7. Stock-Based Compensation

2025 Equity Incentive Plan

The Korsana Biosciences, Inc. 2025 Equity Incentive Plan (the “2025 Plan”) was adopted by the board of directors of Pre-Merger Korsana on September 11, 2025. The 2025 Plan provided for Pre-Merger Korsana to grant stock options, restricted stock awards, restricted stock units, or other stock-based awards to employees, officers, directors, consultants, and advisors. Stock options granted under the 2025 Plan generally vest over four years, subject to the participant’s continued service, and expire after ten years. In connection with the effectiveness of the 2026 Stock Plan (defined below), no further awards will be granted under the 2025 Plan, and therefore, as of September 30, 2026, there are no shares of common stock available for issuance under the 2025 Plan.

2026 Stock Incentive Plan

In connection with the Merger, the Korsana Biosciences, Inc. 2026 Stock Incentive Plan (the "2026 Stock Plan") was approved by the board of directors of Cyclerion, the legal acquirer in the Merger, on July 16, 2026, and by Cyclerion's stockholders on August 26, 2026. The 2026 Stock Plan became effective upon completion of the Merger on September 8, 2026. The 2026 Stock Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units and other equity-based awards. The 2026 Stock Plan is administered by the Compensation Committee of the Board (the "Compensation Committee") or another committee as designated by the Board to administer the plan. Current employees, officers, non-employee directors, and other individual service providers of the Company and its subsidiaries are eligible to participate in the 2026 Stock Plan. The initial share pool under the 2026 Stock Plan is 6,092,348 shares of Company common stock, and as of September 30, 2026, there are 5,898,568 shares available in the pool. The shares that may be issued under the 2026 Stock Plan will be automatically increased on January 1 of each year beginning in 2027 and ending with a final increase on January 1, 2036 in an amount equal to 5% of the diluted shares (including outstanding shares of Company common stock and shares of Company common stock issuable upon conversion of outstanding preferred stock and exercise of outstanding pre-funded warrants) on the preceding December 31, unless a lower, or no, increase is determined by the Compensation Committee.

2026 Employee Stock Purchase Plan

The Korsana Biosciences, Inc. 2026 Employee Stock Purchase Plan (the "ESPP") was approved by the board of directors of Cyclerion, the legal acquirer in the Merger, on July 16, 2026, and by Cyclerion stockholders on August 26, 2026. The ESPP became effective upon completion of the Merger on September 8, 2026. The ESPP has 550,512 shares reserved for issuance. The shares that may be issued under the ESPP will be automatically increased on January 1 of each year beginning in 2027 and ending with a final increase on January 1, 2036 in an amount equal to the lesser of 1% of the diluted shares (including outstanding shares of Company common stock and shares of Company common stock issuable upon conversion of outstanding preferred stock and exercise of outstanding pre-funded warrants)

on the preceding December 31 or 2,000,000, unless a lower, or no, increase is determined by the Compensation Committee. As of September 30, 2026, no offering periods had commenced under the ESPP and no shares have been issued out of the ESPP.

Stock Option Valuation

Stock Options

The weighted average grant-date fair value of stock options granted during the nine months ended September 30, 2026 was $6.74. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had an exercise price lower than the fair value of the Company’s common stock. There were no stock options granted during the nine months ended September 30, 2025.

Restricted Stock Awards

On November 8, 2024, the Company issued and sold 1,037,000 RSAs to Paragon at $0.10 per share, of which 518,500 RSAs were subsequently contributed to Parasa Holding LLC (“Parasa”), an entity formed by Paragon to hold equity in the Company. The RSAs were subject to performance-based vesting conditions tied to the achievement of specified Series A Convertible Preferred Stock financing milestones. On November 21, 2024, 40% of the RSAs vested, with the remaining 60% vesting on September 11, 2025. The Company recognized stock-based compensation expense upon achievement of the respective performance conditions.

