What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-28 compared with 2024-03-22 · 194 added, 132 removed, 221 unchanged (60% of the section changed)

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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.

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

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

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

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.

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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.

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

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 plan to move 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 conduct a clinical study designed to enroll approximately 30 patients to evaluate the correlation between patient-reported or informant-reported efficacy with trained rater-reported efficacy using PEC measurements, which the FDA had previously recommended.

Strategic Reprioritization

On August 8, 2023, our Board of Directors approved a broad-based strategic reprioritization (the “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 are expected to be reduced by approximately $80,000.

As of December 31, 2023, the Reprioritization was substantially completed.

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.

Any remaining costs are expected to be paid during the first quarter of 2024.

IGALMI TM Revised Commercialization Strategy

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

The goal of the realigned CAD team is to work with large IDNs and drive sales utilizing a top-down approach.

Over time, the revised commercial effort is expected to allow the Company to continue to make inroads into the institutional market in a more cost-efficient manner.

Commercial efforts for the IGALMI TM launch were impacted significantly in the six months ended December 31, 2023, due to the reduction in force, which included the elimination of sales, marketing, and commercial operations staff.

The realigned CAD team generated $376 in net revenue for the three-month period ended December 31, 2023 through legacy sales and volume-based contracts, up from $341 for the three-month period ended September 30, 2023.

Net revenues from IGALMI™ product sales for the years ended December 31, 2023 and 2022 were $1,380 and $375, respectively.

On October 30, 2023, we announced that the Centers for Medicare & Medicaid Services (“CMS”) assigned a new J-Code for IGALMI TM (J1105).

J-Codes are permanent codes used by healthcare providers, commercial insurance plans, and government payers to help standardize the reimbursement process.

A J-Code can help simplify claims submission as compared to use of a miscellaneous or unlisted code, which in turn can streamline the billing and reimbursement process.

The J-Code for IGALMI TM has been published online in the CMS HCPCS Application Summaries and Coding Recommendations, Third Quarter, 2023 HCPCS Coding Cycle.

We believe this J-Code will facilitate access to IGALMI TM for patients with agitation associated with bipolar disorder or schizophrenia.

December 2023 Refinancing

On December 5, 2023 (the “Second Amendment Effective Date”), we entered into the Second Amendment to Credit Agreement and Guaranty and Termination of Revenue Interest Financing Agreement (the “Second Amendment”), which amended the Credit Agreement and Guaranty, dated April 19, 2022, by and among us, as the borrower, certain subsidiaries of the Company from time to time party thereto as subsidiary guarantors, the lenders party thereto (the “Lenders”), and Oaktree Fund Administration LLC (“OFA”) as administrative agent (as amended, the “Credit Agreement”).

Among other things, the Second Amendment deferred the effectiveness of the Credit Agreement’s Revenue Covenant (as defined below) to the fourth quarter of 2024 and reduced the required minimum revenue levels under the Revenue Covenant;

modified the interest rate of loans under the Credit Agreement;

provided for warrants to be issued to the Lenders to purchase 70 shares of our common stock;

and lowered the strike price of warrants previously issued to the Lenders under the Credit Agreement to $3.6452 per share.

Also on the Second Amendment Effective Date, we terminated the Revenue Interest Financing Agreement (as amended, the “RIFA”) by and among the Company, the purchasers party thereto (the “Purchasers”) and OFA, as administrative agent.

The $30,000 in financing previously provided to us under the RIFA was converted to an outstanding loan under the Credit Agreement (the “Tranche A-2 Term Loan”) pursuant to the Second Amendment.

All commitments for potential future funding under the RIFA were terminated.

For additional information, see below under “Liquidity and Capital Resources—Sources of Liquidity—Financing Agreements.”

March 2024 Waiver

On March 20, 2024 (the “Effective Date”), we entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement pursuant to which the Lenders waived the covenant that we not receive a report and opinion from our independent registered public accounting firm that contains a “going concern” or similar qualification with respect to our financial statements for the year ended December 31, 2023.

