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Item 7. Management’s Discussion and Analysis

2026-03-27 compared with 2025-03-28 · 139 added, 146 removed, 269 unchanged (51% of the section changed)

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BioXcel Therapeutics, Inc.

(“BTI” or the “Company”) is a biopharmaceutical company utilizing artificial intelligence (“AI”) to develop transformative medicines in neuroscience and, through the Company’s wholly owned subsidiary, OnkosXcel Therapeutics LLC (“OnkosXcel”), immuno-oncology.

We are focused on utilizing cutting-edge technology and innovative research to develop high-value therapeutics aimed at transforming patients’ lives.

We employ various AI platforms to reduce therapeutic development costs and potentially accelerate development timelines.

BTAI, “the Company”) is a biopharmaceutical company built on artificial intelligence (“AI”) to develop transformative medicines in neuroscience.

Our wholly owned subsidiary, OnkosXcel Therapeutics, is focused on the development of medicines in immuno-oncology.

We have utilized cutting-edge technology and innovative research to develop high-value therapeutics aimed at transforming patients’ lives.

We developed a proprietary AI platform to reduce therapeutic development costs and potentially accelerate development timelines.

Our approach leverages existing approved drugs and/or clinically evaluated product candidates together with big data and proprietary machine learning algorithms to identify new therapeutic indications.

We believe this differentiated approach has the potential to reduce the expense and time associated with drug development in diseases with substantial unmet medical needs.

We believe this differentiated approach has proven its potential to reduce the expense and time associated with drug development in diseases with substantial unmet medical needs.

Our most advanced neuroscience candidate is BXCL501.

In indications other than those approved by the United States (“U.S.”) Food and Drug Administration (“FDA”) as IGALMI ® , BXCL501 is an investigational, proprietary, orally dissolving film formulation of dexmedetomidine (or “Dex”) in development for the treatment of agitation associated with psychiatric and neurological disorders.

Our most advanced immuno-oncology asset, BXCL701, is an investigational oral innate immune activator being developed by OnkosXcel Therapeutics as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

In indications other than those approved by the U.S.

Food and Drug Administration (FDA) as IGALMI ® , BXCL501 is an investigational, proprietary, orally dissolving sublingual film formulation of dexmedetomidine in development for the treatment of agitation associated with psychiatric and neurological disorders.

Our most advanced immuno-oncology asset, BXCL701, is an investigational oral innate immune activator from OnkosXcel Therapeutics as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

On April 6, 2022, we announced that the FDA approved IGALMI ® (dexmedetomidine) sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults.

IGALMI ® is approved to be self-administrated by patients under the supervision of a health care provider.

On July 6, 2022, we announced that IGALMI ® was commercially available in doses of 120 and 180 micrograms.

We are continuing to develop BXCL501 for the acute treatment of agitation associated with bipolar disorders or schizophrenia in the at-home setting and for the acute treatment of agitation (non-daily) associated with dementia due to probable Alzheimer’s disease in the at-home setting and in care facilities.

As described further below, we have recently deprioritized the development of BXCL501 for certain indications, including development of BXCL501 as a potential adjunctive treatment for major depressive disorder (“MDD”), as well as our BXCL701 program except as noted in Part, Item 1, “Business” under the heading “Immuno-Oncology.”

In our SERENITY program, we are evaluating BXCL501 for use in the at-home setting for agitation associated with bipolar disorders or schizophrenia.

We completed Part 1 of the SERENITY III trial and announced topline results on May 25, 2023.

We reviewed our SERENITY III program with the FDA in Type C meetings on November 8, 2023 and March 6, 2024.

Based on the feedback received from the FDA to date, we are moving forward to evaluate at-home use of the 120 mcg dose of BXCL501, with safety as the primary objective and efficacy measures as exploratory endpoints to support continued efficacy in the at-home setting as recommended by the FDA in the November 8, 2023 meeting, for the acute treatment of agitation in bipolar disorders or schizophrenia.

We also plan to initiate a clinical study designed to enroll approximately 30 patient-informant dyads to evaluate the correlation between patient-and informant-reported efficacy measurement and the PEC scale, conducted by trained clinician raters as previously recommended by the FDA.

On September 5, 2024, we announced the initiation of patient enrollment in our SERENITY At-Home trial.

The pivotal Phase 3 trial is designed to evaluate the safety of BXCL501 in the at home setting.

On March 27, 2025, we announced that 24 clinical trial sites had been opened and 127 patients had been enrolled, representing 63% of the total required enrollment.

Topline data results, which are expected in the second half of 2025, are intended to support a supplemental new drug application (sNDA) submission to potentially expand the label of IGALMI® (dexmedetomidine) sublingual film.

See further discussion in “Our Neuroscience Clinical Programs” .

For our TRANQUILITY program, we have conducted clinical studies evaluating BXCL501 for the acute treatment of agitation associated with mild to moderate dementia in patients with probable Alzheimer’s disease, who reside in assisted living facilities (“ALFs”) and residential care settings and who required minimal assistance with activities of daily living.

On June 29, 2023, we announced positive topline data from our TRANQUILITY II trial, as well as information regarding certain investigator misconduct and noncompliance at a clinical trial site.

Since that time, we have taken steps to further investigate and evaluate the conduct of the TRANQUILITY II trial at this clinical site.

Based on these steps to date, we believe that there have been no further instances of misconduct or fraud or other findings that adversely impact the data integrity or reliability of the eligibility, safety, and efficacy data obtained at the clinical trial site in question.

On March 3, 2025 we announced that the U.S.

Food and Drug Administration (FDA) concluded that the inspection of a single site in its TRANQUILITY II Phase 3 trial was closed under 21 C.F.R.20.64(d)(3) and released the Establishment Inspection Report.

The FDA designated “Voluntary Action Indicated” for the site.

We had previously been conducting the TRANQUILITY III clinical trial, which was designed to evaluate the potential for BXCL501 to treat acute agitation in patients with moderate to severe dementia associated with probable Alzheimer’s disease living in nursing homes and who require moderate to full assistance with activities of daily living.

We paused enrollment in TRANQUILITY III due to the much higher-than-expected background frequency of episodes of agitation experienced by the first several patients enrolled in the study.

We held Type B/Breakthrough Therapy Designation meetings with the FDA on October 11, 2023 and on February 20, 2024 to obtain additional feedback on our plans for further development of BXCL501 for the treatment of agitation associated with dementia in patients with probable Alzheimer’s disease.

We are currently planning to generate additional Phase 3 efficacy and safety data, in a variety of relevant care-facility settings and across severity of dementia using the Positive and Negative Syndrome Scale-Excitatory Component (“PEC”) as the primary efficacy measure.

In addition, we plan to discuss the details of the requirement for long-term safety data at a future meeting with the FDA.

