Why does this transaction make sense for Applied?

After a thorough review of our options, the Board believes this transaction and the offer price is more favorable to the Company’s stockholders than the anticipated treatment of Shares in a wind down proceeding, whether inside or outside of bankruptcy, which would likely result in no proceeds payable to the Company’s stockholders.

This transaction would give us the resources we need to keep moving forward with bringing Govorestat and our other drug candidates to patients with rare diseases. By selling to Cycle, we’re in a position to continue pursuing our mission and create more opportunities for patients with rare diseases.

Who is Cycle? Why is Cycle the right partner for Applied?

Cycle Group Holdings Limited is a company focused on providing treatments and services for patients with neurological, rare metabolic, and rare immunological conditions, most of which are genetic conditions.

They market nine commercial products within the United States and bring meaningful experience in developing and commercializing drug products.

Cycle is a well-capitalized acquirer with the strategic interest and resources to support Applied’s assets, provide working capital financing through closing, and move expeditiously without a financing condition.

Why is now the right time for this transaction?

The Board, with the assistance of outside financial and legal advisors, has conducted a thorough evaluation of the Company’s strategic alternatives and the Company’s existing cash and projected cash needs, including the likelihood that the Company could not continue as a going concern and determined that Cycle’s offer is more favorable to the Company’s stockholders than the anticipated treatment of Shares in a wind down proceeding, whether inside or outside of bankruptcy, which would likely result in no proceeds payable to the Company’s stockholders.

The timing of this transaction provides Applied access to Cycle’s resources to continue our operations, include by provide a working capital facility of up to U.S. $8.5 million during the period between signing and closing based on an approved budget.

Why do you believe this transaction will generate more value for shareholders than Applied’s standalone strategy?

Remaining independent would require substantial new financing in a challenging environment, likely on terms highly dilutive to current stockholders (if available at all). By contrast, the transaction delivers immediate cash value, a clear path to closing, and participation in future upside through contingent value rights (CVRs), which the Board—supported by an independent fairness opinion—determined to be more favorable on a risk-adjusted basis than the anticipated treatment of Shares in a wind down proceeding, whether inside or outside of bankruptcy.

Did the Applied board run a full strategic review process?

Yes. Over numerous meetings, the Board, with its advisors, evaluated a comprehensive range of alternatives, including continuing as a standalone company, mergers, acquisitions, partnerships, joint ventures, licensing, other strategic transactions, and winding down the company’s operations.

The Applied Board ran a full strategic review process involving outreach to and discussions with 30+ potential partners. The transaction presents a unique opportunity for shareholders to realize immediate value through upfront cash consideration, while retaining the potential for additional value down the road via the CVR.

Did Applied engage in discussions with other parties besides Cycle? Did Applied receive any other expressions of interest, or formal offers?

Applied contacted and engaged with over 30 potential counterparties. Following this outreach and negotiation process, the Board concluded that Cycle’s proposal represented the best available offer at the time of signing, with a high likelihood of closing and supportive interim funding.

Full details about the background of the transaction will be filed with the SEC in due course.

What is the likelihood that other bidders emerge? What ability does Applied have to respond to a higher offer?

We’re not going to speculate on hypotheticals.

Applied has the right to respond to unsolicited proposals that are determined superior as defined in the merger agreement, which will be filed with the SEC in due course.

What approvals are required to complete this transaction?

The transaction is subject to customary closing conditions.

We expect the transaction to close in the first quarter of 2026.

Do you anticipate regulatory scrutiny, or a second request from the FTC/DOJ?

No HSR filing is required for this transaction.

We also do not anticipate that any foreign merger control approvals will be needed.

Is there a breakup fee associated with this transaction?

Yes, equal to 4.5% of the upfront transaction equity value plus 4.5% of the value of the Company’s outstanding borrowings under the working capital facility entered into with Cycle concurrently with the execution of the merger agreement. Full details are included in the merger agreement, which will be filed with the SEC in due course.

When will the transaction close?

We expect the transaction to close in the first quarter of 2026.

The transaction is subject to customary closing conditions, as well as the satisfaction of the minimum tender condition that a majority of outstanding shares of Applied must be tendered in the offer.

Will the Applied management team remain with the business after closing?

The specific leadership team is something that will be decided upon as part of the integration process.

What will happen to Applied’s corporate headquarters?

That is something that will be decided as part of the integration process.

What does this transaction mean for Applied employees?

Details regarding employees will be decided as part of the integration process.

It is essential that everyone at Applied remains focused on our important work of bringing Govorestat and our other drug candidates to patients with rare diseases.

How will Applied be integrated into Cycle?

Those details will be decided as part of the integration process.

Do you expect layoffs as a result of this transaction?

It’s too early to speculate on any potential workforce impacts. It is important to maintain our focus on continuing to operate as we do today.

We are committed to keeping you informed throughout this process and will share additional information as it becomes available.

What will happen to my benefits and pay?

Until the transaction is finalized, which we expect to occur in the first quarter of 2026, Applied will remain your employer and you will continue to receive your pay and benefits as usual.

We are committed to keeping you informed throughout this process and will share additional information as it becomes available.

I own Applied stock. What should I do with it? What will happen to it at closing?

Any shares owned in Applied at the time of closing will entitle you to receive, on a per share basis, $0.088 in cash and one CVR. The CVR entitles holders to potential milestone payments of up to $0.40 per share based on certain regulatory and commercial achievements, as well as a pro rata share of any closing cash in excess of $500,000 (capped at $1.5 million) after payment of Applied’s indebtedness and transaction expenses.

Any in-the-money options in Applied at the time of closing (those options with an exercise price below $0.088) will entitle you to receive, on a per-option-share basis, cash equal to the difference between $0.088 and your exercise price, plus one CVR. The CVR entitles holders to potential milestone payments of up to $0.40 per share based on certain regulatory and commercial achievements, as well as a pro rata share of any closing cash in excess of $500,000 (capped at $1.5 million) after payment of Applied’s indebtedness and transaction expenses. Any out-of-the-money stock options (those with an exercise price at or above $0.088) will fully vest prior to closing, and holders will be permitted to exercise them before the closing; however, any such options that are not exercised by closing will be cancelled for no consideration and will not receive cash or CVRs.

Any RSUs outstanding at the time of closing will entitle you to receive, on a per-RSU basis, $0.088 in cash and one CVR. The CVR entitles holders to potential milestone payments of up to $0.40 per share based on certain regulatory and commercial achievements, as well as a pro rata share of any closing cash in excess of $500,000 (capped at $1.5 million) after payment of Applied’s indebtedness transaction expenses.

What happens between now and closing?

Until the transaction closes, which is expected in the first quarter of 2026, Cycle and Applied will continue to operate independently, and it’s business as usual.

It is essential that everyone at Applied remains focused on the business at hand and continuing to advance Govorestat to benefit patients suffering from debilitating disease.

Who should I contact if I have additional questions? When will you provide more information?

If you have any questions, please don’t hesitate to reach out to Les Funtleyder, CFO and Interim CEO at Lfuntleyder@appliedtherapeutics.com

We will do our best to be transparent and keep you informed as we move through the transaction, providing information and additional context as we can.

What should I do if I receive calls from members of the media, or the investor community?

If you receive any inquiries from reporters, investors, or any other outside parties, please promptly refer them to Les Funtleyder, CFO and Interim CEO at Lfuntleyder@appliedtherapeutics.com.

It is important that we speak with one voice on this matter.