Accordingly, while our independent registered public accounting firm’s report contained in this Annual Report on Form 10-K contains a “going concern” explanatory paragraph, it does not constitute an event of default under the Credit Agreement.

The Fourth Amendment also includes a number of other changes to the Credit Agreement, as described below under “— Liquidity and Capital Resources—Sources of Liquidity—Financing Agreements.”

Our Clinical Programs

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” .

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.

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.

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.

If IGALMI ® would be approved outside the U.S., we would consider launching the product through collaborations with third parties.

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).

Our Neuroscience Clinical Programs

The following is a summary of the status of our major clinical development programs as of the date of this Annual Report on Form 10-K:

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Product Revenue, Net

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

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

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

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Expenditures primarily consist of salary, benefits and non-cash stock-based compensation for our research and development personnel, costs incurred under agreements with contract research organizations and sites that conduct our non-clinical studies and clinical trials, costs of outside consultants engaged in research and development activities, travel expenses, the cost of acquiring, developing and manufacturing preclinical and clinical trial materials and lab supplies, and depreciation and other expenses.

Payments to BioXcel LLC are also included in research and

development expenses.

Payments to BioXcel LLC are also included in research and development expenses.

Costs associated with third parties that provide non-clinical services such as toxicology, pharmacology, research and discovery, biomarker studies and similar services are included in the professional fees category of research and development expenses.

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We may also incur increased costs to comply with corporate governance, internal controls, investor relations and disclosures and similar requirements applicable to public companies.

With our Reprioritization substantially completed as of December 31, 2023, we expect that our selling, general and administrative expenses will decline due to the restructured commercialization plan of IGALMI TM and reduced personnel costs.

As a result of our restructuring activities completed during 2024, we expect that our selling, general and administrative expenses will decline due to IGALMI ® ’s restructured commercialization plan and reduced personnel costs.

However, we may also experience increased selling, general and administrative expenses due to higher fees for outside consultants, attorneys, and accountants.

Restructuring Costs

On August 8, 2023, our Board of Directors approved the Reprioritization.

We took actions to reduce certain operational and workforce expenses that were no longer deemed core to ongoing operations in order to extend our 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, a reduction of in-hospital commercialization expenses, a suspension of programs no longer determined to be core to ongoing operations, and a prioritization of at-home treatment setting opportunities for BXCL501.

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.

Annual operating expenses are expected to be reduced by approximately $80,000.

Management believes that, after giving effect to the Reprioritization, the Company’s cash and cash equivalents of $65.2 million as of December 31, 2023 will allow the Company to fund its operations and meet its liquidity requirements into mid-2024.

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

These costs consisted of severance and benefit payments of $4,063 and contract termination costs of $100, which were paid in cash.

The Company paid $3,998 of severance and benefit costs and $100 of contract termination

costs during the year ended December 31, 2023.

As of December 31, 2023, the Reprioritization was substantially completed and any remaining costs are expected to be paid during the first quarter of 2024.

Other Expense (Income)

2023 Strategic Reprioritization

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

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.

Other (Income) Expense

Other (income) expense primarily consists of interest costs associated with the Credit Agreement the Company entered into in April 2022, changes in fair value of derivative financial instruments, and interest income earned on cash and cash equivalents that were comprised primarily of money market funds.

Interest expense may increase in the future as our loans provided under the Credit Agreement are subject to floating interest rates following our December 2023 amendment to the Credit Agreement and, if we meet required milestones, we may draw down additional funds under the Credit Agreement.

Interest expense may increase in the future if we meet required milestones, and we are able to draw down additional funds under the Credit Agreement.

Recently Issued Accounting Pronouncements

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Product Revenue, Net

Commercial sales of IGALMI TM launched in July 2022.

Product revenue, net for the years ended December 31, 2023 and 2022 was $1,380 and $375, respectively, comprised of sales of IGALMI TM .