On October 27, 2025, the Company issued and sold 207,400 RSAs to its chief executive officer under the 2025 Plan, with service-based vesting conditions over four years and subject to the Company's repurchase rights upon termination of service. Proceeds received for unvested RSAs were initially recorded as a liability and are reclassified to equity as the awards vest. During the three and nine months ended September 30, 2026, the Company reclassified $0.1 million and $0.3 million from liability to equity, respectively. As of September 30, 2026, $0.2 million and $0.4 million related to unvested RSAs were included in accrued expenses and other current liabilities and accrued other liabilities, noncurrent, respectively, on the condensed consolidated balance sheet.

During the three and nine months ended September 30, 2026, the Company recorded stock-based compensation expense of less than $0.1 million and $0.1 million, respectively, related to the RSAs in the condensed consolidated statements of operations and comprehensive loss as general and administrative and research and development expense. During the three and nine months ended September 30, 2025, the Company recorded stock-based compensation expense of less than $0.1 million related to the RSAs in the condensed consolidated statements of operations and comprehensive loss as general and administrative and research and development expense.

Parasa Warrant Obligation

In September 2025, the Company entered into the Antibody Discovery and Option Agreement (the “Paragon ADOA”) with Paragon and Parasa (see Note 9). Under the terms of the Paragon ADOA, Parasa will be entitled to grants of warrants to purchase a number of shares equal to 1.00% of the then-outstanding shares of the Company’s stock, on a fully diluted basis, on December 31, 2025 and December 31, 2026, with an exercise price equal to the fair market value of the underlying shares on the grant date as determined by the Board of Directors (the “Parasa Warrant Obligation”). If the term with respect to all research programs ends prior to the end of a calendar year, the warrant for such calendar year shall be pro-rated for that calendar year. The grant dates for the issuance of warrants were on December 31, 2025 (the “2025 Parasa Warrant Obligation”) and expected to be on December 31, 2026 (the “2026 Parasa Warrant Obligation”) (if the term with respect to all research programs is still active), respectively, as all terms of the award, including number of shares and exercise price, will be known by all parties on those dates. Parasa’s research and discovery related activities have a service inception date preceding the grant dates, with the full award being vested as of the grant date with no post-grant date service requirement. Accordingly, the Company records a liability for the warrants expected to be granted to Parasa as the related services are provided, with the value of the liability based on the estimated fair value of the warrants at each interim reporting date. For the three and nine months ended September 30, 2026, $12.7 million and $13.5 million, respectively, were recognized as stock-based compensation expense related to the 2026 Parasa Warrant Obligation expected to be granted to Parasa on December 31, 2026 within research and development expense in the Company’s condensed consolidated statement of operations and comprehensive loss. For the three and nine months ended September 30, 2025, $0.2 million was recognized as stock-based compensation expense related to the 2025 Parasa Warrant Obligation expected to be granted to Parasa on December 31, 2025 within research and development expense in the Company’s condensed consolidated statement of operations and comprehensive loss. On December 31, 2025, the fair value of the warrant obligation of $0.8 million was reclassified from accrued expenses to stockholders’ equity on the condensed consolidated balance sheet when the Company settled the 2025 Parasa Warrant Obligation by issuing Parasa a warrant to purchase 228,671 shares of Company Common Stock at an exercise price of $4.15 per share. The warrant issued on December 31, 2025 has a term of 10 years, is fully vested, and is exercisable in part or full at any time during the term of the warrant. As of September 30, 2026, the warrant issued under the 2025 Parasa Warrant Obligation is outstanding and unexercised.

As of September 30, 2026, total unrecognized compensation cost related to the unvested stock options was $34.5 million, which is expected to be recognized over a weighted average period of approximately 3.4 years. As of September 30, 2026, total unrecognized compensation cost related to the unvested RSAs was $0.4 million, which is expected to be recognized over a weighted average period of approximately 2.7 years. As of September 30, 2026, total unrecognized compensation cost related to the 2026 Parasa Warrant Obligation was $4.6 million, which is expected to be recognized over approximately 0.3 years.