On September 5, 2024, we submitted to the FDA the proposed protocol for our TRANQUILITY In-Care Phase 3 trial designed to evaluate the efficacy and safety of a 60 mcg dose of BXCL501 for agitation associated with Alzheimer’s dementia.

On November 12, 2024, we announced that we had received feedback from the FDA on the proposed protocol.

See further discussion in “Our Neuroscience Clinical Programs” .

On October 15, 2024, we announced a U.S.

Department of Defense grant to the University of North Carolina to fund a study of BXCL501 (Sublingual Dexmedetomidine) for treating Acute Stress Disorder (ASD).

See further discussion in “Additional Neuroscience Opportunities” .

On July 6, 2022, we announced that IGALMI ® was commercially available in doses of 120 and 180 micrograms (“mcg”).

On August 27, 2025 we announced that the SERENITY At-Home Pivotal Phase 3 trial evaluating the safety of BXCL501, as an acute treatment for agitation associated with bipolar disorders or schizophrenia in the at-home setting, met its primary objective.

The data from this successful study will form the basis of the sNDA submission for a label expansion of IGALMI ® into the at-home setting.

The sNDA was filed with the FDA on January 14, 2026.

On September 10, 2025 we further announced positive topline exploratory efficacy data from the SERENITY At-Home Pivotal Phase 3 safety trial, which demonstrated BXCL501 had continued effects and consistent benefit with repeat dosing.

On October 10, 2025 we announced positive results from the correlation study related to exploratory efficacy outcomes from the SERENITY At-Home trial.

The results demonstrated a strong correlation between the clinician assessments and the patient or caregiver (informant) assessments.

The results, along with the data from the SERENITY At-Home trial, have been included in the sNDA filed with the FDA on January 14, 2026.

Our TRANQUILITY program is designed to evaluate BXCL501 as a potential treatment option for agitation associated with Alzheimer’s dementia in the outpatient or at-home setting and in-care facilities.

We have had several FDA meetings to discuss the development program, and the FDA has commented on the proposed protocol for our TRANQUILITY In-Care Phase 3 trial, which is designed to evaluate the efficacy and safety of a 60 mcg dose of BXCL501 for agitation associated with Alzheimer’s dementia.

The Company is advancing plans for initiation of the trial upon funding.

We have deprioritized the development of BXCL501 for certain other proposed indications.

Our most advanced immuno-oncology candidate, BXCL701, is an investigational oral innate immune activator from OnkosXcel Therapeutics as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

Development of our BXCK701 programs continues to be deprioritized.

IGALMI ® Commercialization Strategy

We continue to support IGALMI ® in the hospital setting with minimal commercial support.

On August 14, 2023, the Company announced it had implemented a shift in commercial strategy for IGALMI ® in the institutional setting, a reduction of in-hospital commercialization expenses, a suspension of programs no longer deemed core to the Company’s business, and a shift to focus on the development of BXCL501 for use in the at-home and care facilities in the treatment of acute agitation in schizophrenia and bipolar disorders, and in the treatment of acute agitation (non-daily) associated with dementia due to probable Alzheimer’s disease (collectively, the “Reprioritization”).

Following the Reprioritization, a small Corporate Account Director (“CAD”) team supported current customers and targeted Integrated Delivery Networks (“IDNs”) with educational support and contracting opportunities, while our trade operation supported customers with drug supply.

Following the Clinical Reprioritization, a small Corporate Account Director (“CAD”) team supported current customers and targeted Integrated Delivery Networks (“IDNs”) with educational support and contracting opportunities, while our trade operation supported customers with drug supply.

The goal of this approach was to help maintain current business and potentially broaden IGALMI ® utilization through volume contracting.

As part of the Clinical Prioritization in September 2024, further workforce reductions were made, including 9 additional marketing and sales employees.

The Clinical Prioritization staff reductions may have future impacts on net revenue.

Despite our reduction in commercial resources, net revenues from IGALMI ® product sales of $2,266 for the year ended December 31, 2024 were up 64% over net revenues from IGALMI ® product sales of $1,380 for the year ended December 31, 2023.

We believe this positive growth reflects increasing market acceptance and interest in our product.

As part of the Clinical Reprioritization in September 2024, further workforce reductions were made, including 9 additional marketing and sales employees.

The Clinical Reprioritization staff reductions may have had impacts on net revenue.

IGALMI ® product sales decreased to $642 for the year ended December 31, 2025 from $2,266 for the year ended December 31, 2024.

We are currently seeking potential commercial partners.

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Recent Developments

Nasdaq Delisting Notice

As previously reported, on September 20, 2024, we received a letter from Nasdaq Staff notifying us that for the 30 consecutive business days prior to the date of the letter, the Company’s market value of listed securities closed below the minimum $35 million requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company was granted a period of 180 calendar days, or until March 19, 2025, to regain compliance.

As anticipated, on March 20, 2025, the Company received another letter from the Staff stating that, as a result of the Company’s continued non-compliance with the MVLS Requirement, its securities would be delisted from Nasdaq unless the Company appeals the Staff’s delisting determination by requesting a hearing before the Nasdaq Panel.

The Company made timely request for a hearing before the Panel to appeal the Staff’s determination.

The Company’s common stock will remain listed and eligible for trading on Nasdaq at least pending the ultimate conclusion of the hearing process;

however, there can be no assurance that the Company will ultimately regain compliance and remain listed on Nasdaq.

Credit Agreement Amendments

Fifth Amendment to Credit Agreement

On November 21, 2024, we entered into the Fifth Amendment to our Credit Agreement (the “Fifth Amendment”), pursuant to which the Lenders agreed to, among other things, (i) waive the Credit Agreement’s covenant that the report and opinion the Company will receive from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2024 will not contain a “going concern” or similar qualification, (ii) permanently waive the Credit Agreement’s minimum revenue covenant, and (iii) waive the Fourth Amendment’s requirement that the Company raise, after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 in gross cash proceeds from the issuance of its common stock, warrants, and/or pre-funded warrants, and/or in cash and/or non-cash consideration from newly entered-into partnering transactions.

subordinated debt (subject to terms set forth in the Fifth Amendment), and/or (iv) asset sales permitted pursuant to the Credit Agreement or consented to by the Lenders (such capital raise, “Raise 2”), and (C) after the effective date of the Fifth Amendment and on or prior to the earlier of (x) August 15, 2025 and (y) the date that is 30 days after the final data readout of the SERENITY At-Home Phase 3 trial, at least $29,000 in net cash proceeds (including the proceeds from Raise 1 and Raise 2) from the same permitted capital raising activities listed in the preceding clause (B).

The Company met the requirements of Raise 1, discussed in Note 11, Common Stock Financing Activities .