As part of the Company’s Reprioritization, the IGALMI TM commercial team shifted focus to a hospital/contracting strategy with a CAD team.

The goal of the realigned CAD team is to work with large Integrated Delivery Networks and drive sales utilizing a top-down approach.

The realigned CAD team generated $376 in net revenue for the three-month period ended December 31, 2023 through legacy sales and volume-based contracts.

However, the revised commercial effort is expected to allow the Company to continue to make inroads into the institutional market in a more cost-efficient manner.

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.

Cost of Goods Sold

Cost of goods sold for the years ended December 31, 2023 and 2022, were $1,260 and $20, respectively, which primarily related to the costs to produce, package and deliver IGALMI TM to customers, as well as costs related to excess or obsolete inventory.

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 TM 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, 2023 is primarily the result of increased sales and the increase in the reserve for excess and obsolete inventory.

Cost of goods sold for the years ended December 31, 2024 and 2023 were $2,143 and $1,260, respectively, which primarily related to the costs to produce, package and deliver IGALMI ® to customers, as well as costs related to excess or obsolete inventory.

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.

Research and Development Expense

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Chemical, manufacturing and controls cost

Travel and other costs

Other expenses

Total research and development expenses

The decrease of $53,891 for the year ended December 31, 2024, compared to the year ended December 31, 2023 is primarily attributable to the following:

● A decrease in clinical trials expense as 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, as well as the TRANQUILITY II study of BXCL501 for the potential treatment of agitation in patients with Alzheimer’s disease.

● A decrease in personnel and related costs during the fourth quarter of 2023 as a result of the Company’s Reprioritization.

● 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.

● An increase in non-cash stock-based compensation due to higher award forfeitures in 2022.

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

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

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.

Selling, General and Administrative Expense

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Commercial and marketing

Travel and other costs

Other expenses

Total selling, general and administrative expenses

The increase of $14,652 for the year ended December 31, 2023, relative to the year ended December 31, 2022 is primarily attributable to:

● Increased professional fees, primarily related to higher legal costs for the investigation of our TRANQUILITY II study, the write-off of previously deferred costs related to the initial public offering of OnkosXcel, and higher corporate operating support levels partially offset by reductions in consulting and recruiting fees.

● An increase in personnel costs due to our efforts to expand our functional teams, particularly in sales, to support commercialization of IGALMI TM in the U.S., prior to the Reprioritization.

● An increase in travel and other costs as a result of the commercial launch of IGALMI TM .

● Decreased non-cash stock-based compensation costs due to increased award forfeitures in 2023 resulting from the Reprioritization and decreased insurance costs as a result of completed clinical activities.

● Decreased commercial and marketing costs due to higher spend levels in 2022 resulting from the commercial launch of IGALMI TM .

The decrease of $48,921 for the year ended December 31, 2024, relative to the year ended December 31, 2023 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 commercial and marketing research costs.

Restructuring Costs

Restructuring costs were $4,163 for the year ended December 31, 2023.

Restructuring costs were $2,441 and $4,163 for the years ended December 31, 2024 and 2023, respectively.

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

There were no restructuring costs for the year ended December 31, 2022.

Other (Income) Expense

Interest expense increased to $13,314 for the year ended December 31, 2023 compared to $8,213 for the year ended December 31, 2022, due to higher average debt balances during the year due to borrowings under the Credit Agreement and, prior to its termination, the RIFA that the Company put in place in April 2022.

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.

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 increased to $5,649 for the year ended December 31, 2023 compared to $2,528 for the year ended December 31, 2022, due to higher average cash balances during the year.

Interest income decreased to $2,602 for the year ended December 31, 2024 compared to $5,649 for the year ended December 31, 2023, 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.

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

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

We do not believe that inflation has had a material effect on our results of operations during the periods presented.

