CITIUS ONCOLOGY, INC. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 001-41534 Citius Oncology, Inc. (Exact name of registrant as specified in its charter) Delaware 99-4362660 ( State or other jurisdiction of incorporation or organization ) ( IRS Employer Identification No. ) 11 Commerce Drive , First Floor , Cranford , NJ 07016 ( Address of principal executive offices ) ( Zip Code ) (908) 967-6677 ( Registrant’s telephone number, including area code ) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common stock, $0.0001 par value CTOR Nasdaq Capital Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of May 9 , 2025, there were 71,552,402 shares of common stock, $0.0001 par value, of the registrant issued and outstanding. Citius Oncology, Inc. FORM 10-Q TABLE OF CONTENTS March 31, 2025 Page PART I. FINANCIAL INFORMATION: 1 Item 1. Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024 1 Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2025 and 2024 2 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended March 31, 2025 and 2024 3 Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2025 and 2024 4 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures about Market Risk 16 Item 4. Controls and Procedures 16 PART II. OTHER INFORMATION 17 Item 1. Legal Proceedings 17 Item 1A. Risk Factors 17 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Mine Safety Disclosures 17 Item 5. Other Information 17 Item 6. Exhibits 18 SIGNATURES 19 i EXPLANATORY NOTE In this Quarterly Report on Form 10-Q, and unless the context otherwise requires, the “Company,” “Citius Oncology” “we,” “us” and “our” refer to Citius Oncology, Inc. and its wholly-owned subsidiary Citius Oncology Sub Inc., “Citius Oncology Sub”, taken as a whole. LYMPHIR TM (denileukin diftitox) is our registered trademark. All other trade names, trademarks and service marks appearing in this quarterly report are the property of their respective owners. We have assumed that the reader understands that all such terms are source-indicating. Accordingly, such terms, when first mentioned in this report, appear with the trade name, trademark or service mark notice and then throughout the remainder of this report without trade name, trademark or service mark notices for convenience only and should not be construed as being used in a descriptive or generic sense. ii CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this Report and in other documents which we file with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to: ● our independent registered public accounting firm’s report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern; ● the Company’s need for substantial additional funds and its ability to raise those funds; ● the ability of the Company to recognize the anticipated benefits of the Merger (as defined herein), which may not be realized fully, if at all, or may take longer to realize than expected; ● our ongoing evaluations of strategic alternatives; ● the ability of the Company to commercialize LYMPHIR, including covering the costs of licensing payments, product manufacturing and other third-party goods and services; ● the ability of the Company to regain compliance with the continued listing requirements of the Nasdaq Stock Market LLC (“Nasdaq”); ● the ability of LYMPHIR or any of our future product candidates to impact the quality of life of our target patient populations; ● the estimated markets for LYMPHIR or any of our future product candidates and the acceptance thereof by any market; ● our ability to procure cGMP commercial-scale supply; ● our dependence on third-party suppliers; ● risks arising from changes in the fields in which LYMPHIR and any of our future product candidates, if approved, may compete; ● risks relating to the results of research and development activities, including those from our existing and any new pipeline assets; ● ability to obtain, perform under and maintain financing and strategic agreements and relationships; ● the Company’s operating results and financial performance; ● uncertainties relating to preclinical and clinical testing, approval and commercialization of any future product candidates by the Company; ● the Company’s ability to manage and grow our business and execution of our business and growth strategies; ● the competitive environment in the life sciences and biotechnology industry; ● failure to maintain, protect and defend the Company’s intellectual property rights; ● changes in government laws and regulations, including laws governing intellectual property, and the enforcement thereof affecting the Company’s business; ● changes in general economic conditions, geopolitical risk, including as a result of any unexpected global tariffs, pandemic or international conflict, including in the Middle East and between Russia and Ukraine; ● the effect of the transactions on the Company’s business relationships, operating results, and businesses generally; ● volatility in the price of the Company’s securities due to a variety of factors, including the Company’s inability to implement its business plans or meet or exceed our financial projections; ● the outcome of any litigation related to or arising out of the Merger, or any adverse developments therein or delays or costs resulting therefrom; and ● the other factors discussed in the “Risk Factors” section of our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the Securities and Exchange Commission on December 27, 2024, as amended on January 27, 2025, and elsewhere in this Report. Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this Report. iii PART I - FINANCIAL INFORMATION Item 1. Financial Statements. CITIUS ONCOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, 2025 September 30, 2024 Current Assets: Cash and cash equivalents $ 112 $ 112 Inventory 15,339,253 8,268,766 Prepaid expenses 2,700,000 2,700,000 Total Current Assets 18,039,365 10,968,878 Other Assets: In-process research and development 73,400,000 73,400,000 Total Other Assets 73,400,000 73,400,000 Total Assets $ 91,439,365 $ 84,368,878 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 7,676,310 $ 3,711,622 License payable 28,400,000 28,400,000 Accrued expenses 8,722,168 — Due to related party 4,941,664 588,806 Total Current Liabilities 49,740,142 32,700,428 Deferred tax liability 2,256,480 1,728,000 Note payable to related party 3,800,111 3,800,111 Total Liabilities 55,796,733 38,228,539 Stockholders’ Equity: Preferred stock - $ 0.0001 par value; 10,000,000 shares authorized: no shares issued and outstanding — — Common stock - $ 0.0001 par value; 100,000,000 ; 71,552,402 shares issued and outstanding at March 31, 2025 and September 30, 2024 7,155 7,155 Additional paid-in capital 89,308,821 85,411,771 Accumulated deficit ( 53,673,344 ) ( 39,278,587 ) Total Stockholders’ Equity 35,642,632 46,140,339 Total Liabilities and Stockholders’ Equity $ 91,439,365 $ 84,368,878 See notes to unaudited condensed consolidated financial statements. 1 CITIUS ONCOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2025 AND 2024 (Unaudited) Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, 2025 2024 2025 2024 Revenues $ — $ — $ — $ — Operating Expenses Research and development 3,139,413 1,348,966 4,403,921 2,497,461 General and administrative 2,243,327 1,385,580 5,565,306 2,903,488 Stock-based compensation – general and administrative 2,088,572 1,957,000 3,897,050 3,874,000 Total Operating Expenses 7,471,312 4,691,546 13,866,277 9,274,949 Loss before Income Taxes ( 7,471,312 ) ( 4,691,546 ) ( 13,866,277 ) ( 9,274,949 ) Income tax expense 264,240 144,000 528,480 288,000 Net Loss $ ( 7,735,552 ) $ ( 4,835,546 ) $ ( 14,394,757 ) $ ( 9,562,949 ) Net Loss Per Share - Basic and Diluted $ ( 0.11 ) $ ( 0.07 ) $ ( 0.20 ) $ ( 0.14 ) Weighted Average Common Shares Outstanding Basic and diluted 71,552,402 67,500,000 71,552,402 67,500,000 See notes to unaudited condensed consolidated financial statements. 2 CITIUS ONCOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2025 AND 2024 (Unaudited) Preferred Stock Common Stock Additional Paid-In Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance, September 30, 2024 - $ - 71,552,402 $ 7,155 $ 85,411,771 $ ( 39,278,587 ) $ 46,140,339 Stock-based compensation expense - - - - 1,808,478 - 1,808,478 Net loss - - - - - ( 6,659,205 ) ( 6,659,205 ) Balance, December 31, 2024 - - 71,552,402 7,155 87,220,249 ( 45,937,792 ) 41,289,612 Stock-based compensation expense - - - - 2,088,572 - 2,088,572 Net loss - - - - - ( 7,735,552 ) ( 7,735,552 ) Balance, March 31, 2025 - - 71,552,402 $ 7,155 $ 89,308,821 $ ( 53,673,344 ) $ 35,642,632 Balance, September 30, 2023 - $ - 67,500,000 $ 6,750 $ 43,658,750 $ ( 18,129,840 ) $ 25,535,660 Stock-based compensation expense - - - - 1,917,000 - 1,917,000 Net loss - - - - - ( 4,727,403 ) ( 4,727,403 ) Balance, December 31, 2023 - - 67,500,000 6,750 45,575,750 ( 22,857,243 ) 22,725,257 Stock-based compensation expense - - - - 1,957,000 - 1,957,000 Net loss - - - - - ( 4,835,546 ) ( 4,835,546 ) Balance, March 31, 2024 - $ - 67,500,000 $ 6,750 $ 47,532,750 $ ( 27,692,789 ) $ 19,846,711 See notes to unaudited condensed consolidated financial statements. 3 CITIUS ONCOLOGY, INC. Condensed Consolidated STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024 (Unaudited) 2025 2024 Cash Flows From Operating Activities: Net loss $ ( 14,394,757 ) $ ( 9,562,949 ) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation expense 3,897,050 3,874,000 Deferred income tax expense 528,480 288,000 Changes in operating assets and liabilities: Inventory ( 7,070,487 ) Prepaid expenses ( 1,171,920 ) Accounts payable 3,964,688 ( 785,132 ) Accrued expenses 8,722,168 ( 259,071 ) Due to related party 4,352,858 7,617,072 Net Cash Provided By Operating Activities - - Net Change in Cash and Cash Equivalents - - Cash and Cash Equivalents – Beginning of Period 112 - Cash and Cash Equivalents – End of Period $ 112 $ - See notes to unaudited condensed consolidated financial statements. 4 CITIUS ONCOLOGY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024 (Unaudited) 1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Citius Oncology, Inc. (“Citius Oncology”, the “Company”, “we” or “us”) is a specialty pharmaceutical company dedicated to the development and commercialization of critical care products targeting unmet needs with a focus on oncology products. We are commercializing E7777 (denileukin diftitox), an approved oncology immunotherapy for the treatment of cutaneous T-cell lymphoma (“CTCL”), a rare form of non-Hodgkin lymphoma. We have obtained the trade name of LYMPHIR for E7777. Since our inception, we have devoted substantially all our efforts to business planning, research and development, and recruiting management and technical staff. We are subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, the Company’s ability to obtain additional financing, risks related to the development by the Company or its competitors of research and development stage products, market acceptance of any of its products approved for marketing, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners and the Company’s compliance with governmental and other regulations. Since our inception, Citius Pharmaceuticals, Inc. (“Citius Pharma”) (Nasdaq: CTXR) has funded and continues to fund the Company. Citius Pharma and the Company are party to an amended and restated shared services agreement (the “A&R Shared Services Agreement”), which governs certain management and scientific services that Citius Pharma provides the Company. Merger On August 23, 2021, Citius Pharma formed Citius Acquisition Corp. (“SpinCo”) as a wholly-owned subsidiary in conjunction with the acquisition of LYMPHIR, which began operations in April 2022, when Citius Pharma transferred the assets related to LYMPHIR to SpinCo, including the related license agreement and asset purchase agreement (see Note 5). On October 23, 2023, Citius Pharma and SpinCo entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) with TenX Keane Acquisition, a Cayman Islands exempted company (“TenX”), and TenX Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of TenX (“Merger Sub”). On August 12, 2024, pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into SpinCo, with SpinCo surviving as a wholly owned subsidiary of TenX (the “Merger”) which was subsequently renamed Citius Oncology Sub, Inc. Prior to closing of the Merger, TenX migrated to and domesticated as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware and the Cayman Islands Companies Act (As Revised) (the “Domestication”). As part of the Domestication, TenX changed its name to “Citius Oncology, Inc.” (Nasdaq: CTOR). Immediately after the closing of the Merger, Citius Pharma owned approximately 92.3 % of the outstanding shares of common stock of the Company. While the Merger Sub was the legal acquirer of the Company, for accounting purposes, the Company was deemed to be the accounting acquirer. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing stock for the assets and liabilities of the Merger Sub, accompanied by a recapitalization. Total shares outstanding of the Company after the Merger and recapitalization increased to 71,552,402 . The net assets of the merged entities are stated at historical cost, with no goodwill or other intangible assets recorded. Additionally, the historical financial statements of the Company became the historical financial statements of the Company. 5 The Merger, net amount of $ 2,753,795 charged to additional paid in capital consists of $ 395,015 of net liabilities of TenX on the date of the Merger (cash of $ 163,500 less liabilities of $ 559,015 ) plus directly related transaction costs of $ 2,358,780 . As part of the Merger, Citius Pharma made capital investments in the Company through cash contributions of $ 3,827,944 to fund transactions related to the Merger and by reclassifying to additional paid in capital intercompany receivables of $ 33,180,961 that were due from the Company to Citius Pharma. Simultaneously, Citius Pharma advanced an additional $ 3,800,111 to the Company under the terms of a note payable (see Note 8). Basis of Presentation and Summary of Significant Accounting Policies Basis of Preparation - The accompanying unaudited condensed consolidated financial statements include the operations of Citius Oncology, Inc., and its wholly-owned subsidiary, Citius Oncology Sub, Inc., which was formed in connection with Merger. All significant inter-company balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of March 31, 2025, and the results of its operations and cash flows for the three and six months ended March 31, 2025 and 2024. The operating results for the three and six months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending September 30, 2025. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 filed with the Securities and Exchange Commission (“SEC”) on December 27, 2024, as amended on January 27, 2025. Use of Estimates - The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for in-process research and development, stock-based compensation, net realizable value of inventory and income taxes. Actual results could differ from those estimates and changes in estimates may occur. Basic and Diluted Net Loss per Common Share - Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents and consisting of stock options, were not included in the calculation of the diluted loss per share because they were anti-dilutive. Recently Issued Accounting Standards Other than as disclosed in our Form 10-K, we are not aware of any other recently issued accounting standards not yet adopted that may have a material impact on our financial statements. 2. GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLAN The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had a net loss of $ 14,394,757 for the six months ended March 31, 2025. The Company has no revenue and has relied on funding from Citius Pharma to finance its operations. At March 31, 2025, the Company had $ 112 in cash and a negative working capital of $ 31.7 million. Citius Pharma has sufficient capital to fund Citius Oncology through May 2025, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying financial statements are issued. 6 The Company plans to continue to rely on funding from Citius Pharma, to raise capital through equity financings from outside investors and to generate revenue from the future sales of LYMPHIR. Both the Company and Citius Pharma are actively engaged in capital raising efforts to extend the cash runway. The Company also has retained Jefferies LLC as its exclusive financial advisor in evaluating strategic alternatives aimed at maximizing shareholder value. There is no assurance, however, that Citius Pharma will have the resources to continue funding the Company, that the Company will be successful in raising the needed capital and, if funding is available, that it will be available on terms acceptable to the Company or that the Company will find strategic partners or generate substantial revenue from the sale of LYMPHIR. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of the above uncertainty. 3. INVENTORY Inventory is stated at the lower of actual accumulated costs or net realizable value. Inventory consists of finished goods of $ 7,092,779 , and work in process of $ 8,246,474 as of March 31, 2025. Inventory consists of finished goods of $ 6,134,895 , and work in process of $ 2,133,862 as of September 30, 2024. Inventory is all related to the manufacturing of LYMPHIR commercial products to be sold in 2025. No reserves against inventory were deemed necessary based on an evaluation of the product expiration dating. 4. PREPAID EXPENSES Prepaid expenses at March 31, 2025 and September 30, 2024 consist of $ 2,700,000 of advance payments made for the preparation of long-lead time drug substance and product costs, respectively, which will be utilized in research and development activities or in the manufacturing of LYMPHIR for sales. 