stage trials may not replicate the positive signals seen in Phase 2. Dependence on third parties for manufacturing and clinical trial conduct adds another layer of risk.

Finally, the company is addressing a NASDAQ minimum bid price compliance issue, having been granted an extension until September 8, 2025, to regain compliance. While management expresses confidence, failure to do so could result in delisting, impacting stock liquidity and investor sentiment.

Conclusion

Cognition Therapeutics stands at a pivotal juncture, armed with promising Phase 2 data for its lead candidate, zervimesine, in two areas of significant unmet medical need: Alzheimer's disease and dementia with Lewy bodies. The company's differentiated mechanism targeting the sigma-2 receptor complex and toxic oligomers offers a novel approach with the potential for disease modification and a favorable safety profile, particularly the oral administration route. The strategic decision to focus entirely on the dementia programs, backed by positive clinical signals and ongoing preparations for Phase III, positions the company to pursue potential registrational pathways.

However, the path forward is heavily contingent on securing substantial funding required for larger trials. The explicit "going concern" warning underscores this challenge, making successful partnering or other capital-raising efforts the most critical near-term catalysts for investors. The outcomes of the upcoming FDA End-of-Phase 2 meetings will provide essential clarity on the regulatory requirements, further shaping the development plan and funding needs. While risks related to financing, regulatory hurdles, and clinical trial execution remain significant, the potential reward of bringing a novel, effective, and convenient therapy to patients suffering from devastating neurodegenerative diseases represents a compelling long-term opportunity. Investors will be closely monitoring the company's progress on securing capital and advancing discussions with regulatory bodies.