For a discussion of inflationary risks to our future revenues under the Inflation Reduction Act, see “ Health care reform measures could hinder or prevent our product candidates ’ commercial success.” in Part I, Item 1A., “Risk Factors” elsewhere in this Annual Report on Form 10-K.

Reverse Stock Split

On February 10, 2025, the Company effected a 1-for-16 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, each 16 shares of common stock issued and outstanding immediately prior to February 10, 2025 were automatically converted into 1 share of common stock.

The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock.

All outstanding convertible notes, stock options and RSUs entitling their holders to purchase or obtain or convert into shares of our common stock were adjusted, as required by the terms of these securities.

All applicable common share and per share amounts have been retrospectively restated to show the effect of the reverse stock split.

Liquidity and Capital Resources

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We will need substantial additional funding, and if we are unable to raise capital when needed, we could be compelled to pursue alternative options, including, without limitation, implementing further workforce reductions, reducing or ceasing product development programs and advancement of our clinical trials and product candidates, selling our assets or seeking other strategic alternatives.

See “Risks Related to Financial Position and Need for Additional Capital — We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts or otherwise seek strategic alternatives.

See “Risks Related to Financial Position and

Need for Additional Capital — We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts or otherwise seek strategic alternatives.

Item 1A., “Risk Factors” elsewhere in this Annual Report on Form 10-K.

Sources of Liquidity

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 TM , we do not expect to generate positive cash flows from operations in the near term.

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).

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the Credit Agreement and the RIFA.

Pursuant to the Credit Agreement, the Lenders originally agreed to provide us up to $135,000 in senior secured term loans to us.

Pursuant to the Credit Agreement, the Lenders originally agreed to provide up to $135,000 in senior secured term loans to us.

On April 28, 2022, we borrowed the first $70,000 tranche of loans under the Credit Agreement.

Pursuant to the RIFA, the Purchasers agreed to provide us with up to $120,000 in financing for our near-term commercial activities of IGALMI TM , development and commercialization of BXCL501 and other general corporate purposes.

Pursuant to the RIFA, the Purchasers agreed to provide us with up to $120,000 in financing for our near-term commercial activities of IGALMI ® , development and commercialization of BXCL501 and other general corporate purposes.

On July 8, 2022, we drew down the first tranche of $30,000 under the RIFA.

In connection with the Credit Agreement, we granted to the Lenders (i) warrants to purchase up to 278 shares of our common stock (the “Original Warrants”), (ii) rights to purchase up to

$5,000 of our common stock and (iii) warrants to purchase up to 175 individual ownership units (i.e., not in thousands) in OnkosXcel (the “OnkosXcel Warrants”).

On November 13, 2023, we, the Lenders and OFA entered into a Waiver and First Amendment to Credit Agreement and Guaranty (the “First Amendment”) that provided for, among other things, a waiver and a modification to the covenant in the Credit Agreement regarding investments in OnkosXcel, pursuant to which we are permitted to invest up to a maximum of $30,000 at any time outstanding in OnkosXcel, increased from the $25,000 at any time outstanding.

In connection with the Credit Agreement, we granted to the Lenders (i) warrants to purchase up to 17 shares of our common stock (the “Closing Date Warrants”), (ii) rights to purchase up to $5,000 of our common stock and (iii) warrants to purchase up to 175 individual ownership units (i.e., not in thousands) in OnkosXcel (the “OnkosXcel Warrants”).

On November 13, 2023, we, the Lenders and OFA entered into a Waiver and First Amendment to Credit Agreement and Guaranty (the “First Amendment”) that provided for, among other things, a waiver and a modification to the covenant in the Credit Agreement regarding investments in OnkosXcel, pursuant to which we were permitted to invest up to a maximum of $30,000 at any time outstanding in OnkosXcel, increased from the $25,000 at any time outstanding.

The First Amendment waived any defaults or events of default arising under the Credit Agreement due to a breach prior to the date of the First Amendment of the OnkosXcel investment covenant, or a breach of our obligation to notify OFA of such default, including our investment in an amount in excess of what was previously permitted under the OnkosXcel investment covenant.

