What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 125 added, 88 removed, 177 unchanged (55% of the section changed)

14 unchanged sentences

ZORYVE cream 0.3% is approved for once-daily topical treatment of mild, moderate, and severe plaque psoriasis with no limitations on location or duration of use.

In October 2023, we received FDA approval for an expanded indication in plaque psoriasis down to 6 years of age.

In November 2025, our supplemental New Drug Application (sNDA) was accepted for filing by the FDA to potentially expand the indication of ZORYVE cream 0.3% for the treatment of plaque psoriasis in children down to the age of 2, with a Prescription Drug User Fee Act (PDUFA) target action date assigned for June 29, 2026.

We received FDA approvals for expanded indications in plaque psoriasis down to 6 years of age and subsequently down to 2 years of age in October 2023 and June 2026, respectively.

In June 2023, we achieved our first commercial launch outside of the United States following Health Canada approval of ZORYVE cream 0.3% for the treatment of plaque psoriasis in individuals 12 years of age or older.

In February 2026, Health Canada accepted our Supplement to a New Drug Submission (SNDS) for ZORYVE cream 0.3% for individuals down to 2 years of age.

In February 2026, Health Canada accepted for review our Supplement to a New Drug Submission (SNDS) for ZORYVE cream 0.3% for individuals down to 2 years of age.

In December 2023, we received FDA approval for ZORYVE foam 0.3% (ZORYVE foam) for the treatment of seborrheic dermatitis in individuals aged 9 years and older, with no limitation on severity, location, or duration of use.

1 unchanged sentence

ZORYVE foam became commercially available in the United States in January 2024 and in Canada in November 2024.

We also received FDA approval for ZORYVE foam for the treatment of plaque psoriasis of the scalp and body in adults and adolescents aged 12 and older in May 2025, followed by commercial launch in the United States in June 2025.

ZORYVE foam for the treatment of plaque psoriasis of the scalp and body in adults and adolescents ages 12 and older was also approved by Health Canada in October 2025, followed by commercial launch in November 2025.

We have completed enrollment in a Maximum Usage Systemic Exposure (MUSE) trial for ZORYVE foam in children with plaque psoriasis of the scalp and body 2 to 11 years old.

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limitation on location, body surface area treated, concomitant use, or duration of use specified in the approved labeling.

ZORYVE cream 0.15% was also approved by Health Canada in March 2025 and commercially launched in April 2025.

We also received FDA approval for, and commercially launched, ZORYVE cream 0.05% for the topical treatment of mild to moderate atopic dermatitis in children 2 to 5 years of age in October 2025.

In October 2025, Health Canada accepted our SNDS for ZORYVE cream 0.05% for the topical treatment of mild to moderate atopic dermatitis in children 2 to 5 years old.

In February 2026, we announced positive topline data for INTEGUMENT-INFANT, a Phase 2 study evaluating the safety and efficacy of investigational ZORYVE cream 0.05% in infants as young as 3 months to less than 2 years of age with atopic dermatitis.

We submitted an sNDA to the FDA in April 2026 based on the results of this trial to potentially expand the indication for ZORYVE cream 0.05% for the treatment of infants with atopic dermatitis down to the age of 3 months.

We also received FDA approval for ZORYVE foam for the treatment of plaque psoriasis of the scalp and body in adults and adolescents aged 12 and older, which was commercially launched in the United States in June 2025 and in Canada in November 2025.

We have completed enrollment in a Maximum Usage Systemic Exposure (MUSE) trial for ZORYVE foam in children aged 2 to 11 years old with plaque psoriasis of the scalp and body, which we believe could be sufficient basis for an expansion of the indication of this product in the future.

We also received FDA approval for, and commercially launched, ZORYVE cream 0.15% in July 2024 for the topical treatment of mild to moderate atopic dermatitis in adults and pediatric patients 6 years and older, with no limitation on location, body surface area treated, concomitant use, or duration of use specified in the approved labeling.

ZORYVE cream 0.15% was also commercially launched in Canada in April 2025.

We also received FDA approval for, and commercially launched, ZORYVE cream 0.05% for the topical treatment of mild to moderate atopic

dermatitis in children 2 to 5 years of age in October 2025.

In October 2025, Health Canada accepted for review our SNDS for ZORYVE cream 0.05% for the topical treatment of mild to moderate atopic dermatitis in children 2 to 5 years old.