The Company met the requirements of Raise 2, discussed in Note 20, Subsequent Events .

In connection with the Fifth Amendment and the required capital raises described in the preceding paragraph, the Lenders agreed to modify the Credit Agreement’s minimum liquidity covenant to require minimum cash liquidity of $7,500 (instead of $25,000) from and after the closing of Raise 1 until March 30, 2025.

On March 31, 2025, the minimum liquidity amount will increase to $10,000, and on September 30, 2025, the minimum liquidity amount will further increase to $15,000.

In connection with the Fifth Amendment, the Company paid a one-time amortization payment of $2,500 principal amount, together with accrued and unpaid interest and a portion of the prepayment fee and other fees payable in December 2024.

The Fifth Amendment also modified the interest rate of the loans provided under the Credit Agreement from a floating rate of Term SOFR plus 7.50% per annum, to a fixed rate of 13% per annum, retroactive to and effective as of September 30, 2024.

For the quarterly payment dates ending December 31, 2024, March 31, 2025, and June 30, 2025, t he Company has the ability to make interest payments of up to 10% per annum “in-kind” by capitalizing and adding such interest to the outstanding principal amount of the loans under the Credit Agreement .

In addition, pursuant to the Fifth Amendment, the Company will be required to make quarterly amortization payments equal to 5.0% of the principal amount of funded loans, together with applicable prepayment fees, beginning on March 31, 2026.

On the effective date of the Fifth Amendment and as a condition to effectiveness thereof, the Company’s wholly owned subsidiaries OnkosXcel Therapeutics, LLC and OnkosXcel Employee Holdings, LLC (collectively, “OnkosXcel”), which previously provided unsecured guarantees of the Company’s obligations under the Credit Agreement, granted security interests in substantially all of their assets to support such obligations.

The Fifth Amendment amended the negative covenants under the Credit Agreement to remove flexibility the Company and its subsidiaries previously had thereunder to undertake various transactions, including, without limitation, with respect to potential dispositions of OnkosXcel or out-licenses by OnkosXcel of its intellectual property.

Pursuant to the Fifth Amendment, the Company committed to appoint a new independent board director (subject to customary background checks, applicable law, confirmation of independence and Nasdaq rules), and to provide the independent director with various privileges and committee memberships on the board of directors of the Company (including the appointment of such director on committee to be formed to focus on capital raising and evaluate strategic options).

The Company also agreed to engage an investment banker reasonably acceptable to OFA and the Lenders to assist the Company and its board of directors with evaluating and exploring strategic options.

The Company also agreed to covenants requiring that the Company’s cash expenditures be monitored by the Lenders according to a board-approved budget provided to the Lenders prior to the signing of the Fifth Amendment, which cash budget will be updated on a bi-weekly basis going forward.

The Company will not be permitted to make disbursements for any two-week period in excess of 115% of the aggregate budgeted amount of disbursements for the applicable period.

Finally, pursuant to the Fifth Amendment, the Company is restricted from paying cash bonuses to its employees or executives during the fiscal years 2024 and 2025 without OFA’s consent or increasing the cash compensation for fiscal year 2025 for certain senior officers of the Company from their compensation for fiscal year 2024.

Company Warrants and Registration Rights Agreement

In connection with the closing of the Fifth Amendment, the Company agreed to, substantially concurrently with the closing of Raise 1, grant new warrants to the Lenders to purchase an aggregate of 313 shares of common stock on the

closing date of the Fifth Amendment, at an exercise price of $0.16 per share (the “New Warrants”).

The New Warrants will expire on the seventh anniversary of their issuance.

In addition, the Company agreed to, substantially concurrently with the closing of Raise 1, amend and restate all warrants to purchase stock of the Company issued to the Lenders prior to the effective date of the Fifth Amendment, to revise the exercise price thereunder to an exercise price equal to the lower of (i) the price per share of the common stock of the Company issued in Raise 1 and (ii) arithmetic average of the volume-weighted average price of the Company’s common stock on the Nasdaq Capital Market during the 30 trading days preceding Raise 1 (such existing warrants, as amended and restated, the “Original Warrants”).

The Original Warrants provide the Lenders with the right to purchase a total of 28 shares of common stock of the Company.

Sixth Amendment to Credit Agreement

On March 4, 2025, we entered into the Sixth Amendment to our Credit Agreement (the “Sixth Amendment”), pursuant to which the Lenders agreed to, among other things, delay the date on which we are required to engage an investment banker (which date has been subsequently extended to April 30, 2025).

IGALMI® sNDA Submission for At-Home Use and Milestone

On January 20, 2026, we announced we submitted a supplemental New Drug Application, or sNDA, to the FDA for IGALMI® in the at-home use setting for the acute treatment of agitation associated with bipolar disorders or schizophrenia.

This sNDA submission seeks to expand IGALMI’s label to include the broader at home patient population where there are no FDA-approved options currently available.

March 2026 Offering and Warrant Amendment

On March 10, 2026, we entered into a securities purchase agreement (the “March 2026 Offering”) with the purchaser named therein (the “Purchaser”).

Pursuant to the March 2026 Offering, we agreed to issue and sell to the Purchaser and the Purchaser agreed to buy in a registered direct offering (i) an aggregate of 2,480 shares (the “Shares”) of common stock, par value $0.001 per share (“Common Stock”) and accompanying warrants to purchase up to 2,480 shares of Common Stock at a combined offering price of $1.739 per Share and accompanying warrant, and (ii) Pre-Funded warrants to purchase up to 2,020 shares of Common Stock and accompanying warrants to purchase up to 2,020 shares of Common Stock, at a combined offering price of $1.738 per share underlying the Pre-Funded Warrants and accompanying warrant, which equals the offering price per Share and accompanying warrant less the $0.001 exercise price per share of the Pre-Funded Warrants, pursuant to our effective registration statement on Form S-3 (File No.

333-275261), including the base prospectus included therein, and a prospectus supplement filed with the Securities and Exchange Commission on March 10, 2026.

The accompanying warrants have an exercise price of $1.614 per share, are immediately exercisable upon issuance, and will expire on the five-year anniversary of the date of issuance.

The March 2026 Offering closed on March 11, 2026.

We received aggregate gross proceeds of approximately $7,825, before deducting placement agent fees and estimated offering expenses payable by us.

Rodman & Renshaw LLC (the “Placement Agent”) acted as our exclusive placement agent in connection with the March 2026 Offering.

As compensation in connection with the March 2026 Offering, we agreed to pay the Placement Agent a cash fee equal to 6.0% of the gross proceeds from the March 2026 Offering, and issue to the Placement Agent or its designees warrants to purchase a number of shares of Common Stock equal to 4.0% of the aggregate number of shares placed in the Registered Direct Offering (180,031 shares), at an exercise price equal to 125% of the offering price per share (or $2.0175 per share), with a term of five years from the commencement of the Registered Direct Offering (the “Placement Agent Warrants”).