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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%.

Following the Second Amendment, we must also comply with certain covenants under the Credit Agreement, including a financial covenant that requires we maintain a minimum cash liquidity amount of $15,000 (or higher upon certain events) and a modified minimum revenue requirement measured on a quarterly basis based on the revenue attributable to BXCL501 for the six consecutive month period ending on the last day of the relevant quarter (the “Revenue Covenant”), subject to cure payments of not less than $1,000 if we fail to meet the minimum revenue requirement.

The Revenue Covenant applies beginning with the six-month period ending on December 31, 2024.

fail to meet the minimum Revenue Covenant for the preceding six-month periods ending on December 31, 2024, March 31, 2025, June 30, 2025 and September 30, 2025, we could be required to make revenue cure payments of up to $4,500, $6,200, $8,500, and $8,500, respectively, plus aggregate prepayment fees of $1,900.

Under the Credit Agreement, these cure payments would be due on April 21, 2025, June 6, 2025, September 5, 2025 and December 8, 2025, respectively.

We are only permitted to make cure payments for revenue shortfalls up to three times during the term of the Credit Agreement, after which we would default on the Credit Agreement if we are unable to satisfy the minimum revenue requirement for any subsequent fiscal quarter.

As of December 31, 2023, we had aggregate principal indebtedness of $102,680 outstanding under the Credit Agreement.

In connection with the closing of the Second Amendment, we amended and restated the Original Warrants granted to the Lenders on April 19, 2022 to purchase up to 278 shares of the Company’s common stock at an exercise price of $20.04 per share.

Pursuant to the amendment and restatement of the Original Warrants, dated December 5, 2023 (the “Amended and Restated Original Warrants”), the exercise price of the Original Warrants has been reduced to $3.6452 per share, which represents the 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 the Second Amendment Effective Date.

Following the Second Amendment, we were required to comply with certain covenants under the Credit Agreement, including a financial covenant that requires we maintain a minimum cash liquidity amount of $15,000 (or higher upon certain events) and a modified minimum revenue requirement measured on a quarterly basis based on the revenue attributable to BXCL501 for the six consecutive month period ending on the last day of the relevant quarter (the “Revenue Covenant”), subject to cure payments of not less than $1,000 if we failed to meet the minimum revenue requirement.

In connection with the closing of the Second Amendment, we amended and restated the Closing Date Warrants granted to the Lenders on April 19, 2022 to purchase up to 17 shares of the Company’s common stock at an exercise price of $320.64 per share.

Pursuant to the amendment and restatement of the Closing Date Warrants, dated December 5, 2023 (the “Amended and Restated Closing Date Warrants”), the exercise price of the Closing Date Warrants was reduced to $58.3232 per share, which represented the 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 the Second Amendment Effective Date.

In addition, the Company granted new warrants to the Lenders to purchase up to 4 shares of the Company’s common stock (the “2023 Warrant Shares”) at an exercise price of $58.3232 per share (the “2023 Warrants”).

The Original Warrants and the 2023 Warrants will expire on April 19, 2029 and may be net exercised at the holder’s election.

On the “Effective Date, we entered into the Fourth Amendment to the Credit Agreement (“the Fourth Amendment”), pursuant to which the Lenders waived the covenant that we not receive a report and opinion from our independent registered public accounting firm that contains a “going concern” or similar qualification with respect to our financial statements for the year ended December 31, 2023.

The Fourth Amendment includes covenants that we will receive, (i) after the Effective Date 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 (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 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.

The Amended and Restated Closing Date Warrants and the 2023 Warrants will expire on April 19, 2029 and may be net exercised at the holder’s election.

On February 12, 2024 (the “Third Amendment Effective Date”), we entered into the Third Amendment to Credit Agreement and Guaranty (the “Third Amendment”), pursuant to which the Lenders agreed to waive the covenant that we shall not receive a report and opinion from our independent auditors that contains a “going concern” or like qualification or exception or emphasis of matter of going concern footnote with respect to our financial statements for the fiscal year ended December 31, 2023 and, as a result, such event shall not be an event of default.