In February 2026, we announced positive top-line data for INTEGUMENT-INFANT, a Phase 2 study evaluating the safety and efficacy of investigational ZORYVE cream 0.05% in infants as young as 3 months to less than 2 years of age with atopic dermatitis.

We submitted a Supplemental New Drug Application (sNDA) to the FDA based on the results of this trial to potentially expand the indication for ZORYVE cream 0.05% for the treatment of infants with atopic dermatitis down to the age of 3 months, which has been assigned a Prescription Drug User Fee Act (PDUFA) target action date of February 23, 2027.

ZORYVE cream 0.15% and ZORYVE cream 0.05% are once-daily, steroid-free creams that provide rapid disease clearance and significant reduction in itch and have been specifically developed to be treatment options for long-term disease control.

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Following this termination, Kowa ceased all sales and promotions of ZORYVE, and we will not be required to make any further payments to Kowa.

We have now assumed all responsibility for promotion of ZORYVE to primary care practitioners and pediatricians in the United States, and has built a dedicated commercial team to execute those activities.

In August 2023, we entered into a strategic collaboration and licensing agreement (the Huadong Agreement) for topical roflumilast in Greater China and Southeast Asia with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.

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ARQ-234 could potentially be used to treat other inflammatory conditions as well.

In March 2026, we announced that the first participant had been enrolled in a Phase 1a/1b clinical study evaluating the safety and tolerability of ARQ-234.

In March 2026, the first participant was enrolled in our Phase 1a/1b clinical study evaluating the safety and tolerability of ARQ-234.

In July 2018, we executed a licensing agreement with AstraZeneca AB (AstraZeneca) for exclusive worldwide rights to roflumilast as a topical product for use in humans solely for dermatological indications.

Moreover, we have our own intellectual property portfolio around topical uses of roflumilast, with issued and pending formulation, pharmacokinetic, and method-of-use patents in the United States and other jurisdictions from several distinct patent families, which provides us with exclusivity in the United States for our product cream formulation through 2037 and foam formulation through 2042.

We have incurred annual net losses in each year since inception, including net losses of $11.3 million and $25.1 million for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, we had an accumulated deficit of $1,149.4 million and cash, cash equivalents, restricted cash, and marketable securities of $224.3 million.

As of March 31, 2026, we had $100.0 million outstanding under a loan and security agreement, as amended, with SLR Investment Corp.

We have incurred annual net losses in each year since inception.

We had a net income of $3.7 million and a net loss of $40.9 million for the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, we had an accumulated deficit of $1,134.4 million, cash, cash equivalents, restricted cash, and marketable securities of $238.9 million, and $100.0 million outstanding under a loan and security agreement, as amended, with SLR Investment Corp.

(SLR) and the lenders party thereto.

While we generated net income for the quarters ended September 30, 2025 and December 31, 2025, the extent of any net income or losses for future periods is uncertain, and we may continue to incur net losses in future periods.

While we have generated net income for certain recent fiscal quarters, the extent of any net income or losses for future periods is uncertain, and we may continue to incur net losses in future periods.

We expect to continue to incur significant expenses as we commercialize ZORYVE and as we advance our product candidates and label extensions through clinical trials, regulatory submissions, and potentially commercialization.

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Any failure to obtain sufficient funds on acceptable terms if or when needed could have a material adverse effect on our business, results of operations, and financial condition.

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We do not own or operate, and currently have no plans to establish any manufacturing facilities.

We do not own or independently operate any manufacturing facilities, and currently have no plans to establish any such facilities.

We rely on third parties to conduct our nonclinical studies and clinical trials, as well as for the manufacturing and supply of our product candidates and for the commercial supply of our products.

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In August 2022, in conjunction with the launch of our first FDA-approved product, we began to recognize revenue from product sales, net of deductions.

Below are the time periods that we began to recognize product revenue, net of deductions, related to the launches of each of our products and indications:

Below are the time periods in which we began to recognize product revenue, net of deductions, related to the launches of each of our products and indications:

Product/Indication Concentration Region Age 2022 2023 2024 2025 2026

ZORYVE cream for Plaque Psoriasis

United States > 12 yrs

ZORYVE cream for Plaque Psoriasis 0.3% U.S.