We also agreed to reimburse the Placement Agent for certain expenses in an amount of up to $75 and to pay up to $16 for clearing and closing expenses.

In connection with the March 2026 Offering, pursuant to the terms of a Warrant Amendment Agreement, dated as of March 10, 2026 (the “Warrant Amendment Agreement”), the exercise price of certain outstanding warrants issued on March 27, 2024 and November 25, 2024 to purchase up to an aggregate of 1,385 shares of Common Stock held by the Purchaser was reduced to $1.614 per share, equal to the exercise price of the Accompanying Warrants issued in the March 2026 Offering, and the term of such warrants was extended to five years following the closing date of the March 2026 Offering.

The investor paid approximately $173 in exchange for the reduction in exercise price and the extension of the term of these warrants.

We paid the Placement Agent a cash fee of 6.0% of the gross proceeds paid for the warrant amendment.

Our Neuroscience Clinical Programs

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Product Revenue, Net

Revenue relates to sales of IGALMI ® and reflect limited market access since commercial launch in July 2022.

Revenue relates to sales of IGALMI ® and reflects limited market access since commercial launch in July 2022.

The revenues are net of rebates, chargebacks, discounts, and other adjustments.

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Restructuring Costs

2023 Strategic Reprioritization

On August 8, 2023, our Board of Directors approved a broad-based strategic reprioritization (the “Reprioritization”).

2023 Clinical Reprioritization

On August 8, 2023, our Board of Directors approved a broad-based strategic reprioritization (the “Clinical Reprioritization”).

We determined to take actions to reduce certain operational and workforce expenses no longer deemed core to ongoing operations to extend its cash runway and drive innovation and growth in high-potential clinical development and value-creating opportunities.

These actions included a shift in commercial strategy for IGALMI ® in the institutional setting as described, a reduction of in-hospital commercialization expenses, a de-prioritization of programs no longer determined to be core to ongoing operations, and a prioritization on at-home treatment setting opportunities for BXCL501, all as described in Part I, Item 1, “Business”.

As part of this strategy, our Board of Directors approved a reduction of approximately 60% of our workforce.

Annualized operating expenses were expected to be reduced by approximately $80,000.

The Reprioritization was substantially completed by the end of 2023.

As a result of the Reprioritization, the Company recorded restructuring costs of $4,163 in the year ended December 31, 2023.

These costs consisted of severance and benefit costs of $4,063 and contract termination costs of $100.

The Company paid $3,998 of severance and benefit costs and $100 of contract termination costs during the year ended December 31, 2023.

Remaining costs were paid during the first quarter of 2024.

2024 Clinical Prioritization

As discussed in Note 4, Restructuring , on May 8, 2024 the Company took additional actions as part of its continued efforts to preserve cash and prioritize investment in its core clinical programs.

As part of these actions, the Company initiated a further reduction of approximately 15% of the Company’s then current workforce.

The Company notified impacted employees on May 8, 2024 and recorded total restructuring costs of $856 for the three months ended June 30, 2024.

These costs consisted of severance and benefit costs, all of which were paid during the three month period ended June 30, 2024.

On September 17, 2024, the Company approved a plan for an additional reduction in its workforce by 15 employees (including all but one marketing and sales employee), or approximately 28% of the Company’s headcount (the “Clinical Prioritization”), in order to extend its cash runway and prioritize investment on the clinical development of its lead neuroscience asset, BXCL501.

The Company incurred aggregate charges in connection with the Clinical Prioritization of $1,586 which relate primarily to severance and benefits costs.

Accordingly, the Company recorded a restructuring charge of $1,553 in the third quarter 2024, and $33 in the fourth quarter.

The Company completed the Clinical Prioritization in October 2024, and paid $983 of the related costs during the fourth quarter of 2024.

The remaining costs of approximately $603, is included in Accrued Expenses on the Consolidated Balance at December 31, 2024, and is expected to be paid in the first quarter of 2025.

As a result of these actions, operating costs of $69,511 for the year ended December 31, 2024 decreased by approximately $103,651 compared to operating costs of $173,162 for the year ended December 31, 2023.

Net cash used in operating activities of $72,027 for the year ended December 31, 2024 decreased by approximately $82,979, compared to Net cash used in operating activities of $155,006 for the year ended December 31, 2023.

These achievements demonstrate the Company’s operational capability and commitment to be focused on limited objectives in the near term.

As part of this strategy, the Company’s Board of Directors approved a reduction of approximately 60% of the Company’s workforce.

The Company notified impacted employees on August 14, 2023.

The Clinical Reprioritization was substantially complete as of December 31, 2023, and the remaining restructuring costs were paid during the first quarter of 2024.

2024 Clinical Reprioritization

On May 8, 2024, the Company took actions as part of its continued efforts to preserve cash and prioritize investment in its core clinical programs.

The Company reduced its workforce by approximately 15% and notified impacted employees on May 8, 2024.

All related restructuring costs were paid in the second quarter of 2024.

On September 17, 2024, the Company reduced its workforce by an additional 28% to extend its cash runway and prioritize clinical development of BXCL501.

The Company completed the Clinical Reprioritization in October 2024, paid $475 of the related costs during the first quarter of 2025, and paid the remaining $128 during the second quarter of 2025.

Management believes that, after giving effect to the Clinical Reprioritization and additional restructuring activities completed, the Company’s cash, cash equivalents and restricted cash of $28,757 as of December 31, 2025 and proceeds subsequently raised pursuant to the ATM Program and pursuant to its Registered Direct Offering in March 2026, will allow the Company to fund its operations and meet its liquidity requirements into the second quarter of 2026.

Other (Income) Expense

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Commercial sales of IGALMI ® launched in July 2022.

Product revenue, net for the years ended December 31, 2024 and 2023 was $2,266 and $1,380, respectively, comprised of sales of IGALMI ® reflecting an increase of 64%.

As part of the Company’s Reprioritization in August 2023, the IGALMI ® commercial team shifted focus to a hospital/contracting strategy with a corporate account director team to work with large Integrated Delivery Networks and drive sales utilizing a top-down approach.

As part of the Clinical Prioritization in September 2024, further workforce reductions were made.

We are currently seeking potential commercial partners.

Our continued commercialization efforts for IGALMI ® are designed to build the foundation to launch additional potential follow-on indications, if any.

As part of the Company’s Reprioritization, the IGALMI ® commercial team shifted focus to a hospital/contracting strategy with a Corporate Account Director (“CAD”) team.

The goal of the realigned CAD team is to work with large hospital/Integrated Delivery Network (“IDN”) and drive sales utilizing a top-down approach, allowing the Company to continue to make inroads into the institutional market in a more cost-efficient manner.