As a condition to the effectiveness of the Third Amendment, among other things, we shall have received at least $40,000 in gross proceeds from a registered public sale of the Company’s common stock, warrants and/or pre-funded warrants on or before February 20, 2024.

We did not meet this condition and therefore the Third Amendment did not become effective.

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.

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).

In addition, the Fourth Amendment provides that if we have not, after the Effective Date and on or before September 30, 2024, received at least $40,000 in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent in its sole discretion) from partnering transactions entered into after the Effective Date, the “Minimum Liquidity Amount” (as defined in the Credit Agreement) that we are required to maintain at all times will increase to $25,000 from $15,000, unless and until we have received, after the Effective Date and on or before November 30, 2024, at least $50,000 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 in its sole discretion) from partnering transactions entered into after the Effective Date.

In connection with the Fourth Amendment, on the Effective Date, we granted new warrants to the Lenders to purchase up to 100 shares of our common stock (the “2024 Warrant Shares”) at an exercise price of $3.0723 per share (the “2024 Warrants”), which represents a 10% premium over the arithmetic average of the volume-weighted average

price of our common stock on the Nasdaq Capital Market during the 30 trading days preceding the Effective Date.

In addition, the Fourth Amendment provided that if we had not, after the Effective Date and on or before September 30, 2024, received at least $40,000 in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent in its sole discretion) from partnering transactions entered into after the effective date of the Fourth Amendment, the “Minimum Liquidity Amount” (as defined in the Credit Agreement) that we are required to maintain at all times will increase to $25,000 from $15,000, unless and until we had received, after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 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 in its sole discretion) from partnering transactions entered into after the effective date of the Fourth Amendment.

In connection with the Fourth Amendment, on the effective date of the Fourth Amendment, we granted new warrants to the Lenders to purchase up to 6 shares of our common stock (the “2024 Warrant Shares”) at an exercise price of $49.1568 per share (the “2024 Warrants”), which represents a 10% premium over the arithmetic average of the volume-weighted average price of our common stock on the Nasdaq Capital Market during the 30 trading days preceding the Effective Date.

The 2024 Warrants will expire on April 19, 2029 and may be net exercised at the holder’s election.

In addition, pursuant to the Credit Agreement, the Lenders have the right to purchase shares of our common stock, so long as borrowings under the Credit Agreement are outstanding, for a purchase price of $5,000 at a price per share equal to a 10% premium to the volume-weighted average price of the common stock over the 30 trading days prior to the Lenders’ election to proceed with such equity investment (the “Equity Investment Right”).

We entered into a registration rights agreement with the Lenders (as amended and restated in connection with the Second Amendment, the “Amended and Restated Registration Rights Agreement”) and filed registration statements on Form S-3 to register the shares issuable upon exercise of the Original Warrants, 2023 Warrants and, if issued, the shares related to the Equity Investment Right, for resale.

The maximum shares of our common stock issuable under the Original Warrants, the 2023 Warrants and the Lenders’ Equity Investment Right is 5,852.

On the Effective Date, we further amended and restated the Amended and Restated Registration Rights Agreement (the “Second Amended and Restated Registration Rights Agreement”) with the Lenders.

Pursuant to the Second Amended and Restated Registration Rights Agreement, we agreed to register the 2024 Warrant Shares for resale.

On November 21, 2024, the Company entered into the Fifth Amendment to Credit Agreement and Guaranty and First Amendment to Fourth Amendment to Credit Agreement and Guaranty (the “Fifth Amendment”).

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).

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 made the required 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 by December 31, 2024.

For the quarterly payment dates ending December 31, 2024, March 31, 2025, and June 30, 2025, t he Company will have 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 .

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 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 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.