5. PATENT AND TECHNOLOGY LICENSE AGREEMENTS License Agreement with Eisai In September 2021, Citius Pharma entered into an asset purchase agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr. Reddy’s”) and a license agreement with Eisai Co., Ltd. (“Eisai”) to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. Citius Pharma renamed E7777 as I/ONTAK and also obtained the trade name of LYMPHIR for the product. Citius Pharma assigned these agreements to us effective April 1, 2022.. The Company received a BLA approval from the FDA for LYMPHIR in August 2024. Under the terms of these agreements, Citius Pharma acquired Dr. Reddy’s exclusive license for E7777 from Eisai and other related assets owned by Dr. Reddy’s (which are now owned by Citius Oncology). The exclusive license rights include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally, we retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the India option prior to FDA approval), Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma paid Dr. Reddy’s a $ 40 million upfront payment, which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to $ 40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $ 70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10 % to 15 %), and up to $ 300 million for commercial sales milestones. Citius Oncology also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10 % to 15 %). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50 % in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. Citius Oncology will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of Citius Oncology’s payment obligations under these agreements. 7 At the time of the FDA approval for LYMPHIR, a $ 27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $ 22.5 million remains due as of March 31, 2025. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment. Under the license agreement, Eisai was to receive a $ 5.9 million milestone payment upon FDA approval, which is included in license payable at March 31, 2025, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $ 22 million related to the achievement of net product sales thresholds. Citius Oncology was also required to reimburse Eisai for up to $ 2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a Biologics License Application (“BLA”) for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and chemistry, manufacturing, and controls (“CMC”) activities through the filing of the BLA for LYMPHIR with the FDA. The BLA was approved by the FDA on August 8, 2024. We are responsible for development costs associated with potential additional indications. On March 28, 2025, Citius Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. Citius Oncology has agreed to pay Eisai on or before July 15, 2025, an aggregate amount of $ 2,535,318 and thereafter on the 15 th of each of the next four months to pay Eisai $ 2,350,000 and make a final payment of $ 2,197,892 to Eisai on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of actual payment under the letter agreement at the rate of 2 % per annum. The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or related to the failure of Citius Oncology to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. The term of the license agreement will continue until (i) March 30, 2026, if there has not been a commercial sale of a licensed product in the territory, or (ii) if there has been a first commercial sale of a licensed product in the territory by March 30, 2026, the 10-year anniversary of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $ 10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent. Under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction. As part of the definitive agreement with Dr. Reddy’s, Citius Pharmaceuticals acquired method of use patents in which LYMPHIR is administered in combination with the programmed cell death protein 1 (“PD-1”) pathway inhibitor drug class. PD-1 plays a vital role in inhibiting immune responses and promoting self-tolerance through modulating the activity of T-cells, activating apoptosis of antigen-specific T cells and inhibiting apoptosis of regulatory T cells. The following patents were acquired and subsequently transferred to us: ● US Provisional Application No. 63/070,645, which was filed on August 26, 2020, and subsequently published as US 2022/0062390 A1 on March 3, 2022, entitled Methods of Treating Cancer. ● International Patent Application Number: PCT/IB2021/0576733, which was filed with the World Intellectual Property Organization on August 23, 2021, and subsequently published as WO 2022/043863 A1 on March 3, 2022, entitled, Combination for Use in Methods of Treating Cancer. 8 Upon FDA approval of LYMPHIR in August 2024, the Company was subject to approval milestone payments totaling $ 33.4 million. The Company paid $ 5.0 million prior to year end and the remaining balance is reflected as a License Payable on the balance sheet. The $ 33.4 million was recorded as in-process research and development asset and will be subject to amortization over the regulatory exclusivity period commencing upon revenue generation. 6. STOCKHOLDER’S EQUITY Authorized Capital Stock The certificate of incorporation adopted on August 5, 2024, in connection with the Merger, authorized 110,000,000 shares, of which 100,000,000 shares are common stock with a par value of $ 0.0001 , and 10,000,000 shares are preferred stock with a par value of $ 0.0001 . On April 7, 2025, pursuant to Board and stockholder approval, the Company amended its Certificate of Amendment to increase the authorized shares of common stock from 100,000,000 shares to 400,000,000 shares. Stock Plans Under the 2023 Citius Oncology Omnibus Stock Incentive Plan, adopted on April 29, 2023, we reserved 15,000,000 common shares for issuance. On August 2, 2024, we reserved an additional 15,000,000 common shares for issuance under the 2024 Citius Oncology Omnibus Stock Incentive Plan. The stock plans provide incentives to employees, directors, and consultants through grants of options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. Volatility is estimated using the trading activity of Citius Pharmaceuticals common stock until such time as we have sufficient history. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted to employees and directors, all of which qualify as “plain vanilla,” is based on the average of the contractual term (generally 10 years) and the vesting period. For non-employee options, the expected term is the contractual term. A summary of option activity under the stock plans is presented below: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2024 12,750,000 $ 2.15 8.78 years $ — Granted 5,750,000 $ 1.07 Forfeited - Outstanding at March 31, 2025 18,500,000 $ 1.81 8.72 years $ — Exercisable at March 31, 2025 5,135,417 $ 2.06 8.39 years $ — On December 2, 2024, the Board of Directors granted options to purchase 200,000 common shares at an exercise price of $ 1.02 per share. On December 12, 2024, the Board of Directors granted options to purchase 5,550,000 common shares at an exercise price of $ 1.07 per share. The weighted average grant date fair value of the options granted during the six months ended March 31, 2025 was estimated at $ 0.80 per share. All these options vest over terms of 12 to 36 months and have a term of 10 years. 9 Stock-based compensation expense for the three months ended March 31, 2025 and 2024 was $ 2,088,572 and $ 1,957,000 , respectively. Stock-based compensation expense for the six months ended March 31, 2025 and 2024 was $ 3,897,050 and $ 3,874,000 , respectively. At March 31, 2025, unrecognized total compensation cost related to unvested awards under the Citius Oncology stock plans of $ 12,304,857 is expected to be recognized over a weighted average period of 1.64 years. 7. COMMERCIAL MANUFACTURING CONTRACTS The Company has entered into an agreement with a contract manufacturing organization for the manufacture and supply of drug substance. The agreement runs through calendar 2026, with an automatic renewal for a subsequent four-year term. Under this agreement, the Company is obligated to purchase minimum annual quantities of batches at a set price per batch, subject to annual increases. Additionally, the Company is required to pay an annual service fee of $ 250,000 . The agreement also includes provisions for potential price increases based on increases in the manufacturer’s operating expenses or industry indices, as well as significant termination fees and obligations. As of March 31, 2025, the total minimum purchase commitment under this agreement was approximately $ 17.3 million consisting of payments of $ 11.9 million and $ 5.4 million for calendar years 2025 and 2026, respectively. As of March 31, 2025, the Company also has commercial supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments under these two agreements amount to approximately $ 4.5 million consisting of purchase commitment obligations of $ 2.9 million in calendar year 2025 and $ 1.6 million in 2026. 8. RELATED PARTY TRANSACTIONS The Company’s officers and directors also serve as officers of Citius Pharma. As of March 31, 2025, the Company does not have any employees. The Company and Citius Pharma entered into the A&R Shared Services Agreement. Under the terms of the agreement, Citius Pharma provides management and scientific services to the Company. During the three months ended March 31, 2025, Citius Pharma charged the Company $ 567,937 for reimbursement of general and administrative payroll, $ 480,000 for reimbursement of research and development payroll, and $ 30,368 for the use of shared office space. During the three months ended March 31, 2024, Citius Pharma charged the Company $ 433,394 for reimbursement of general and administrative payroll, $ 483,063 for reimbursement of research and development payroll, and $ 27,939 for the use of shared office space. During the six months ended March 31, 2025, Citius Pharma charged the Company $ 1,135,874 for reimbursement of general and administrative payroll, $ 960,000 for reimbursement of research and development payroll, and $ 58,307 for the use of shared office space. During the six months ended March 31, 2024, Citius Pharma charged the Company $ 855,676 for reimbursement of general and administrative payroll, $ 966,126 for reimbursement of research and development payroll, and $ 60,735 for the use of shared office space. The Company has limited cash, therefore all the Company’s expenditures are paid by Citius Pharma and reflected in the due to related party account. Citius Pharma advanced cash to the Company for a non-interest bearing, unsecured promissory note issued by the Company, dated August 16, 2024, in the principal amount of $ 3,800,111 . The note is repayable in full upon a financing of at least $ 10 million by the Company. 9. SUBSEQUENT EVENTS On April 5, 2025, upon stockholder approval, the Company amended its Certificate of Incorporation to increase the Company’s authorized shares of Common Stock to 400,000,000 shares from 100,000,000 shares. On April 23, 2025, we received a notification letter from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the minimum bid price of our common stock on the Nasdaq Capital Market closed below $ 1.00 per share for 30 consecutive business days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until October 20, 2025, to regain compliance with the Bid Price Rule. If at any time before October 20, 2025 the bid price of our common stock closes at $ 1.00 per share or more for a minimum of ten consecutive business days , Nasdaq will provide us with written confirmation of compliance with the Bid Price Rule. If we do not regain compliance with the Bid Price Rule by October 20, 2025, Nasdaq will provide notice to us that our common stock is subject to delisting. At that time, we may appeal the determination to a Nasdaq hearings panel. The request for a hearing will stay any suspension or delisting action pending the issuance of the hearing panel’s decision. We are currently evaluating our options for regaining compliance. There can be no assurance that we will be able to regain compliance with the Bid Price Rule, even if we maintain compliance with the other listing requirements. 