IGALMI ® product revenue, net for the years ended December 31, 2025 and 2024 was $642 and $2,266, respectively.

The decrease in sales was primarily due to a reduction in bulk sales to existing customers, an increase in GPO discounts, and a reduction in commercial activities due to the Clinical Reprioritization in May 2024 and September 2024.

Cost of Goods Sold

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We entered into a commercial supply agreement with ARx, LLC (“ARx”) pursuant to which ARx has agreed to exclusively manufacture and supply us with all of our worldwide demand of film formulation of Dex to be used for the commercial supply of IGALMI ® and for ongoing clinical trials of our product candidate BXCL501, subject to certain alternative supply provisions.

The increase in Cost of goods sold for the year ended December 31, 2024 is primarily the result of increased sales and a $474 increase in the reserve for excess and obsolete inventory, compared to the prior year.

The decrease in Cost of goods sold for the year ended December 31, 2025 is primarily the result of lower charges for reserves for excess or obsolete inventory compared to the same period in 2024.

Charges for reserves for excess or obsolete inventory were $108 and $1,980 for the year ended December 31, 2025 and 2024, respectively.

Research and Development Expense

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The decrease of $184 for the year ended December 31, 2025, compared to the year ended December 31, 2024 is primarily attributable to the following:

● A decrease in clinical trials expense was a result of reduced costs associated with the wind down of the SERENITY III study to evaluate BXCL501 for at home use for the acute treatment of agitation related to schizophrenia and bipolar disorders.

In addition, the TRANQUILITY II study of BXCL501 for the potential treatment of agitation in patients with Alzheimer’s disease was completed in 2023, and the reduction of these costs were partially offset by the September 2024 launch of SERENITY-At Home trial.

● A decrease in personnel and related costs related to the Clinical Prioritization.

● A decrease in Chemical, manufacturing and controls (“CMC”) costs due to lower CMC costs related to decreased clinical trial activities.

● A decrease in non-cash stock-based compensation due to higher award forfeitures in 2024.

● Decreased personnel and related costs related to the Clinical Reprioritization.

● Decreased non-cash stock compensation costs as a result of lower headcount coupled with reversals in accelerated stock compensation expense for employees terminated in the first quarter of 2025 resulting in a net $514 decrease.

● Decreased professional fees due to lower pharmacology costs, research and discovery costs, toxicology, and consulting costs.

● Increased clinical trials expense due to the execution of the SERENITY At-Home pivotal Phase 3 safety trial intended to support a supplemental new drug application to potentially expand the label of IGALMI ® into the outpatient or at-home setting.

Following IGALMI ® ’s approval by the FDA, we capitalize costs related to commercial production of IGALMI ® as inventory and expense those CMC costs related to clinical trials.

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The decrease of $13,998 for the year ended December 31, 2025, relative to the year ended December 31, 2024 is primarily attributable to:

● A decrease in personnel costs due to the Clinical Prioritization, reducing 9 full-time employees.

● Decreased professional fees, primarily related to lower legal costs in 2024 compared to 2023 for the investigation of our TRANQUILITY II study, and reductions in consulting and recruiting fees in 2024.

● Decreased other expenses as a result of lower headcount.

● Decreased non-cash stock-based compensation costs due to increased award forfeitures in 2024 and lower headcount.

● Decreased personnel costs due to the Clinical Reprioritization in May 2024 and September 2024.

● Decreased professional fees, primarily related to lower legal costs in 2025 compared to 2024 and reductions in consulting for the year ended December 31, 2025.

● Decreased non-cash stock-based compensation costs as a result of lower headcount.

● Decreased other expenses, primarily travel expenses, as a result of lower headcount.

● Decreased commercial and marketing research costs.

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Restructuring costs were $194 and $2,441 for the years ended December 31, 2025 and 2024, respectively.

See “Components of Our Results of Operations - Restructuring Costs” above for a discussion of the Company’s Reprioritization and restructuring activities.

See “Components of Our Results of Operations - Restructuring Costs” above for a discussion of the Company’s Clinical Reprioritization and restructuring activities.

Other (Income) Expense

Interest expense increased to $15,129 for the year ended December 31, 2024 compared to $13,314 for the year ended December 31, 2023, due to an increase in interest rates compared to the prior year and higher average debt balances during the year due to borrowings under the Credit Agreement.

Interest expense increased to $16,984 for the year ended December 31, 2025 compared to $15,129 for the year ended December 31, 2024, primarily due to higher debt balances and interest rates under the Credit Agreement.

The expense was partially offset by interest income earned on cash and cash equivalents that were held primarily in short-term money market funds.

Interest income decreased to $1,066 for the year ended December 31, 2025 compared to $2,602 for the year ended December 31, 2024, due to lower average cash balances during the year.

Other (income) expense, net is primarily associated with changes in fair value of derivative financial instruments for the period, which relate to instruments associated with the Credit Agreement.

Other (income) expense, net is primarily associated with changes in fair value of derivative financial instruments for the period, which relate to instruments associated with the Credit Agreement and the Company’s registered direct equity offerings.

Inflation generally affects us by increasing our labor costs and clinical trial costs.

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Liquidity and Capital Resources

As of December 31, 2024, we had cash and cash equivalents of $29,854, working capital of $15,161 and stockholders’ deficit of $93,101.

As of December 31, 2025, we had cash, cash equivalents and restricted cash of $28,757, negative working capital of $9,241 and stockholders’ deficit of $95,463.

Net cash used in operating activities was $57,615 and $72,027 for the years ended December 31, 2025 and 2024, respectively.

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We have primarily focused our efforts on raising capital and building the products in our pipeline, and, although we generate revenue from sales of IGALMI ® , we do not expect to generate positive cash flows from operations in the near term.

Since our inception, our operations have been financed primarily from proceeds from the sale of equity securities, including our initial public offering, private placements of our common stock, registered offerings of our common stock, an Open Market Sale Agreement (as amended, supplemented and/or restated from time to time, the “Sale Agreement”) with Jefferies LLC (“Jefferies”), and borrowings under our Credit Agreement (as described below).

Since our inception, our operations have been financed primarily from proceeds from the sale of equity securities, including our initial public offering, private placements of our common stock, registered offerings of our common stock, an Equity Distribution Agreement with Canaccord Genuity LLC (“Canaccord”), and borrowings under our Credit Agreement (as described below).

We have not yet established an ongoing source of revenue sufficient to cover our operating costs and will need to do so in future periods.

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(i) the conditions precedent to the borrowing of Tranche C (as described in the preceding bullet point) have been satisfied, and (ii) our total net revenue attributable to sales of BXCL501 (for the avoidance of doubt, including any revenues attributable to use of BXCL501 for opioid withdrawal) for the trailing twelve consecutive month period exceeding a specified amount.