Company Warrants and Registration Rights Agreement

Prior to the Fifth Amendment, pursuant to the Credit Agreement, the Lenders had the right to purchase shares of our common stock, so long as borrowings under the Credit Agreement are outstanding, for a purchase price of $5,000 at a price per share equal to a 10% premium to the volume-weighted average price of the common stock over the 30 trading days prior to the Lenders’ election to proceed with such equity investment (the “Equity Investment Right”).

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.

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

We entered into a registration rights agreement with the Lenders in connection with the original closing of the Credit Agreement, which has been amended and restated since in connection with each issuance of additional warrants to the Lenders, including most recently, in connection with the Fifth Amendment (as so amended and restated the “Amended and Restated Registration Rights Agreement”).

Pursuant to the Amended and Restated Registration Rights Agreement, we have filed registration statements on Form S-3 to register the shares issuable upon exercise of the Original Warrants and the New Warrants for resale.

The maximum shares of our common stock issuable under the Original Warrants and the New Warrants is 366.

As part of entering into the Credit Agreement, OnkosXcel, a wholly owned subsidiary of BTI, granted the OnkosXcel Warrants to the Lenders to purchase 175 individual limited liability company units.

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See Note 9, Debt and Credit Facilities and Note 20, Subsequent Events in the notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information relating to the Credit Agreement and RIFA, including applicable interest rates, payment obligations and certain restrictive and financial covenants thereunder.

As of December 31, 2023, we were in compliance with all restrictive and financial covenants under the Credit Agreement, other than the “going concern” covenant described above as to which the Lenders have waived compliance.

As of December 31, 2024, 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.

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

We did not sell any shares, and no proceeds were received under the Sale Agreement during the year ended December 31, 2022.

From January 1, 2024 through March 19, 2024, we sold 647 shares under the Sale Agreement for gross proceeds of $1,743 and received proceeds of $1,691, net of issuance costs of $52.

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.

Year ended December 31,

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Operating Activities

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.

Net cash used in operating activities was $135,341 for the year ended December 31, 2022, and was primarily attributable to our $165,757 net loss, a $1,985 increase in inventory of IGALMI TM and a $3,905 increase in prepaid expenses, other current assets and other assets, partially offset by $17,337 in non-cash stock-based compensation, a $4,611 increase in accrued and payment in kind interest, and $13,030 increase in accounts payable, accrued expenses, due to related parties and other current liabilities.

Investing Activities

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

Net cash used in investing activities was $139 for the year ended December 31, 2022, and was primarily attributable to the purchase of equipment and leasehold improvements.

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.

Financing Activities

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.

Net cash provided by financing activities for the year ended December 31, 2022, was $96,237 and was primarily attributable to $98,600 of proceeds received from the OFA Facilities, net of $2,646 of debt issuance costs and proceeds of $283 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 TM 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 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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● seek regulatory approvals for any product candidates that successfully complete clinical trials;

● fully develop a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize IGALMI TM and any product candidates for which we may obtain regulatory approval;

● fully develop a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize IGALMI ® and any product candidates for which we may obtain regulatory approval;

● 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, after giving effect to the Reprioritization, we believe that our cash and cash equivalents of $65.2 million as of December 31, 2023 will allow us to fund our operations and meet our liquidity requirements into mid-2024, assuming we are able to comply with the covenants under our Credit Agreement.

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

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Contractual Obligations and Commitments

In April 2022, the Company signed a commercial supply agreement that requires minimum annual payments for the first three years of the agreement that in aggregate total $10,000 for the three-year period and the minimum commitment for 2024 is $5,000.

In July 2024, the Company signed an amendment to its commercial supply agreement that requires minimum annual payments for the first five years of the agreement ending in 2026 that in aggregate total $10,000.

The Company has met the minimum requirements for the first 3 years ending in 2024.

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

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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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.

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.

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.

BTI periodically confirms the accuracy of its estimates with the service providers and makes adjustments, if necessary.

8 unchanged sentences

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