0.3% Canada > 12 yrs

United States 6-11 yrs October

ZORYVE foam for Seborrheic Dermatitis

United States > 9 yrs

6-11 yrs October

ZORYVE foam for Seborrheic Dermatitis 0.3% U.S.

0.3% Canada > 9 yrs

ZORYVE cream for Atopic Dermatitis

United States > 6 yrs

ZORYVE cream for Atopic Dermatitis 0.15% U.S.

0.15% Canada > 6 yrs

United States 2-5 yrs October

ZORYVE foam for Scalp & Body Psoriasis

United States > 12 yrs

2-5 yrs October

ZORYVE foam for Scalp & Body Psoriasis 0.3% U.S.

0.3% Canada > 12 yrs

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Other revenue recognized to date is derived primarily from upfront license fees and milestone payments received pursuant to the Sato Agreement and Huadong Agreement.

We expect that any other revenue we generate pursuant to these agreements will fluctuate from period to period as a result of the timing of potential milestone achievements and any potential regulatory approvals within the respective Sato Territory and Huadong Territory.

Operating Expenses

Cost of Sales

Cost of sales includes direct and indirect costs related to the manufacturing and distribution of ZORYVE, including raw materials, third-party manufacturing costs, packaging services, and freight-in, as well as third-party royalties payable on our net product sales and amortization of intangible assets associated with ZORYVE.

Cost of sales includes direct and indirect costs related to the manufacturing and warehousing of ZORYVE, including raw materials, third-party manufacturing costs, packaging services, storage and freight-in, as well as third-party royalties payable on our net product sales and amortization of intangible assets associated with ZORYVE.

Prior to the date on which the initial regulatory approval was received for each product, costs of inventory production were recorded as research and development expense.

As of March 31, 2026 and December 31, 2025, the value of this expensed inventory on hand was approximately $1.7 million and $2.6 million, respectively.

As of June 30, 2026 and December 31, 2025, the value of this expensed inventory on hand was approximately $0.9 million and $2.6 million, respectively.

Subsequent to initial regulatory approval, costs of production are capitalized into inventory, and as that inventory is sold and revenue is recognized, the cost of the inventory is recognized in cost of sales.

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Research and Development Expenses

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Our selling, general and administrative expenses consist primarily of salaries and related costs, including payroll taxes, benefits, stock-based compensation, and travel, for sales, commercial operations, human resources, information technology, legal, and finance employees.

Other selling, general and administrative expenses include costs related to sales and marketing of ZORYVE;

Other selling, general and administrative expenses include costs related to the sales and marketing of ZORYVE;

outbound distribution;

commissions earned by Kowa under our promotion agreement, which was terminated effective January 23, 2026;

6 unchanged sentences

Interest Expense

Interest expense is related to interest incurred on our debt.

Interest expense is related to interest and fees incurred on our debt.

Provision for Income Taxes

Provision for income taxes is primarily related to foreign income tax expense, foreign withholding taxes incurred in relation to payments received pursuant to our in-license agreements, and state income tax expense related to jurisdictions with minimum taxes or taxes based on revenue.

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Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

Comparison of the Three Months Ended June 30, 2026 and 2025

Product revenue, net

Three Months Ended March 31, Change

Three Months Ended June 30,

2026 2025 $ %

5 unchanged sentences

ZORYVE cream 0.15%

24,231 14,617 9,614 66 %

ZORYVE cream 0.05% 2,926 — 2,926 *

3 unchanged sentences

*Not applicable

The increase in product revenue, net, for ZORYVE cream 0.3% was primarily driven by greater patient demand for ZORYVE cream in the United States and Canada.

The increase in product revenue, net, for ZORYVE foam was primarily driven by greater patient demand for ZORYVE foam for the treatment of seborrheic dermatitis in the United States and Canada,and the commercial launch of ZORYVE foam for plaque psoriasis of the scalp and body in the United States in June 2025 and Canada in November 2025.

The increase in product revenue, net, for ZORYVE cream 0.15% was primarily driven by greater patient demand in the United States, as well as its commercial launch in Canada in April 2025.

The increase in product revenue, net, for ZORYVE cream 0.3% was primarily driven by greater patient demand for ZORYVE cream.