As of December 31, 2025, there are no remaining unfunded commitments under the Credit Agreement.

The Second Amendment also modified the interest rate of the loans provided under the Credit Agreement to be a floating rate per annum equal to the secured overnight financing rate (“SOFR”) (subject to a SOFR floor of 2.5% and a cap of 5.5%) plus 7.5%.

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On March 20, 2024, we entered into the Fourth Amendment to the Credit Agreement (“the Fourth Amendment”), pursuant to which the Lenders waived the Credit Agreement’s covenant that the report and opinion the Company received from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2023 not contain a “going concern” or similar qualification.

The Fourth Amendment included covenants that we receive, (i) after the effective date of the Fourth Amendment and on or before April 15, 2024, at least $25,000 in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or in non-refundable cash consideration from partnering transactions entered into after the effective date of the Fourth Amendment (so long as such partnering transactions would not require us or any of our

subsidiaries to make any cash investments in connection with the partnering transactions and no such cash investments are made), and (ii) after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 (for the avoidance of doubt, inclusive of amounts previously counted toward the preceding clause (i)) in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or in cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent (as defined in the Credit Agreement) in its sole discretion ) from partnering transactions entered into after the effective date of the Fourth Amendment.

and/or pre-funded warrants, and/or in non-refundable cash consideration from partnering transactions entered into after the effective date of the Fourth Amendment (so long as such partnering transactions would not require us or any of our subsidiaries to make any cash investments in connection with the partnering transactions and no such cash investments are made), and (ii) after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 (for the avoidance of doubt, inclusive of amounts previously counted toward the preceding clause (i)) in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or in cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent (as defined in the Credit Agreement) in its sole discretion ) from partnering transactions entered into after the effective date of the Fourth Amendment.

Failure to perform this covenant would constitute (A) a default under the Credit Agreement and (B) an event of default under the Credit Agreement, subject to a cure period, in the case of clause (i) of the preceding sentence, until May 15, 2024 (for the avoidance of doubt, failure to perform clause (ii) would constitute an immediate event of default under the Credit Agreement without any cure or grace period).

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Pursuant to the Fifth Amendment, the Lenders agreed to, among other things, (i) waive the Credit Agreement’s covenant that the report and opinion the Company will receive from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2024 will not contain a “going concern” or similar qualification, (ii) permanently waive the Credit Agreement’s minimum revenue covenant, and (iii) waive the Fourth Amendment’s requirement that the Company raise, after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 in gross cash proceeds from the issuance of its common stock, warrants, and/or pre-funded warrants, and/or in cash and/or non-cash consideration from newly entered-into partnering transactions.

The Fifth Amendment included a new capital raising covenant requiring that the Company receive (A) after the effective date of the Fifth Amendment and on or prior to November 27,2024, at least $7,000 in gross cash proceeds from the issuance of the Company’s common stock, warrants and/or pre-funded warrants(“Raise 1”), (B) after the effective date of the Fifth Amendment and on or before March 15, 2025 (provided that the Company was required to use its commercially reasonable efforts to satisfy the requirement by February 15, 2025), at least $18,000 in net cash proceeds (including the proceeds of Raise 1) from (i) the issuance of the Company’s common stock, warrants and/or pre-funded warrants, (ii) non-refundable cash consideration from partnering transactions entered into after the effective date of the Fifth Amendment (so long as such partnering transactions would not require the Company or any of its subsidiaries to make any cash investments in connection with the partnering transactions and no such cash investments are made), (iii) the issuance of the Company’s subordinated debt (subject to terms set forth in the Fifth Amendment), and/or (iv) asset sales permitted pursuant to the Credit Agreement or consented to by the Lenders (such capital raise, “Raise 2”), and (C) after the effective date of the Fifth Amendment and on or prior to the earlier of (x) August 15, 2025 and (y) the date that is 30 days after the final data readout of the SERENITY At-Home Phase 3 trial, at least $29,000 in net cash proceeds (including the proceeds from Raise 1 and Raise 2) from the same permitted capital raising activities listed in the preceding clause (B).

from Raise 1 and Raise 2) from the same permitted capital raising activities listed in the preceding clause (B) (“Raise 3”).

The Company has raised sufficient net proceeds to date to satisfy this requirement.

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Finally, pursuant to the Fifth Amendment, the Company is restricted from paying cash bonuses its employees or executives during the fiscal years 2024 and 2025 without OFA’s consent or increasing the cash compensation for fiscal year 2025for certain senior officers of the Company from their compensation for fiscal year 2024.

As of December 31, 2024, we had aggregate principal indebtedness of $106,722 outstanding under the Credit Agreement.

On March 4, 2025, the Company entered into the Sixth Amendment to our Credit Agreement, which extended the deadline to engage an investment banker.

The Company subsequently entered into the Seventh and Eighth Amendments on March 12, 2025 and April 22, 2025, respectively, and collectively, these amendments extended the deadline to July 31, 2025.

The Company retained an investment banker on July 29, 2025.

The Credit Agreement contains, among other things, a covenant requiring that our audited annual financial statements included in our Annual Report be delivered without a "going concern" or like qualification or exception.

On March 27, 2026, we entered into the Ninth Amendment to Credit Agreement and Guaranty (the “Ninth Amendment”).

Pursuant to the Ninth Amendment, the Lenders agreed to (i) waive the Credit Agreement’s covenant that the report and opinion the

Company will receive from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2025 will not contain a “going concern” or similar qualification, and (ii) reduce the Credit Agreement’s minimum liquidity covenant to require minimum cash liquidity of $12.50 million from and after March 31, 2026 (instead of $15.0 million).

The Ninth Amendment’s effectiveness is subject to various customary conditions precedent, as well as conditions subsequent requiring the Company to:

● on or before March 31, 2026, make a one-time prepayment of the principal amount of $2.50 million, together with accrued and unpaid interest thereon;

● on April 15, 2026, either (i) pay to the Lenders an amendment fee in cash in an amount equal to approximately $2.0 million or (ii) grant new warrants to the Lenders to purchase 1,353,729 shares of common stock of the Company, at an exercise price of $0.01 per share (the “New Warrants”);

● in connection with the receipt by the Company of any gross cash proceeds from (i) the issuance of the Company’s common stock, warrants and/or pre-funded warrants, (ii) non-refundable cash consideration from partnering transactions entered into after the effective date of the fifth amendment to the Credit Agreement, (iii) the issuance of the Company’s subordinated debt and/or (iv) sales by the Company of its assets, in each case ((i) through (iv)), in transactions permitted under the Credit Agreement, make a prepayment of the loans under the Credit Agreement in an aggregate principal amount equal to 50% of such gross cash proceeds, together with accrued interest thereon and any fees or premia (including prepayment premium) payable in connection therewith;

provided, that the foregoing requirement will not apply (A) with respect to the first $2.50 million in the aggregate of proceeds raised from Capital Raise Activities (as defined in the Credit Agreement) and (B) once the aggregate principal amount of the Loans prepaid pursuant to one or more Capital Raise Prepayments equals $2.50 million.