10 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations for the three and six months ended March 31, 2025 and 2024 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Oncology, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on December 27, 2024, as amended on January 27, 2025. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report. Business Citius Oncology is a specialty biopharmaceutical company focused on developing and commercializing innovative targeted oncology therapies. We are commercializing LYMPHIR (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. LYMPHIR was approved by the FDA in August 2024. We were incorporated in the Cayman Islands on March 1, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. In August 2024, we reincorporated in Delaware and completed the Merger whereby we acquired SpinCo as a wholly owned subsidiary and changed our name to Citius Oncology, Inc. SpinCo began operations in April 2022. Since inception, we devoted substantially all of our efforts to business planning, research and development, and recruiting management and technical staff. The Company is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, the Company’s ability to obtain additional financing, risks related to the development by the Company or our competitors of research and development stage products, market acceptance of our approved products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners and the Company’s compliance with governmental and other regulations. License Agreement with Eisai In September 2021, Citius Pharma entered into an asset purchase agreement with Dr. Reddy’s and a license agreement with Eisai to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. Citius Pharma renamed E7777 as I/ONTAK and also obtained the trade name LYMPHIR TM for the product. Citius Pharma assigned these agreements to us effective April 1, 2022. Denileukin diftitox is referred to in this report as E7777, I/ONTAK or LYMPHIR, depending on the period of time and context that is being discussed. Under the terms of these agreements, Citius Pharma acquired Dr. Reddy’s exclusive license for E7777 from Eisai and other related assets owned by Dr. Reddy’s which are now owned by us. The exclusive license rights include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally, we retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the India option prior to FDA approval), Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma paid Dr. Reddy’s a $40 million upfront payment, which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%) and up to $300 million for commercial sales milestones. We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10% to 15%). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. We will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of Citius Oncology’s payment obligations under these agreements. 11 At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $22.5 million remains due as of March 31. 2025. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment. Under the license agreement, Eisai was to receive a $5.9 million milestone payment, upon FDA approval which is included in license payable at March 31, 2025, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22 million related to the achievement of net product sales thresholds. We were also required to reimburse Eisai for up to $2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and CMC activities through the filing of a BLA for LYMPHIR with the FDA. The BLA was approved by the FDA on August 8, 2024. The Company will be responsible for development costs associated with potential additional indications. On March 28, 2025, Citius Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. Citius Oncology has agreed to pay Eisai on or before July 15, 2025, an aggregate amount of $2,535,318 and thereafter on the 15 th of each of the next four months to pay Eisai $2,350,000 and make a final payment of $2,197,892 to Eisai on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of actual payment under the letter agreement at the rate of 2% per annum. The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or related to the failure of Citius Oncology to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. The term of the license agreement will continue until (i) March 30, 2026, if there has not been a commercial sale of a licensed product in the territory, or (ii) if there has been a first commercial sale of a licensed product in the territory by March 30, 2026, the 10-year anniversary of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent. Under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction. 12 RESULTS OF OPERATIONS Three months ended March 31, 2025 compared with the three months ended March 31, 2024 Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Revenues $ — $ — Operating expenses: Research and development 3,139,413 1,348,966 General and administrative 2,243,327 1,385,580 Stock-based compensation – general and administrative 2,088,572 1,957,000 Total operating expenses 7,471,312 4,691,546 Loss before income taxes (7,471,312 ) (4,691,546 ) Income tax expense 264,240 144,000 Net loss $ (7,735,552 ) $ (4,835,546 ) Revenues We did not generate any revenues for the three months ended March 31, 2025 and 2024. Research and Development Expenses For the three months ended March 31, 2025, research and development expenses were $3,139,413 as compared to $1,348,966 for the three months ended March 31, 2024, an increase of $1,790,447 primarily related to costs associated with the expense of a drug substance batch needed for the pre-license inspection of the manufacturer. General