The increase in product revenue, net, for ZORYVE foam was primarily driven by greater patient demand for ZORYVE foam for the treatment of seborrheic dermatitis and the commercial launch of ZORYVE foam for plaque psoriasis of the scalp and body in the United States in June 2025.

The increase in product revenue, net, for ZORYVE cream 0.15% was primarily driven by greater patient demand.

The increase in product revenue, net, for ZORYVE cream 0.05% was due to its commercial launch in the United States in October 2025.

Cost of Sales

Cost of sales increased by $1.0 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, due to higher sales volumes and the associated increase in expenses recognized for product sold and royalties , partially offset by $2.4 million of catch-up amortization expense recognized in the comparative period for an AstraZeneca milestone achieved.

Cost of sales increased by $3.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

The increase was primarily due to higher sales volumes and the associated increase in expenses recognized for product sold and royalties.

Research and Development Expenses

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2026 2025 $ %

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Total research and development expense $ 20,355 $ 19,453 $ 902 5 %

For research and development expense, the increase in the ARQ-234 direct program costs was primarily due to the $10.0 million milestone that became payable to certain former Ducentis stockholders upon the dosing of the first patient in the ARQ-234 Phase 1a/1b trial.

The increase in the topical roflumilast direct program costs was primarily due to the completion of enrollment and related higher patient costs in our ZORYVE foam MUSE trial for

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the treatment of scalp and body psoriasis in children aged 2 to 11 years.

The increase in indirect costs was primarily driven by increased headcount and related compensation costs.

We expect research and development expenses to continue to increase in 2026, primarily due to our clinical development program for ARQ-234, as well as the development costs associated with ZORYVE label expansions and lifecycle management efforts.

Research and development expense remained materially consistent, with an increase in indirect costs primarily attributable to growth in headcount and investments in medical education.

This was partially offset by a decrease in direct program development costs, which included lower topical roflumilast costs as we close out the INTEGUMENT-INFANT trial.

We expect research and development expenses to continue to increase in future periods, primarily due to our clinical development program for ARQ-234, as well as the development costs associated with ZORYVE label expansions and lifecycle management efforts.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses increased by $10.1 million, or 16%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The increase was primarily due to an increase in sales and marketing expenses of $5.9 million and an increase in compensation and employee benefit related expenses of $4.4 million.

These increases were primarily due to our continued commercialization efforts for ZORYVE.

Selling, general and administrative expenses increased by $13.0 million, or 19%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to increases in compensation and employee benefit related expenses of $9.5 million, sales and marketing expenses of $1.9 million, and other outside spend, partially offset by lower commissions paid out to Kowa following termination of our promotion agreement with Kowa in January 2026.

A portion of the higher personnel costs was related to an increase in headcount, including the expansion of our dermatology sales force, to support our continued commercialization efforts for ZORYVE.

We expect our selling, general and administrative expenses to continue to increase in future periods as we continue to commercialize ZORYVE and potentially other product candidates, as well as support our operations.

Interest Expense

Interest expense increased by $1.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to fees incurred to maintain the availability of the tranche C-1 and tranche C-2 term loans through March 31, 2026 and June 30, 2026, respectively.

Interest expense increased by $0.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to the extension fee incurred with respect to the tranche C-1 and C-2 term loans that remained unfunded after December 31, 2025 through June 30, 2026.

Comparison of the Six Months Ended June 30, 2026 and 2025

Product revenue, net

Six Months Ended June 30, Change

2026 2025 $ %

(in thousands)

Product revenue, net

ZORYVE cream 0.3%

$ 67,997 $ 51,062 $ 16,935 33 %

117,004 69,452 47,552 68 %

ZORYVE cream 0.15%

45,972 24,836 21,136 85 %

ZORYVE cream 0.05% 4,286 — 4,286 *

Total product revenue, net

$ 235,259 $ 145,350 $ 89,909 62 %

______________

*Not applicable

The increase in product revenue, net, for ZORYVE cream 0.3% was primarily driven by greater patient demand for ZORYVE cream.

The increase in product revenue, net, for ZORYVE cream 0.15% was primarily driven by greater patient demand.

The increase in product revenue, net, for ZORYVE cream 0.05% was due to its commercial launch in the United States in October 2025.

Other Revenue

Other revenue of $2.0 million for the six months ended June 30, 2025 was related to a milestone payment received in connection with the Huadong Agreement.