On the date of issuance of the New Warrants, if applicable, the Company agreed to amend and restate its Third Amended and Restated Registration Rights Agreement with the Lenders, dated November 25, 2024.

Pursuant to such amendment and restatement (the “Fourth Amended and Restated Registration Rights Agreement”), the Company will agree to register the shares of common stock issuable under the New Warrants, in addition to all warrants previously issued to the Lenders, for resale.

As of December 31, 2025, the Company had aggregate principal indebtedness of $112,156 outstanding under the Credit Agreement.

On March 31, 2026, the Company is required to make (i) the required payment of $9,252, representing an amortization payment of 5.0% of the principal amount of funded loans, together with accrued and unpaid interest and a portion of the prepayment fee and (ii) one-time prepayment of the principal amount of $2,500 in connection with the Ninth Amendment.

Company Warrants and Registration Rights Agreement

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The Equity Investment Right was terminated as part of the Fifth Amendment.

Also, in connection with the closing of the Fifth Amendment, the Company agreed to, substantially concurrently with the closing of Raise 1, grant new warrants to the

Lenders to purchase an aggregate of 313 shares of common stock, at an exercise price of $0.16 per share (the “New Warrants”).

The New Warrants will expire on the seventh anniversary of their issuance.

Also, in connection with the closing of the Fifth Amendment, the Company agreed to, substantially concurrently with the closing of Raise 1, grant new warrants to the Lenders to purchase an aggregate of 313 shares of common stock, at an exercise price of $0.16 per share (the “New Warrants”).

During the nine months ended September 30, 2025, the Company issued 284 shares of Common Stock in connection with the cashless exercises of the 313 New Warrants.

common stock on the Nasdaq Capital Market during the 30 trading days preceding Raise 1 (such existing warrants, as amended and restated, the “Original Warrants”).

The Original Warrants provide the Lenders with the right to purchase a total of 28 shares of common stock of the Company.

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As of December 31, 2025, we were in compliance with all restrictive and financial covenants under the Credit Agreement.

In May 2021, we entered into the Sale Agreement with Jefferies pursuant to which we could offer and sell shares of our common stock, having an aggregate offering price of up to $100,000, from time to time, through an “at the market offering” program under which Jefferies will act as sale agent.

On November 1, 2023, we entered into an amendment to the Sale Agreement with Jefferies to increase the size of the “at the market offering” program;

pursuant to the Sale Agreement, as amended, we can offer and sell shares of our common stock having an aggregate offering price of up to $150,000 (excluding any shares of common stock already sold in the “at the market offering” program prior to the date of the amendment), from time to time, through an “at the market offering” program under which Jefferies will act as sale agent.

During the year ended December 31, 2024, we sold 240 shares under the Sale Agreement for net proceeds of $7,451.

During the year ended December 31, 2023, we sold 88 shares under the Sale Agreement for net proceeds of $26,221.

We terminated the Sales Agreement with Jefferies on March 26, 2025.

March 2025 Registered Direct Offering

On March 3, 2025, the Company entered into a purchase agreement (the “March 2025 Offering”) pursuant to which the Company agreed to issue and sell an aggregate of (i) 188 shares of Common Stock at an offering price of $3.50 per Share, (ii) Pre-Funded Warrants to purchase up to 3,812 shares of Common Stock, at an offering price of $3.499 per share underlying the Pre-Funded Warrants, which equals the offering price per share less the $0.001 exercise price per share of the Pre-Funded Warrants, and (iii) an aggregate of 4,000 accompanying warrants (the “March 2025 Accompanying Warrants”) to purchase up to 4,000 shares of Common Stock at an offering price of $4.20 per accompanying warrant.

The Pre-Funded Warrants have an exercise price per share of common stock equal to $0.001 per share.

For the year ended December 31, 2025, all 3,812 Pre-Funded Warrants were exercised and the same number of common stock were issued in exchange for $4 of proceeds.

For the year ended December 31, 2025, 2,300 of the March 2025 Accompanying Warrants were exercised and the same number of common stock were issued in exchange for $9,660 of proceeds.

ATM Program - Canaccord

In April 2025, we entered into an Equity Distribution Agreement with Canaccord to sell shares of the Company’s common stock, with aggregate gross sales proceeds of up to $8,135, from time to time, through an “at the market” equity offering program under which Canaccord will act as sales agent.

In August 2025, the Company increased the maximum amount of shares that are eligible to be sold pursuant to the Equity Distribution Agreement to allow for the offer and sale of up to an additional $3,500 of its common stock.

Following the sale of common stock under the Equity Distribution Agreement in August 2025, the Company raised sufficient net proceeds to satisfy the Raise 3 requirement under the Fifth Amendment to the Credit Agreement.

In August 2025, the Company again increased the maximum amount of shares that are eligible to be sold pursuant to the Equity Distribution Agreement to allow for the offer and sale of up to $80,000 shares of common stock pursuant to the Equity Distribution Agreement.

For the year ended December 31, 2025, the Company sold 12,087 shares for gross proceeds of $34,476 and received proceeds of $33,670, net of issuance costs of $806.

Subsequent to December 31, 2025, the Company sold 245 shares for gross proceeds of $498 and received proceeds of $488, net of issuance costs of $10.

March 2026 Offering and Warrant Amendment

On March 10, 2026, we entered into a securities purchase agreement (the “March 2026 Offering”) with the purchaser named therein (the “Purchaser”).

333-275261), including the base prospectus included therein, and a prospectus supplement filed with the Securities and Exchange Commission on March 10, 2026.

The accompanying warrants have an exercise price of $1.614 per share, are immediately exercisable upon issuance, and will expire on the five-year anniversary of the date of issuance.

The March 2026 Offering closed on March 11, 2026.

We received aggregate gross proceeds of approximately $7,825, before deducting placement agent fees and estimated offering expenses payable by us.

Rodman & Renshaw LLC (the “Placement Agent”) acted as our exclusive placement agent in connection with the March 2026 Offering.

We also agreed to reimburse the Placement Agent for certain expenses in an amount of up to $75 and to pay up to $16 for clearing and closing expenses.

The investor paid approximately $173 in exchange for the reduction in exercise price and the extension of the term of these warrants.

We paid the Placement Agent a cash fee of 6.0% of the gross proceeds paid for the warrant amendment.