and Administrative Expenses For the three months ended March 31, 2025, general and administrative expenses were $2,243,327 as compared to $1,385,580 for the three months ended March 31, 2024, an increase of $857,747. The primary reason for the increase was the efforts associated with the pre-commercial and commercial launch activities of LYMPHIR associated with market research, marketing, distribution and drug product reimbursement from health plans and payers. Stock-based Compensation Expense For the three months ended March 31, 2025, stock-based compensation expense was $2,088,572 as compared to $1,957,000 for the three months ended March 31, 2024. The primary reason for the $131,572 increase in stock-based compensation expense was the new options granted in December 2024. Income Taxes The Company recorded deferred income tax expense of $264,240 in the three months ended March 31, 2025 as compared to $144,000 in the three months ended March 31, 2024 related to the amortization for taxable purposes of its in-process research and development asset. Net Loss For the three months ended March 31, 2025, we incurred a net loss of $7,735,552 compared to a net loss of $4,835,546 for the three months ended March 31, 2024. The $2,900,006 increase in the net loss was primarily due to the increases of $1,790,447 in research and development and $857,747 in general and administrative expenses. 13 Six months ended March 31, 2025 compared with the six months ended March 31, 2024 Six Months Ended March 31, 2025 Six Months Ended March 31, 2024 Revenues $ — $ — Operating expenses: Research and development 4,403,921 2,497,461 General and administrative 5,565,306 2,903,488 Stock-based compensation – general and administrative 3,897,050 3,874,000 Total operating expenses 13,866,277 9,274,949 Loss before income taxes (13,866,277 ) (9,274,949 ) Income tax expense 528,480 288,000 Net loss $ (14,394,757 ) $ (9,562,949 ) Revenues We did not generate any revenues for the six months ended March 31, 2025 and 2024. Research and Development Expenses For the six months ended March 31, 2025, research and development expenses were $4,403,921 as compared to $2,497,461 for the six months ended March 31, 2024, an increase of $1,906,460 primarily related to costs associated with the expense of a drug substance batch needed for the pre-license inspection of the manufacturer. General and Administrative Expenses For the six months ended March 31, 2025, general and administrative expenses were $5,565,306 as compared to $2,903,488 for the six months ended March 31, 2024, an increase of $2,661,818. The primary reason for the increase was the efforts associated with the pre-commercial and commercial launch activities of LYMPHIR associated with market research, marketing, distribution and drug product reimbursement from health plans and payers. Stock-based Compensation Expense For the six months ended March 31, 2025, stock-based compensation expense was $3,897,050 as compared to $3,874,000 for the six months ended March 31, 2024. The primary reason for the $23,050 increase in stock-based compensation expense was the new options granted in December 2024. Income Taxes The Company recorded deferred income tax expense of $528,480 in the six months ended March 31, 2025 as compared to $288,000 in the six months ended March 31, 2024 related to the amortization for taxable purposes of its in-process research and development asset. Net Loss For the six months ended March 31, 2025, we incurred a net loss of $14,394,757 compared to a net loss of $9,562,949 for the six months ended March 31, 2024. The $4,831,808 increase in the net loss was primarily due to the increases of $1,906,460 in research and development and 2,661,818 in general and administrative expenses. 14 LIQUIDITY AND CAPITAL RESOURCES Liquidity and Working Capital Citius Oncology has incurred operating losses since inception and incurred a net loss of $14,394,757 for the six months ended March 31, 2025. At March 31, 2025, we had an accumulated deficit of $53,673,344. The Company has no revenue and has relied on funding from Citius Pharma to finance its operations. At March 31, 2025, we had $112 in cash and a negative working capital of approximately $31.7 million. We need to obtain substantial additional financing in order to satisfy our outstanding milestone payment obligations, as well as meet minimum purchase commitments under our agreements for the manufacture and supply of our drug product, and cannot be sure that any additional funding will be available on terms favorable to us, or at all. As of March 31, 2025, the Company’s outstanding milestone payments and purchase commitments for 2025 include: ● We have agreed to pay Eisai on or before July 15, 2025, an aggregate amount of $2,535,318 and thereafter on the 15 th of each of the next four months $2,350,000 and make a final payment of $2,197,892 to Eisai on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of actual payment under the letter agreement at the rate of 2% per annum. ● At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $22.5 million remains due as of March 31, 2025. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment. ● We have entered into an agreement with a contract manufacturing organization for the manufacture and supply of drug substance. Under this agreement, the Company is obligated to purchase minimum annual quantities of batches at a set price per batch, subject to annual increases. As of March 31, 2025, the total minimum purchase commitment under this agreement was approximately $17.3 million, consisting of payments of $11.9 million and $5.4 million for calendar years 2025 and 2026, respectively. ● As of March 31, 2025, the Company also has commercial supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments under these two agreements amount to approximately $4.5 million consisting of purchase commitment obligations of $2.9 million in calendar years 2025 and $1.6 million in 2026. We plan to continue to rely on funding from Citius Pharma, to raise capital through equity financings from outside investors and to generate revenue from the future sales of LYMPHIR. We also have retained Jefferies LLC as our exclusive financial advisor in evaluating strategic alternatives aimed at maximizing shareholder value. There is no assurance, however, that Citius Pharma will have the resources to continue funding us, that we will be successful in raising the needed capital and, if funding is available, that it will be available on terms acceptable to us or that we will find strategic partners or generate substantial revenue from the sale of LYMPHIR. On April 2, 2025, Citius Pharma closed on a registered direct offering to an institutional investor of its common stock and pre-funded warrants to purchase common stock. The net proceeds to Citius Pharma from the offering were approximately $1.735 million, after deducting placement agent fees and other offering expenses payable by Citius Pharma. After giving effect to the Citius Pharma April 2, 2025 financing, we expect that Citius Pharma will have sufficient funds to continue our operations through May 2025. We will need to raise additional capital in the future to support our operations beyond May 2025. There is no assurance, however, that we will be successful in raising the needed capital or that the proceeds will be received in an amount or in a timely manner to support our operations. Inflation Our management believes that inflation has not had a material effect on our results of operations. Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements. 15 Critical Accounting Policies and Estimates The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions. Our critical accounting policies and use of estimates are discussed in, and should be read in conjunction with, the annual consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024, filed with the SEC on December 27, 2024, as amended on January 27, 2025. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure. Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of March 31, 2025. In designing and evaluating disclosure controls and procedures, we recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of March 31, 2025, based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Changes In Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 1A. Risk Factors. Except for the below, there have been no material changes to the Company’s risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC on December 27, 2024, as amended on January 27, 2025. Our independent registered public accounting firm’s report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern. As a result of our historical operating losses and expected future negative cash flows from operations, we have concluded that there is substantial doubt about our ability to continue as a going concern. Similarly, the report of our independent registered public accounting firm on our consolidated financial statements, which was included in our Annual Report on Form 10-K for the year ended September 30, 2024, includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Our consolidated financial statements for the fiscal year ended September 30, 2024 have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from uncertainty about our ability to continue as a going concern. You should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for distribution to stockholders, in the event of liquidation. After giving effect to the Citius Pharma financing in April 2025, we expect to have sufficient funds to continue our operations through May 2025. We will need to raise additional capital in the future to support our operations beyond May 2025. The Company’s continued operations beyond May 2025, including our commercialization of LYMPHIR, will depend on our ability to successfully launch and generate substantial revenue from the sale of LYMPHIR and on our ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our Common Stock and make it more difficult to obtain financing. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of LYMPHIR, there will be a material adverse effect on its business, including the dissolution and liquidation of our Company. Further, the Company expects in the future to incur additional expenses as we continue our efforts to commercialize LYMPHIR and protect our intellectual property. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not applicable. Item 5. Other Information. During the quarter ended March 31, 2025, none of our directors or officers adopted or terminated any contract or written plan for the purchase or sale of our securities. 17 Item 6. Exhibits. 3.1 Certificate of Incorporation of Citius Oncology, Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K filed on August 16, 2024). 3.2 Certificate of Amendment to Certificate of Incorporation of Citius Oncology, Inc., effective April 7, 2025 (incorporated by reference to Annex A to Schedule 14C filed on February 24, 2025). 31.1 Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a).* 31.2 Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a).* 32.1 Certification of the Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.* EX-101.INS Inline XBRL Instance Document* EX-101.SCH Inline XBRL Taxonomy Extension Schema Document* EX-101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document* EX-101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* EX-101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document* EX-101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document* EX-104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* * Filed herewith. 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CITIUS ONCOLOGY, INC. Date: May 14, 2025 By: /s/ Leonard Mazur Leonard Mazur Chief Executive Officer (Principal Executive Officer) Date: May 14, 2025 By: /s/ Jaime Bartushak Jaime Bartushak Chief Financial Officer (Principal Financial and Accounting Officer) 19