See Note 6 to the condensed consolidated financial statements for additional information.

Cost of Sales

Cost of sales increased by $4.4 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, due to higher sales volumes and the associated increase in expenses recognized for

product sold and royalties , partially offset by $2.7 million of catch-up amortization expense recognized in the comparative period for an AstraZeneca milestone achieved.

Research and Development Expenses

Six Months Ended June 30, Change

2026 2025 $ %

(in thousands)

Direct external costs:

ARQ-234 program $ 12,305 $ 2,034 $ 10,271 505 %

Topical roflumilast program 5,290 4,273 1,017 24 %

Other programs

197 2,375 (2,178) (92) %

Indirect costs:

Compensation and personnel-related 22,411 19,417 2,994 15 %

Other 10,779 8,897 1,882 21 %

Total research and development expense $ 50,982 $ 36,996 $ 13,986 38 %

The increase of $14.0 million in research and development expenses was primarily due to the $10.0 million milestone that became payable to certain former Ducentis stockholders in the first quarter of 2026 upon the dosing of the first patient in the ARQ-234 Phase 1a/1b trial, with the remaining increase primarily attributable to higher indirect costs, including growth in headcount and investments in medical education.

The decrease in other program expenses primarily reflected lower JAK inhibitor–related direct costs, following the completion of the Phase 1b clinical study for our ARQ-255 program in 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $23.0 million, or 17%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to increases in compensation and employee benefit related expenses of $13.9 million and sales and marketing expenses of $7.8 million, partially offset by lower commissions paid out to Kowa following termination of our promotion agreement with Kowa in January 2026.

A portion of the higher personnel costs was related to an increase in headcount, including the expansion of our dermatology sales force, to support our continued commercialization efforts for ZORYVE.

Interest Expense

Interest expense increased by $1.8 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to fees incurred to maintain the availability of the tranche C-1 and tranche C-2 term loans through March 31, 2026 and June 30, 2026, respectively.

Liquidity, Capital Resources, and Requirements

2 unchanged sentences

We have incurred annual operating losses since our inception and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our products and product candidates, including conducting nonclinical and clinical trials and providing selling, general and administrative support for these operations.

As of March 31, 2026, we had cash, cash equivalents, restricted cash, and marketable securities of $224.3 million, and an accumulated deficit of $1,149.4 million.

As of March 31, 2026, we had $100.0 million outstanding under the Loan Agreement.

As of June 30, 2026, we had cash, cash equivalents, restricted cash, and marketable securities of $238.9 million, an accumulated deficit of $1,134.4 million, and $100.0 million outstanding under the Loan Agreement.

We believe that our existing capital resources will be sufficient to meet the projected operating requirements for at least 12 months from the date of issuance of our financial statements.

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There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources.

If we are unable to obtain additional funding from these or other sources if or when needed it may be necessary to significantly reduce our current rate of spending through, among other things, reductions in staff and delaying, scaling back, or stopping certain research and development programs, nonclinical studies, clinical trials or other development activities, and commercialization efforts.

If we are unable to obtain additional funding from these or other sources if or when needed, it may be necessary to significantly

reduce our current rate of spending through, among other things, reductions in staff and delaying, scaling back, or stopping certain research and development programs, nonclinical studies, clinical trials, or other development activities, and commercialization efforts.

In addition, market conditions impacting financial institutions could impact our ability to access some or all of our cash, cash equivalents, and marketable securities, and we may be unable to obtain alternative funding when and as needed on acceptable terms, if at all.

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We have based our projected operating requirements on assumptions that may prove to be incorrect, and we may use all our available capital resources sooner than we expect.

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• costs associated with any adverse market conditions or other macroeconomic factors.

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On December 22, 2021, we entered into a loan and security agreement (the Prior Loan Agreement) with SLR Investment Corp (SLR) and the lenders party thereto.

On December 22, 2021, we entered into a loan and security agreement (the Prior Loan Agreement) with SLR Investment Corp.

(SLR) and the lenders party thereto.

The Prior Loan Agreement was amended and restated on January 10, 2023 (the AR Loan Agreement) to include Arcutis Canada, Inc., a corporation incorporated under the laws of the Province of Ontario, as a borrower and party.

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With the approval of ZORYVE cream 0.3% on July 29, 2022, the tranche B term loans were funded in August 2022.

As of March 31, 2026 and December 31, 2025, the aggregate principal amount outstanding under the Loan Agreement was $100.0 million.

As of June 30, 2026 and December 31, 2025, the aggregate principal amount outstanding under the Loan Agreement was $100.0 million.

In October 2024, we made a 2024 Partial Prepayment of $100.0 million, which reduced the aggregate principal amount outstanding under the Loan Agreement to $100.0 million.

In connection with the 2024 Partial Prepayment, we are obligated to pay a prepayment penalty of $1.0 million by June 30, 2026 and a final fee of $6.95 million, representing the final fee applicable to the amount of the 2024 Partial Prepayment, on January 1, 2027.

As a result of such 2024 Partial Prepayment, subject to us generating a minimum net product revenue for the trailing six (6) month period ending as of the month prior to the borrowing date equal to 80% of our projected net product revenue as set forth in its annual plan for the respective period, we obtained the ability to draw down the tranche C-1 and tranche C-2 term loans.

The tranche C-1 term loan availability expired on March 31, 2026 and the tranche C-2 term loan availability will expire on June 30, 2026.

In addition, as a result of the 2024 Partial Prepayment, (i) the maturity date of the Loan Agreement is August 1, 2029 (such date, the Maturity Date), (ii) the applicable per annum interest rate is equal to 5.95% plus the greater of (a) 2.50% per annum and (b) the one-month Secured Overnight Financing Rate (SOFR), (iii) we are no longer subject to certain cost and purchase price restrictions regarding acquisitions, and (iv) we may prepay principal amounts outstanding under the Term Loans in minimum increments of $25.0 million, subject to a prepayment premium of (a) 3.0% for any prepayment made prior to the first anniversary of the second amendment, (b) 2.0% for any prepayment made after the first anniversary of the second amendment and prior to the second anniversary of the second amendment, or (c) 1.0% for any prepayment made after the second anniversary of the second amendment and prior to the Maturity Date.

Principal amounts outstanding under the Term Loans will generally accrue interest at a floating rate equal to the applicable rate in effect from time to time, as determined by SLR on the third business day prior to the funding date of the applicable Term Loan and on the first business day of the month prior to each payment date of each Term Loan.

In connection with the 2024 Partial Prepayment, we paid a prepayment penalty of $1.0 million during the second quarter of 2026 and are obligated to pay a final fee of $6.95 million, representing the final fee applicable to the amount of the 2024 Partial Prepayment, on January 4, 2027.

As a result of such 2024 Partial Prepayment, subject to us generating a minimum net product revenue for the trailing six (6) month period ending as of the month prior to the borrowing date equal to 80% of our projected net product revenue as set forth in our annual plan for the respective period, we obtained the ability to draw down the tranche C-1 and tranche C-2 term loans.

The tranche C-1 term loan availability expired on March 31, 2026, and the tranche C-2 term loan availability expired on June 30, 2026.

Neither tranche was drawn prior to its expiration.

In addition, as a result of the 2024 Partial Prepayment, (i) the maturity date of the Loan Agreement is August 1, 2029 (such date, the Maturity Date), (ii) the applicable per annum interest rate is equal to 5.95% plus the greater of (a) 2.50% per annum and (b) the one-month Secured Overnight Financing Rate (SOFR), (iii) we are no longer subject to certain cost and purchase price restrictions regarding acquisitions, and (iv) we may prepay principal amounts outstanding under the Term Loans in minimum increments of $25.0 million, subject to a prepayment premium of (a) 2.0% for any prepayment made after August 9, 2025 and prior to August 9, 2026 or (b) 1.0% for any prepayment made after August 9, 2026 and prior to the Maturity Date.

Principal amounts outstanding under the Term Loans will accrue interest at a floating rate equal to the applicable rate in effect from time to time, as determined by SLR on the third business day prior to the funding date of the applicable Term Loan and on the first business day of the month prior to each payment date of each Term Loan.

Prior to the 2024 Partial Prepayment, the applicable rate was a per annum interest rate equal to 7.45% plus the greater of (a) 0.10% and (b) the one-month SOFR.

As a result of such 2024 Partial Prepayment, the applicable interest rate will be a per annum interest rate equal to 5.95% plus the greater of (a) 2.50% and (b) the one-month SOFR.

On March 31, 2026, the rate was 9.61%.

As a result of such 2024 Partial Prepayment, the applicable interest rate is a per annum interest rate equal to 5.95% plus the greater of (a) 2.50% and (b) the one-month SOFR.

On June 30, 2026, the rate was 9.57%.

The benchmark SOFR is subject to change in the event of certain events with respect to the benchmark rate.

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If the Term Loans are accelerated due to, among others, the occurrence of a bankruptcy or insolvency event, we are required to make certain mandatory prepayments of (i) all principal amounts outstanding under the Term Loans, plus accrued and unpaid interest thereon through the prepayment date, (ii) any fees applicable by reason of such prepayment, (iii) the prepayment premiums set forth in the paragraph above, plus (iv) all other obligations that are due and payable, including expenses and interest at the Default Rate (as defined below) with respect to any past due amounts.

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The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, requirements as to financial reporting and insurance and restrictions on our ability to dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock or to redeem capital stock.

on our ability to dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock or to redeem capital stock.

We also agreed to a financial covenant whereby we must generate a minimum net product revenue equal to 75% of our projected net product revenue as set forth in our annual plan for the respective period, tested on a trailing six-month basis as of the end of each month.

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Upon the occurrence and for the duration of an event of default, an additional default interest rate (the Default Rate) equal to 4.0% per annum will apply to all obligations owed under the Loan Agreement.

In connection with the Loan Agreement, we are obligated to pay (i) a final fee equal to 6.95% of the aggregate original principal amount of the Term Loans outstanding as of the date of the second amendment, (x) with respect to any 2024 Partial Prepayment, upon the earliest to occur of (A) January 1, 2027, (B) the acceleration of all outstanding Term Loans and (C) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, and (y) with respect to the Term Loans outstanding as of the date of the second amendment (other than 2024 Partial Prepayment), upon the earliest to occur of (A) the Maturity Date, (B) the acceleration of all outstanding Term Loans and (C) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, (ii) a 2.00% fee with respect to tranche C term loans, due and payable on the earliest to occur of (A) the Maturity Date, (B) the acceleration of all outstanding Term Loans and (C) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, (iii) a 2.00% extension fee with respect to tranche C term loans which remain unfunded after December 31, 2025 which shall accrue during the period commencing January 1, 2026, and ending on the earliest to occur of (A) the expiration of the tranche C term loan availability, and (B) the date on which tranche C term loan is fully drawn, and (iv) a certain amount of lenders’ expenses incurred in connection with the execution of the Loan Agreement.

Additionally, in connection with the original Prior Loan Agreement, we previously had entered into an Exit Fee Agreement, whereby we agreed to pay an exit fee in the amount of 3.0% of each Term Loan funded upon (i) any change of control transaction or (ii) a revenue milestone, calculated on a trailing six-month basis.

Notwithstanding the prepayment or termination of the Term Loan, the exit fee will expire 10 years from the date of the Loan Agreement.

We were in compliance with all covenants under the Loan Agreement as of March 31, 2026.

In connection with the Loan Agreement, we are obligated to pay a final fee equal to 6.95% of the aggregate original principal amount of the Term Loans outstanding as of the date of the second amendment, (A) with respect to any 2024 Partial Prepayment, upon the earliest to occur of (a) January 4, 2027, (b) the acceleration of all outstanding Term Loans, and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, and (B) with respect to the Term Loans outstanding as of the date of the second amendment (other than 2024 Partial Prepayment), upon the earliest to occur of (a) the Maturity Date, (b) the acceleration of all outstanding Term Loans and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans.

We were also obligated to pay (i) a $1.0 million facility fee with respect to tranche C term loans, which was paid in the second quarter of 2026, (ii) a $1.0 million extension fee with respect to tranche C term loans that remained unfunded after December 31, 2025, which was accrued for and paid out during the period commencing January 1, 2026, and ending on June 30, 2026, and (iii) a certain amount of lenders’ expenses incurred in connection with the execution of the Loan Agreement.

Additionally, in connection with the original Prior Loan Agreement, we had previously entered into an Exit Fee Agreement, whereby we agreed to pay an exit fee in the amount of 3.0% of each Term Loan funded upon (i) any change of control transaction or (ii) a revenue milestone, calculated on a trailing six-month basis.

Notwithstanding the prepayment or termination of the Term Loans, the exit fee will expire 10 years from the date of the Loan Agreement.

We were in compliance with all covenants under the Loan Agreement as of June 30, 2026.

The following table sets forth our cash flows for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

Cash provided by (used in) operating activities $ 14,878 $ (30,056)

$ 2,239 $ (30,380)

Cash provided by (used in) investing activities

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Effect of exchange rate changes on cash (165) 204

Net decrease in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

$ (8,786) $ 1,096

Net Cash Provided by (Used in) Operating Activities

During the three months ended March 31, 2026, net cash provided by operating activities consisted of a net loss of $11.3 million, adjusted for certain non-cash charges of $11.7 million and net changes in operating assets and liabilities of $1.8 million.

During the six months ended June 30, 2026, net cash provided by operating activities consisted of net income of $3.7 million and net changes in operating assets and liabilities of $14.4 million.

Non-cash items primarily related to stock-based compensation expense of $23.5 million.

The overall increase in cash from changes in our net operating assets and liabilities was the result of increasing collections of our accounts receivable and an increase in accrued liabilities, in part due to the $10.0 million Ducentis

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milestone liability recorded and payable as of March 31, 2026, partially offset by a reduction in accrued compensation as a result of paying our prior year annual bonus for employees in the first quarter of the current year.

The overall decrease in cash from changes in our net operating assets and liabilities was the result of increasing accounts receivable primarily related to increased sales volume and higher prepaid assets primarily related to the timing of payments, partially offset by an increase in accrued liabilities.

The increase in accrued liabilities was primarily due to higher accrued sales deductions from higher sales volume as well as the $10.0 million Ducentis milestone liability recorded and payable as of June 30, 2026, partially offset by a reduction in accrued compensation as a result of paying our prior year annual bonus for

employees in the first quarter of the current year.

Other fluctuations in our operating assets and liabilities were due to the timing of payments made to third parties.

During the three months ended March 31, 2025, net cash used by operating activities consisted of a net loss of $25.1 million, adjusted for certain non-cash charges of $12.4 million and offset by a decrease in net working capital of $17.7 million.

Non-cash items primarily included stock-based compensation expense of $9.8 million and amortization of intangible assets of $3.0 million.

During the six months ended June 30, 2025, net cash used in operating activities was $30.1 million, which consisted of a net loss of $40.9 million and a change in net operating assets and liabilities of $12.6 million, partially offset by net non-cash charges of $23.4 million.

The net non-cash charges were primarily related to stock-based compensation expense of $20.3 million and amortization of intangible assets of $3.5 million.

Net Cash Provided by (Used in) Investing Activities

During the three months ended March 31, 2026, net cash used by investing activities was comprised primarily of purchases of marketable securities of $62.2 million, partially offset by maturities of marketable securities of $50.8 million.

During the three months ended March 31, 2025, net cash provided by investing activities was comprised primarily of proceeds from maturities of marketable securities of $68.5 million, partially offset by purchases of marketable securities of $56.1 million.

During the six months ended June 30, 2026, net cash used in investing activities was comprised primarily of purchases of marketable securities of $127.7 million, partially offset by maturities of marketable securities of $101.3 million.

During the six months ended June 30, 2025, net cash provided by investing activities was $29.2 million, which was comprised primarily of proceeds from the maturities of marketable securities of $129.1 million, offset by purchases of marketable securities of $89.3 million and a milestone payment made to AstraZeneca of $10.0 million.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2026 and March 31, 2025, net cash provided by financing activities was comprised of proceeds from the issuance of our common stock upon exercise of stock options.

During the six months ended June 30, 2026, net cash provided by financing activities was $3.1 million, which was comprised primarily of $2.4 million of proceeds from the issuance of common stock upon the exercise of stock options, and $1.6 million of proceeds from the issuance of our common stock pursuant to our employee stock purchase plan, partially offset by a $1.0 million payment of the prepayment penalty associated with our tranche A term loan.

During the six months ended June 30, 2025, net cash provided by financing activities was $1.8 million, which was comprised primarily of $1.3 million of proceeds from the issuance of our common stock pursuant to our employee stock purchase plan.

Contractual Obligations and Contingent Liabilities

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What changed 10-Q

Item 2. Management’s Discussion and Analysis