Overview

CervoMed Inc. is a clinical-stage biotechnology company focused on developing treatments for age-related neurologic disorders. The company’s lead drug candidate is neflamapimod, an investigational, orally administered, small molecule brain penetrant that inhibits p38α in the neurons of people with neurodegenerative diseases. CervoMed believes neflamapimod has the potential to treat synaptic dysfunction, the reversible aspect of the underlying disease processes in dementia with Lewy bodies (DLB) and certain other major neurological disorders.

Neflamapimod is currently being evaluated in CervoMed’s ongoing RewinD-LB Trial, a Phase 2b study in patients with DLB funded primarily by a $21.3 million grant from the National Institute on Aging (NIA). CervoMed is the only company of which it is aware that is specifically targeting the treatment of DLB patients who do not have concomitant Alzheimer’s disease (AD) co-pathology, as it believes this approach enhances the alignment of its development path with neflamapimod’s mechanism of action and reduces the heterogeneity of its target patient population.

Financial Summary

As of December 31, 2024, CervoMed had cash and cash equivalents and marketable securities of approximately $38.9 million. The company has not generated any revenue from product sales and does not expect to do so in the near future. CervoMed’s accumulated deficit as of December 31, 2024 was $70.7 million, and it expects its expenses to increase as it continues to invest in research and development activities related to neflamapimod.

Based on its current operating plan, CervoMed believes its existing cash and cash equivalents and marketable securities will enable it to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance of the consolidated financial statements. However, the company will continue to require additional financing to advance its current product candidates through clinical development, to develop, acquire or in-license other potential product candidates, and to fund operations for the foreseeable future.

Financial Operations Overview

Revenue: CervoMed’s revenue consists of grant funding received from the NIA, which is recognized as the qualifying expenses related to the grant are incurred. The company recognized $9.7 million and $7.1 million in grant revenue during the years ended December 31, 2024 and 2023, respectively.

Research and Development Expenses: CervoMed’s research and development expenses, which account for a significant portion of its operating expenses, primarily consist of costs incurred for the development of neflamapimod, including its ongoing RewinD-LB Trial. These expenses increased from $8.4 million in 2023 to $18.8 million in 2024, primarily due to increased outsourced CRO site expenses and manufacturing costs related to neflamapimod.

General and Administrative Expenses: General and administrative expenses increased from $6.5 million in 2023 to $9.1 million in 2024, primarily due to public company-related costs following the completion of the Merger in 2023, including increased legal, insurance, headcount, and stock-based compensation expenses.

Other Income (Expense): Other income (expense) was a de minimis amount in 2024, compared to $5.4 million of other income in 2023, which was due to adjustments to the fair value of the company’s previously outstanding convertible notes.

Interest Income: Interest income increased from $0.2 million in 2023 to $1.9 million in 2024, primarily due to interest earned on CervoMed’s increased cash equivalents and marketable securities balances following the 2024 Private Placement.

Liquidity and Capital Resources

CervoMed’s primary uses of cash are to fund its operations, which consist primarily of research and development expenditures related to its programs and, to a lesser extent, general and administrative expenditures.

In January 2023, CervoMed was awarded a $21.0 million grant from the NIA to support the RewinD-LB Trial, and in August 2024, it received an additional $0.3 million under the grant. As of December 31, 2024, the company had received a total of $14.8 million in cash funding from the NIA Grant.

In April 2024, CervoMed completed a private placement of common stock, pre-funded warrants, and Series A warrants, raising approximately $50.0 million in gross proceeds. The company also previously had an “at-the-market” sales agreement, which it terminated in October 2024 without selling any shares.

Based on its current operating plan, CervoMed believes its existing cash and cash equivalents and marketable securities will enable it to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance of the consolidated financial statements. However, the company will continue to require additional financing to advance its current product candidates and fund operations for the foreseeable future.

Strengths and Weaknesses

Strengths:

• Promising lead drug candidate, neflamapimod, with potential to treat synaptic dysfunction in DLB and other neurological disorders
• Focused development strategy targeting DLB patients without AD co-pathology, which aligns with neflamapimod’s mechanism of action
• Significant grant funding from the NIA to support the RewinD-LB Trial
• Recent successful private placement providing additional capital to fund operations

Weaknesses:

• No approved products or revenue from product sales, relying on grant funding and external financing
• Accumulated deficit of $70.7 million as of December 31, 2024, indicating the company has not yet achieved profitability
• Continued need for additional financing to advance neflamapimod and fund future operations

Outlook

CervoMed’s future success will depend on the continued development and potential commercialization of neflamapimod. The company expects to report 32-week results from the RewinD-LB Trial in the second half of 2025 and plans to meet with the FDA to discuss its Phase 3 plans following the availability of those data.

In addition to neflamapimod’s potential to treat DLB, CervoMed believes the benefit of targeting neuroinflammation-induced synaptic dysfunction in the basal forebrain cholinergic system can be applied to other neurologic indications, such as certain forms of frontotemporal dementia and promoting recovery after ischemic stroke.

However, the company’s ability to generate revenue and achieve profitability will depend on the successful development and eventual commercialization of neflamapimod or another product candidate. CervoMed will need to continue to raise additional capital through equity offerings, debt financings, or other sources to advance its pipeline and fund its operations for the foreseeable future.