Year ended December 31,

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Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $57,615 and was primarily attributable to our net loss of $69,897 and an increase of $8,156 in prepaid expenses, other current assets and other assets, offset by a $6,973 increase in accounts payable, accrued expenses, due to related parties, and other current liabilities, $5,434 in payable in kind interest on our credit agreement, a $3,505 decrease in the change in fair value of our derivative liability, and $2,767 in non-cash stock-based compensation,

Net cash used in operating activities for the year ended December 31, 2024 was $72,027 and was primarily attributable to our net loss of $59,599, a $20,180 increase in the change in fair value of our derivative liability, a $4,327 decrease in accounts payable, accrued expenses, due to related parties, and other current liabilities, and a $1,872 increase in prepaid expenses, other current assets and other assets, offset by $6,543 in payable in kind interest on our credit agreement and $6,156 in non-cash stock-based compensation.

Net cash used in operating activities for the year ended December 31, 2023 was $155,006 and was primarily attributable to our net loss of $179,053 and a $3,219 decrease in accounts payable, accrued expenses, due to related parties, and other current liabilities, partially offset by a $2,888 decrease in prepaid expenses, other current assets and other assets, $18,614 in non-cash stock-based compensation, and a $4,369 increase in accrued and payable in kind interest.

Investing Activities

Net cash used in investing activities for the years ended December 31, 2024 and 2023, respectively was $0 and $20 and was primarily attributable to leasehold improvements in 2023.

Net cash used in investing activities for the years ended December 31, 2025 and 2024, respectively was $0 and $0.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025, was $56,518 and was primarily attributable to net proceeds of $12,957 received from the March 2025 registered direct offering, net proceeds from the sale of common stock under the Equity Distribution Agreement with Canaccord of $33,670, and net proceeds from the exercise of warrants of $9,660.

Net cash provided by financing activities for the year ended December 31, 2024, was $36,660 and was primarily attributable to net proceeds of $39,214 from the sale of common stock under public offerings and the Sale Agreement with Jefferies, less a debt principal payment of $2,500.

Net cash provided by financing activities for the year ended December 31, 2023, was $26,522 and was primarily attributable to net proceeds of $26,221 from the sale of common stock under the Sale Agreement with Jefferies and net proceeds of $508 from the exercise of stock options.

Operating Capital and Capital Expenditure Requirements

We expect to continue to incur significant and increasing operating losses at least for the next several years as we commercialize IGALMI ® and as we expand our clinical trials of and seek marketing approval focused on BXCL501 while pursuing development of additional product candidates for BXCL502, BXCL701 and BXCL702.

We expect to continue to incur net losses in the near term.

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● continue to operate as a public company.

We believe that our existing cash and cash equivalents as of December 31, 2024 will not be sufficient to enable us to fund operating expenses and capital expenditure requirements for at least the next 12 months from the date of the issuance of the consolidated financial statements included in this Annual Report on Form 10-K, including funding our ongoing research and development and commercialization efforts.

In particular, we believe that our cash and cash equivalents of $29,854 as of December 31, 2024 plus the approximately of $14,000 gross proceeds from our financing in March 2025 will allow us to fund our operations and meet our liquidity requirements into the third quarter of 2025, assuming we are able to comply with the covenants under our Credit Agreement.

We believe that our existing cash, cash equivalents and restricted cash as of December 31, 2025 will not be sufficient to enable us to fund operating expenses and capital expenditure requirements for at least the next 12 months from the date of the issuance of the consolidated financial statements included in this Annual Report on Form 10-K, including funding our ongoing research and development and commercialization efforts.

In particular, we believe that our cash, cash equivalents and restricted cash of $28,757 as of December 31, 2025 plus the additional capital raised subsequent to December 31, 2025 will allow us to fund our operations and meet our liquidity requirements into the second quarter of 2026.

We expect that we will need to obtain substantial additional funding to fund our ongoing operations.

To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interests of our existing stockholders may be materially diluted, and the terms of these securities could include liquidation or other preferences that could adversely affect the rights of our existing stockholders.

Under the terms of the Ninth Amendment, following receipt of aggregated gross proceeds from (a) the issuance of the Company’s common stock, warrants and/or pre-funded warrants, (b) non-refundable cash consideration from partnering transactions, (c) the issuance of the Company’s subordinated debt and/or (d) sales by the Company of its assets, in each case ((a) through (d)), in transactions permitted under the Credit Agreement (“Capital Raise Activities”), make a prepayment of the loans under the Credit Agreement in an aggregate principal amount equal to 50% of such gross cash proceeds, together with accrued interest thereon and any fees or premia (including prepayment premium) payable in connection therewith;

provided that such prepayment requirement shall not be applicable (A) with respect to the first $2.5 million gross proceeds received from Capital Raise Activities and (B) once the aggregate principal amount of the prepaid pursuant to one or more of such prepayments equals $2.5 million.

In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, which could adversely impact our ability to conduct our business.

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The Company has met the minimum requirements for the first 4 years ending in 2025.

The remaining minimum commitments for years 4 and 5 (2025 and 2026) is $2,000 each year.

The remaining minimum commitments for year 5 (2026) is $2,000.

In February 2022, we signed a distribution agreement with a third party to distribute product related to BXCL501 in the U.S.

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The Company has granted stock options, restricted stock units and profit units to employees, directors, and consultants, as well as warrants to other third parties.

For employee, director and consultant awards, the value of each grant is estimated on the date of grant using a Black-Scholes option-pricing model.

The fair value of restricted stock units is estimated on the date of grant and is equal to the closing market price per share of our common stock on that date.

For employee, director and consultant stock options, profit units and warrants, the value of each grant is estimated on the date of grant using a Black-Scholes option-pricing model.

The Black-Scholes pricing model incorporates the volatility of the price of BTI’s stock, the risk-free interest rate, the estimated life of the award, the closing market price of the Company’s stock and the exercise price of the award.

Management bases the Company’s estimates of stock price volatility on the historical volatility of the Company’s common stock, as well as a peer group of comparable companies.

Management bases the Company’s estimates of stock price volatility on the historical volatility of the Company’s common stock.

However, these estimates are neither predictive nor indicative of the future performance of the Company’s stock.

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This process involves reviewing open contracts, communicating with personnel to identify services that have been performed on behalf of the Company and estimating the level of service performed and the associated cost incurred for the service when BTI has not yet been invoiced or otherwise notified of the actual cost.

The majority of the Company’s service providers invoice

BTI monthly for services performed or when contractual milestones are met.

The majority of the Company’s service providers invoice BTI monthly for services performed or when contractual milestones are met.

BTI management makes estimates of prepaid and/or accrued expenses, including research and development expenses, as of each reporting date in the Company’s consolidated financial statements based on facts and circumstances known to management at that time.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis