What changed in this filing

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Item 1. Financial Statements

2026-02-13 compared with 2025-08-08 · 186 added, 292 removed, 422 unchanged (53% of the section changed)

2 unchanged sentences

Condensed Interim Consolidated Balance Sheets

June 30, 2025

December 31, 2025

September 30, 2025

7 unchanged sentences

Intangible asset, net

Right-of-use assets

Liabilities and shareholders' equity:

1 unchanged sentence

Accounts payable and accrued liabilities

Short-term right-of-use lease liabilities

Total current liabilities

16 unchanged sentences

Three Months Ended

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

December 31, 2025

December 31, 2024

Research and development

4 unchanged sentences

Interest income

Misc other income

Foreign exchange (loss)

Loss before income taxes

Income tax expense

Exchange differences on translation

5 unchanged sentences

Condensed Interim Consolidated Statements of Cash Flows

Nine Months Ended

June 30, 2025

June 30, 2024

Three Months Ended

December 31, 2025

December 31, 2024

Cash flows from operating activities:

2 unchanged sentences

Share-based compensation

Gain on loan forgiveness

Changes in working capital items:

4 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common shares and warrants

Proceeds from issuance of common shares

Proceeds from issuance of Series A-1 preferred shares and warrants

Proceeds from issuance of Series B-1 preferred shares

Payments for issuance costs of common shares and warrants

Payment for issuance costs of preferred shares

Payment for issuance costs of warrants

Repayment of debt

Payments for issuance costs of common shares

Net cash provided by financing activities

1 unchanged sentence

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

8 unchanged sentences

Total Shareholders' Equity

Three Months Ended June 30, 2025

Balance - March 31, 2025

Preferred return on Series A-1 preferred shares

Share-based compensation

Net loss and comprehensive loss

Balance - June 30, 2025

Three Months Ended June 30, 2024

Balance - March 31, 2024

Issuance of common shares

Issuance costs

Share-based compensation

Net loss and comprehensive loss

Balance - June 30, 2024

Nine Months Ended June 30, 2025

Three Months Ended December 31, 2025

Balance - September 30, 2025

Issuance of common shares

Issuance of Series A-1 preferred shares and warrants

Issuance of Series B-1 preferred shares

Issuance of common shares upon exercise of restricted share units

3 unchanged sentences

Net loss and comprehensive loss

Balance - June 30, 2025

Nine Months Ended June 30, 2024

Balance - December 31, 2025

Three Months Ended December 31, 2024

Balance - September 30, 2024

Issuance of common shares

Issuance of Class A preferred shares and warrants

Issuance costs

Preferred return on Class A preferred shares

Share-based compensation

Net loss and comprehensive loss

Balance - June 30, 2024

Balance - December 31, 2024

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

8 unchanged sentences

Going Concern

These unaudited condensed consolidated financial statements have been prepared on a going concern basis which presumes the realization of assets and the discharge of liabilities in the normal course of operations for at least the next twelve months.

For the nine months ended June 30, 2025, the Company incurred a comprehensive loss of $ 4.8 million resulting in an accumulated deficit of $ 63.6 million.

For the nine months ended June 30, 2025, the Company had a net cash outflow from operating activities of $ 5.6 million and ended the period with $ 12.4 million in cash and cash equivalents and a working capital of $ 12.1 million.

During the nine month period ended June 30, 2025, the Company received gross proceeds of $ 15.0 million from the sale of preferred shares and common shares in a private placement and $ 1.5 million from the sale of preferred shares to an entity controlled by the Company’s CEO, as described below.

These condensed interim consolidated financial statements have been prepared on a going concern basis which presumes the realization of assets and the discharge of liabilities in the normal course of operations for at least the next twelve months.

For the three months ended December 31, 2025, the Company incurred a comprehensive loss of $ 2.3 million resulting in an accumulated deficit of $ 68.2 million.

For the three months ended December 31, 2025, the Company had a net cash outflow from operating activities of $ 2.1 million and ended the quarter with $ 12.1 million in cash and cash equivalents and a net working capital surplus of $ 12.0 million.

The Company’s ability to continue as a going concern is dependent on obtaining additional funding through financings, other strategic activities as well as via grants, to fund the development of its drug candidates.

1 unchanged sentence

These conditions indicate the existence of a material uncertainty that may cast substantial doubt about the Company’s ability to continue as a going concern.

These unaudited condensed consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

These condensed interim consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying condensed interim consolidated financial statements.

These adjustments could be material.

8 unchanged sentences

All adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods.

Operating results for the three and nine months ended June 30, 2025 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2025.

Operating results for the three months ended December 31, 2025 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2026.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S.

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 the financial statements and the reported amounts of revenue and expenses during the period or year.

The preparation of condensed interim consolidated financial statements in conformity with U.S.

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 the condensed interim financial statements and the reported amounts of revenue and expenses during the period or year.

Actual results could differ from those estimates.

Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable;

intangible assets;

right-of-use assets;

Significant areas of judgment and estimation include, but are not limited to, the valuation of accounts and other receivables;

the valuation and useful lives of intangible assets;

deferred income taxes;

the determination of fair value of share-based compensation;

the determination of fair value of warrants in order to allocate proceeds from equity issuances;

and forecasting future cash flows for assessing the going concern assumption.

the determination of the fair value of share-based compensation;

the determination of the fair value of warrants and the allocation of proceeds from equity issuances;

and forecasting future cash flows in assessing our going concern assumption.

Functional and reporting currencies

The consolidated financial statements of the Company are presented in U.S.

The consolidated condensed interim financial statements of the Company are presented in U.S.

dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency.

17 unchanged sentences

Total intangible assets, net

Amortization expense amounted to $ 0.03 million for each of the three months ended June 30, 2025 and June 30, 2024 and $ 0.08 million for each of the nine months ended June 30, 2025 and June 30, 2024.

Amortization expense amounted to $ 0.03 million for each of the three months ended December 31, 2025 and 2024.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

4 unchanged sentences

September 30, 2030

Right-of-Use Lease with Related Party

The Company leases a facility used for executive offices from a related company.

The original lease expired in December 2022 and the Company executed a two -year extension through December 2024.

The Company extended the lease until November 30, 2025, and upon expiry, the arrangement will be month to month and either party will have the right to terminate on 30 days’ notice.

The components of right-of-use lease cost were as follows:

Three Months Ended

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Right-of-use lease cost, included in general and administrative on the Statements of Operations

Lease terms and discount rates were as follows:

June 30, 2025

September 30, 2024

Remaining lease term (months):

Estimated incremental borrowing rate:

Cash flow information was as follows:

Nine Months Ended

June 30, 2025

June 30, 2024

Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.

Research and other commitments

The Company has commitments for contracted research organizations who perform clinical trials for the Company’s ongoing clinical studies and other service providers.

Approximate aggregate future contractual payments at June 30, 2025 are as follows:

The Company has commitments for contract manufacturing and other service providers for chemistry, manufacturing and controls and related development activities associated with its product candidates.

Aggregate future contractual payments at December 31, 2025 are as follows:

September 30, 2026

4 unchanged sentences

License and royalty commitments

In April 2020, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive world-wide rights to the Constructs, including sublicensing rights.

In April 2020, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive world-wide rights to certain know-how, patents and data relating to certain monoclonal antibodies (the “Constructs”), including sublicensing rights.

An intangible asset for the acquired license has been recognized.

2 unchanged sentences

The Company also has a commitment to pay royalties based on any net sales of products containing the Constructs in the countries where the Company directly commercializes the products containing the Constructs and a percentage of any sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the products containing the Constructs.

No milestone, royalty or sublicensing payments were made to the third party during the three and nine months ended June 30, 2025 and 2024.

No milestone, royalty or sublicensing payments were made to the third party during the three months ended December 31, 2025 and 2024.

In connection with this license agreement and pursuant to a purchase agreement entered into in April 2020, the Company acquired drug substance of one of the Constructs for an aggregate purchase price of $ 5.0 million.

No expense was recorded during the three months ended December 31, 2025 and December 31, 2024.

In 2016, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive rights to certain know-how, patents and data relating to a pharmaceutical product.

4 unchanged sentences

The Company also has a commitment to pay the third party a royalty based on net sales of the product in countries where the Company, or an affiliate, directly commercializes the product and a percentage of sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the product.

No license or royalty payments were made to the third party during the three months ended December 31, 2025 and 2024, respectively.

In March 2021, through its Ontario subsidiary, the Company entered into a license agreement with the inventor of the same pharmaceutical product to acquire global rights for all fields of use beyond those named under the 2016 license agreement.

1 unchanged sentence

In addition, if the Company fails to file an investigational new drug application or foreign equivalent (“IND”) for the product within a certain period of time following the date of the agreement, the Company is required to remit to the inventor a fixed license fee quarterly as long as the requirement to file an IND remains unfulfilled.

For the three and nine months ended June 30, 2024, the Company recorded an expense of $ 25,000 and $ 75,000 for the fixed quarterly license fee as outlined in the 2021 license agreement.

There were no milestones achieved in the three and nine months ended June 30, 2025 and no additional expenses were incurred.

In June 2024, the Company’s drug candidate, EB05, was selected by the Biomedical Advanced Research and Development Authority (BARDA), part of the Administration for Strategic Preparedness and Response within the U.S.

Department of Health and Human Services, for evaluation in a U.S.

government-funded clinical study.

The Phase 2 platform trial will be a randomized, double-blinded, placebo-controlled, multi-center U.S.

clinical trial to investigate novel threat-agnostic host-directed therapeutics, including EB05, in hospitalized adult patients with ARDS due to a variety of causes.

For the EB05 cohort of the study, patients will be randomized one-to-one to either EB05 plus Standard of Care (SOC) or to a placebo plus SOC control arm.

Edesa plans to provide drug product for the study as well as technical support.

The Company is responsible for providing drug product and placebo for the Phase 2 platform trial.

For each of the three months ended December 31, 2025, and December 31, 2024, the Company recorded an expense of $ 25,000 as a result of meeting milestones outlined in the 2021 license agreement.

Capital Shares

6 unchanged sentences

The Series B-1 Preferred Shares are presented as permanent shareholders’ equity.

The Series B-1 Preferred Shares did not exist in the comparative period; therefore, no prior-period disclosure is presented.

Issued and Outstanding Series B-1 convertible preferred shares

The Series B-1 Preferred Shares did not exist in the comparative period;

therefore, no prior-period disclosure is presented.

Series B-1 Convertible

2 unchanged sentences

Preferred Shares

Nine Months Ended June 30, 2025

Three Months Ended December 31, 2025

Balance - September 30, 2025

Issuance of Series B-1 Preferred Shares

Series B-1 Preferred Shares issuance costs

Balance - June 30, 2025

Balance - December 31, 2025

Series A-1 Preferred Shares Offering

On October 30, 2024, the Company entered into a Securities Purchase Agreement (Series A-1 Purchase Agreement) with an entity controlled by the Company’s Chief Executive Officer, Secretary and member of the board of directors of the Company (Series A-1 Purchaser), pursuant to which the Company agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $ 5,000,000 of shares of the Company’s newly designated Series A-1 Convertible Preferred Shares, stated value $ 10,000 per share (the Series A-1 Preferred Shares), each of which is initially convertible into approximately 2,903 Common Shares (Series A-1 Conversion Shares), at a conversion price of $ 3.445 per Series A-1 Conversion Share, and warrants (Warrants) to purchase Common Shares (Series A-1 Warrant Shares) at an exercise price of $ 3.445 per Series A-1 Warrant Share.

On October 30, 2024, the Company entered into a Securities Purchase Agreement (“Series A-1 Purchase Agreement”) with an entity controlled by the Company’s Chief Executive Officer, Secretary and member of the board of directors of the Company (“Series A-1 Purchaser”), pursuant to which the Company agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $ 5,000,000 of shares of the Company’s newly designated Series A-1 Convertible Preferred Shares, stated value $ 10,000 per share (the “Series A-1 Preferred Shares”), each of which is initially convertible into approximately 2,903 Common Shares (the “Series A-1 Conversion Shares”), at a conversion price of $ 3.445 per Series A-1 Conversion Share, and warrants (“Warrants”) to purchase Common Shares (the “Series A-1 Warrant Shares”) at an exercise price of $ 3.445 per Series A-1 Warrant Share.

The Series A-1 Preferred Shares and the Warrants are being sold together in a fixed combination of one Series A-1 Preferred Share and a Warrant to purchase a number of Common Shares equal to 75 % of the underlying Series A-1 Conversion Shares at a combined purchase price of $ 10,272.13 per Series A-1 Preferred Share and related Warrants.

14 unchanged sentences

therefore, no prior-period disclosure is presented.

Issued and Outstanding Series A-1 convertible preferred shares

Series A-1 Convertible

2 unchanged sentences

Preferred Shares

Nine Months Ended June 30, 2025

Three Months Ended December 31, 2025

Balance - September 30, 2025

Issuance of Series A-1 Preferred Shares

Series A-1 Preferred Shares issuance costs

Preferred return on Series A-1 Preferred Shares

Balance - June 30, 2025

Equity distribution agreement

In October 2024, the Company entered into an At The Market Offering Agreement with H.C.

Wainwright & Co., LLC as a sales agent (HCW ATM) pursuant to which the Company may offer and sell, from time to time, Common Shares through an at-the-market equity offering program for up to $ 3.87 million in gross proceeds.

Balance - December 31, 2025

At The Market offering agreement

On October 4, 2024, the Company entered into an At The Market offering agreement with H.C.

Wainwright & Co., LLC as a sales agent (“HCW ATM”) pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program.

The Company has no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms.

For the nine months ended June 30, 2025, the Company sold a total of 304,057 Common Shares pursuant to the agreement for net proceeds of $ 0.8 million after deducting sales agent commissions of $ 25,000 .

The Company has not sold any Common Shares pursuant to the HCW ATM subsequent to June 30, 2025.

For the three months ended December 31, 2025, the Company sold 1,177,568 common shares pursuant to the ATM Agreement under the prospectus supplement filed on September 9, 2025 for net proceeds of approximately $ 3.4 million, after deducting sales agent commissions.

On December 12, 2025, the Company filed a prospectus supplement with the SEC authorizing the offer and sale of up to approximately $ 2.26 million of common shares pursuant to the ATM Agreement.

The Company did not sell any common shares under the December 12, 2025 prospectus supplement.

Black-Scholes option valuation model

11 unchanged sentences

Number of Warrant Shares

Weighted Average Exercise Price

Nine Months Ended June 30, 2025

Weighted Average Exercise

Three Months Ended December 31, 2025

Balance - September 30, 2025

Balance - June 30, 2025

Nine Months Ended June 30, 2024

Balance - December 31, 2025

Three Months Ended December 31, 2024

Balance - September 30, 2024

Balance - June 30, 2024

The weighted average contractual life remaining on the outstanding warrants at June 30, 2025 is 31 months.

The following table summarizes information about the warrants outstanding at June 30, 2025:

Balance - December 31, 2024

The weighted average contractual life remaining on the outstanding warrants at December 31, 2025 is 31 months.

The following table summarizes information about the warrants outstanding at December 31, 2025:

Number of Warrants (#)

Exercise Prices

December 2025

February 2026

September 2027

The fair value of warrants granted during the nine months ended June 30, 2024 was estimated using the Black-Scholes option valuation model using the following assumptions:

Nine Months Ended June 30, 2025

The fair value of warrants issued during the three months ended December 31, 2024 were estimated using the Black-Scholes option valuation model using the following assumptions:

Three Months Ended

December 31,2024

Class A Pref Share

7 unchanged sentences

The total number of shares available for issuance under the terms of the 2019 Plan is 2,367,737 .

The remaining number of shares available to grant at June 30, 2025 is 668,398 .

The remaining number of shares available to grant at December 31, 2025 is 690,309 .

The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers.

2 unchanged sentences

Number of Options (#)

Weighted Average Exercise Price

Weighted Average Grant Date Fair Value

Nine Months Ended June 30, 2025

Weighted Average

Exercise Price

Weighted Average Grant

Date Fair Value

Three Months Ended December 31, 2025

Balance - September 30, 2025

Balance - June 30, 2025

Nine Months Ended June 30, 2024

Balance - December 31, 2025

Three Months Ended December 31, 2024

Balance - September 30, 2024

Balance - June 30, 2024

During the three and nine months ended June 30, 2025, there were no employee or director options granted.

During the three and nine months ended June 30, 2024, there were 500 employee options granted and no director options granted.

The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant date.

The weighted average contractual life remaining on the outstanding options at June 30, 2025 is 72 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at June 30, 2025:

Balance - December 31, 2024

There were no options exercised during each of the three months ended December 31, 2025 and 2024.

The intrinsic value of options outstanding at December 31, 2025 was $ 0.00 .

The weighted average contractual life remaining on the outstanding options at December 31, 2025 is 65 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at December 31, 2025:

Number of Options (#)

Exercisable at

June 30, 2025 (#)

December 31, 2025 (#)

Range of Exercise Prices

3 unchanged sentences

36.75 - 40.18

March 2025 - Sep 2031

March 2025 - Feb 2032

March 2025 - Oct 2033

The options exercisable at June 30, 2025 had a weighted average exercise price of $ 25.93 , no intrinsic value and a weighted average remaining life of 72 months.

There were 25,617 options at June 30, 2025 that had not vested with a weighted average exercise price of $ 7.00 , no intrinsic value and a weighted average remaining life of 95 months.

The fair value of options granted during the nine months ended June 30, 2025 and 2024 was estimated using the Black-Scholes option valuation model using the following assumptions:

Nine Months Ended June 30, 2024

Risk free interest rate

Expected life

Expected share price volatility

Expected dividend yield

As of June 30, 2025, the Company had approximately $ 0.01 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 15 months.

Restricted share units (RSU)

January 2031 - Sep 2031

February 2032

August 2026 - July 2033

The options exercisable at December 31, 2025 had a weighted average exercise price of $ 25.21 and an intrinsic value of $ 0.00 and a weighted average remaining life of 65 months.

There were 10,157 options at December 31 2025 that had not vested with a weighted average exercise price of $ 6.21 and an intrinsic value of $ 0.00 and a weighted average remaining life of 89 months.

As of December 31, 2025, the Company had approximately $ 3,644 of unrecognized share-based compensation expense, which is expected to be recognized over a period of 12 months.

Restricted share units

The Company's 2019 Plan allows restricted share units (“RSUs”) to be granted to directors, officers, employees and certain external consultants and advisers.

Under the 2019 Plan, the RSU term is not to exceed 10 years.

The fair value is based on the 5-day VWAP of the Company’s Common Shares up to the date of grant.

The following is a summary of changes in the status of RSUs from October 1, 2024 through June 30, 2025:

The fair value of RSUs is determined based on the market price of the Company’s common shares on the grant date.

The following is a summary of changes in the status of RSUs from October 1, 2025 through December 31, 2025:

Number of RSU (#)

Weighted Average Grant Date Fair Value

Nine Months Ended June 30, 2025

Weighted Average Grant

Date Fair Value

Three Months Ended December 31, 2025

Balance - September 30, 2025

Balance - June 30, 2025

Nine Months Ended June 30, 2024

Balance - December 31, 2025

Three Months Ended December 31, 2024

Balance - September 30, 2024

Balance - June 30, 2024

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at June 30, 2025:

Balance - December 31, 2024

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at December 31, 2025:

Number of RSU (#)

Exercisable at

June 30, 2025 (#)

December 31, 2025 (#)

Fully-vested RSUs

August 2033 - June 2035

August 2033 - December 2035

Vesting in the next 12 months

4 unchanged sentences

Outstanding RSUs can be converted to Common Shares by the holder at any time after vesting and before the expiry date.

As of June 30, 2025, the Company had approximately $ 2.2 million of unrecognized restricted share unit compensation expense, which is expected to be recognized over a period of 35 months.

The Company recorded $ 0.2 million and $ 0.1 million of share-based compensation expenses for the three months ended June 30, 2025 and 2024, respectively and $ 0.3 million and $ 0.4 million for the nine months ended June 30, 2025 and 2024, respectively.

These amounts include expenses related to both stock options and restricted share units (RSUs) granted to employees and directors under the Company’s equity compensation plans.

As of December 31, 2025, the Company had approximately $ 1.5 million of unrecognized restricted share unit compensation expense, which is expected to be recognized over a period of 29 months.

The Company recorded $ 0.40 million and $ 0.08 million of share-based compensation expenses for the three months ended December 31, 2025 and 2024, respectively.

These amounts include expenses related to both stock options and RSUs granted to employees and directors under the Company’s equity compensation plans.

Government Contributions

Reimbursement grant income for the Company’s federal grant with the Canadian government’s SIF is recorded based on the claim period of eligible costs.

In October 2023, the Company entered into a multi-year contribution agreement (the 2023 SIF Agreement) with the Canadian Government’s Strategic Innovation Fund.

Under the 2023 SIF Agreement, the Government of Canada committed up to C$ 23 million in partially repayable funding toward (i) conducting and completing the Company’s Phase 3 clinical study of its experimental drug EB05 in critical-care patients with Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19 or other infectious agents, (ii) submitting EB05 for governmental approvals and manufacturing scale-up, following, and subject to, completing the Phase 3 study and (iii) conducting two non-clinical safety studies to assess the potential long-term impact of EB05 exposure (the Project).

Of the C$ 23 million committed by SIF, up to C$ 5.8 million is not repayable by the Company.

Strategic Response Fund

The Company’s wholly owned subsidiary Edesa Biotech Research is party to a multi-year contribution agreement with the Canadian government’s Strategic Response Fund, or SRF (formerly Strategic Innovation Fund, SIF), dated October 12, 2023, and an Amendment Agreement No.

1 to the agreement, dated September 30, 2025 (together, the “2023 SRF Agreement”).

Under the 2023 SRF Agreement, the Government of Canada committed up to C$ 23 million in partially repayable funding toward (i) conducting and completing the Company’s Phase 3 clinical study of its experimental drug EB05, (ii) submitting EB05 for governmental approvals and manufacturing scale-up, following, and subject to, completing the Phase 3 study and (iii) conducting two non-clinical safety studies to assess the potential long-term impact of EB05 exposure (the “SRF Project”).

Of the C$ 23 million committed by SRF, up to C$ 5.8 million is not repayable by the Company.

The remaining C$ 17.2 million is conditionally repayable starting in 2032 only if and when the Company earns gross revenue.

The repayable portion would be payable over fifteen ( 15 ) years based on a percentage rate of the Company’s annual revenue growth.

The maximum amount repayable under the 2023 SIF Agreement is 1.4 times the original repayable amount.

In addition, the Company is entitled to partial reimbursement of certain eligible expenses under the 2023 SIF Agreement.

Under the 2023 SIF Agreement, the Company agreed to certain financial and non-financial covenants and other obligations in relation to the Project.

Pursuant to the 2023 SIF Agreement, certain customary events of default, such as the Company’s or Edesa Biotech Research’s breach of their covenants and obligations under the 2023 SIF Agreement, their insolvency, winding up or dissolution, and other similar events, may permit the Government of Canada to declare an event of default under the 2023 SIF Agreement.

Upon an event of default, subject to applicable cure, the Government of Canada may exercise a number of remedies, including suspending or terminating funding under the 2023 SIF Agreement, demanding repayment of funding previously received and/or terminating the 2023 SIF Agreement.

The maximum amount repayable is 1.4 times the original repayable amount.

In addition, the Company is entitled to partial reimbursement of certain eligible expenses.

The Company also agreed to certain financial and non-financial covenants and other obligations in relation to the SRF Project.

Certain customary events of default, such as the Company’s or Edesa Biotech Research’s breach of their covenants and obligations under the Agreement, their insolvency, winding up or dissolution, and other similar events, may permit the Government of Canada to declare an event of default.

Upon an event of default, subject to applicable cure, the Government of Canada may exercise a number of remedies, including suspending or terminating funding, demanding repayment of funding previously received and/or terminating the 2023 SRF Agreement.

The funding and any associated conditional repayments are not secured by any assets of Edesa Biotech Research or the Company.

The Agreement will expire on the later of December 31, 2042 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three ( 3 ) years beyond the term or early termination of the 2023 SIF Agreement.

Under the October 2023 SIF Agreement the Company recorded grant income of $ 0.2 million and $ 0.2 million for the three months ended June 30, 2025 and June 30, 2024, respectively, and $ 0.5 million and $ 0.7 million for the nine months ended June 30, 2025 and June 30, 2024, respectively, bringing the total recorded under the agreement to $ 1.8 million.

The 2023 SRF Agreement will expire on the later of December 31, 2045 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three ( 3 ) years beyond the term or early termination.

Under the 2023 SRF Agreement the Company recorded grant income of $ 0.1 million and $ 0.3 million for the three months ended December 31, 2025 and December 31, 2024, respectively.

Financial Instruments

13 unchanged sentences

The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a significant change in market interest rates, relative to interest rates on cash and cash equivalents due to the short-term nature of these balances.

The Company is also exposed to credit risk at period end from the carrying value of its cash and cash equivalents and accounts and other receivable.

The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank and a U.S.

bank believed to be credit worthy and money market mutual funds of U.S.

The Company is also exposed to credit risk at year end from the carrying value of its cash and cash equivalents and accounts and other receivable.

The Company manages this risk by maintaining bank accounts with Canadian Chartered Banks, U.S.

banks believed to be credit worthy and money market mutual funds of U.S.

government securities.

The Company’s cash is not subject to any external restrictions.

The Company assesses the collectability of accounts receivable through a review of the current aging and terms, as well as an analysis of historical collection rates, general economic conditions and credit status of government agencies.

Credit risk for the reimbursement grant and HST refunds receivable are not considered significant since amounts are due from the Canadian government’s SIF and the Canada Revenue Agency.

The Company assesses the collectability of accounts and receivables through a review of the current aging and terms, as well as an analysis of historical collection rates, general economic conditions and credit status of government agencies.

Credit risk for the reimbursement grant and HST refunds receivable are not considered significant since amounts are due from the Canadian government’s SRF and the Canada Revenue Agency.

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The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks.

At June 30, 2025, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 3.5 million and the U.S.

At December 31, 2025, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 2.1 million and the U.S.

dollar exchange rate at this date was equal to 1.3710 Canadian dollars.

Based on the exposure at June 30, 2025, a 10% annual change in the Canadian/U.S.

Based on the exposure at December 31, 2025, a 10% annual change in the Canadian/U.S.

exchange rate would impact the Company’s loss and other comprehensive loss by approximately $ 0.2 million.

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Another director purchased 10,416 Common Shares for an aggregate purchase price of approximately $ 20,000 .

Entities affiliated with significant beneficial owners purchased, in aggregate, 2,687,500 Common Shares and 734 Series B-1 Preferred Shares for aggregate gross proceeds of approximately $ 12.5 million.

Entities affiliated with significant beneficial owner purchased, in aggregate, 2,687,500 Common Shares and 734 Series B-1 Preferred Shares for aggregate gross proceeds of approximately $ 12.5 million.

A holder of Series B-1 Preferred Shares will not have the right to convert any portion of its Series B-1 Preferred Shares, if, together with its affiliates, it would beneficially own in excess of 4.99 % (or, at the option of the holder, 9.99 %) of the number of Common Shares outstanding immediately after giving effect to such conversion, provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving 61 days’ notice to the Company, but not to any percentage in excess of 19.99 %.

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The IRA provides that the board of directors, following the Company’s annual meeting to be held on May 28, 2025, shall consist of seven members, one of whom shall be a director nominated by the lead investor (the “Lead Investor Nominee”), who shall serve on the board effective as of the Closing Date, until the earlier of such time as (i) the lead investor no longer holds at least 51% of the Common Shares (calculated on an as-converted-to-Common Shares basis), subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Common Shares issued in the private placement, or (ii) the lead investor beneficially owns less than 5% of the outstanding Common Shares as a result of a disposition of shares (such period, the “Lead Investor Rights Period”).

The Company also agreed to use its reasonable best efforts to solicit shareholder approval of the Lead Investor Nominee at each general or special meeting of shareholders of the Company at which an election of directors is held during the Lead Investor Rights Period.

Additionally, the IRA includes certain protective provisions that restrict the Company’s ability to, among other things, (i) amend, modify, alter or repeal any provision of the Company’s governing documents in a manner adverse to the holders of Series B-1 Preferred Shares, (ii) alter or change the special rights and restrictions of the Series B-1 Preferred Shares and (iii) increase or decrease the authorized number of Series B-1 Preferred Shares, in each case, without the written consent of the lead investor.

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See Note 5 – Series A-1 Convertible Preferred Shares offering.

During the three and nine months ended June 30, 2025 and 2024, the Company paid cash of $ 20,000 and $ 60,000 in 2025, and $ 20,000 and $ 60,000 in 2024, respectively, for a lease from a company controlled by the Company’s CEO.

During each of the three months ended December 31, 2025 and 2024, the Company paid cash of $ 19,000 and $ 18,000 , respectively, for a month to month lease from a company controlled by the Company's CEO.

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.

The Company extended the lease beyond its December 31, 2024 expiration to November 30, 2025 and upon expiry will be month to month and either party will have the right to terminate on 30 days’ notice.

In October 2023, the Company entered into $ 10.0 million revolving credit agreement with an entity controlled by the Company’s Chief Executive Officer and Secretary and member of the Company’s board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $ 3.5 million (Credit Limit) which was available immediately.

The line of credit bore interest at the Canadian Imperial Bank of Commerce US Base-Interest Rate plus 3 % per annum and has a maturity date of March 31, 2026, unless terminated earlier by either party with 90 days’ notice.

Advances under the line of credit are tied to a borrowing base (Borrowing Base) consisting of eligible grant receivables from SIF, future potential license fee receivables and any other accounts receivable.

At no time shall the aggregate principal amount of all advances outstanding exceed the lesser of (i) the Credit Limit and (ii) an amount equal to 85 % of the Borrowing Base.

During the three and nine months ended June 30, 2025 and 2024, the Company incurred standby charges of $ 0 and $ 13,000 in 2025 and $ 4,000 and $ 38,000 in 2024, respectively.

No rent was payable at December 31, 2025, while approximately $ 7,000 was payable at December 31, 2024.

During the three months ended December 31, 2025 and 2024, the Company incurred standby charges of $ 0 and $ 4,000 , respectively, related to the Credit Agreement.

The Credit Agreement was terminated in October 2024.

Prior to the termination of the Credit Agreement, the Company had not borrowed any funds thereunder.

The Company incurred no termination penalties in connection with the termination of the Credit Agreement.

Prior to its termination, the Company had not borrowed any funds under the agreement and incurred no termination penalties.

At September 30, 2025, accounts and other receivable included immaterial balance due from certain executive officers related to foreign exchange payroll adjustments recorded during fiscal 2025.

These amounts were fully recovered through scheduled deductions during the three months ended December 31, 2025.

As of December 31, 2025, the Company did not have any loans or other receivables outstanding from its directors or executive officers.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

The following management ’ s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of June 30, 2025 and our audited consolidated financial statements for the year ended September 30, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on December 13, 2024, as amended.

The following management ’ s discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q as of December 31, 2025 and our audited consolidated financial statements for the year ended September 30, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on December 12, 2025.

This Quarterly Report on Form 10-Q contains forward-looking statements.

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You should not place undue reliance on these forward-looking statements.

Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2024, as amended, and other reports we file with the Securities and Exchange Commission.

Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Annual Report on Form 10-K for the year ended September 30, 2025, and other reports we file with the Securities and Exchange Commission.

Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made.

We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements as of June 30, 2025 and September 30, 2024 and for the three and nine months ended June 30, 2025 and 2024 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S.

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed interim consolidated financial statements as of December 31, 2025 and September 30, 2025 and for the three months ended December 31, 2025 and 2024 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we have prepared in accordance with U.S.

generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods.

The preparation of these condensed interim financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed interim financial statements, as well as the reported revenues and expenses during the reporting periods.

On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below.

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general changes in economic or business conditions;

other risks and uncertainties, including those listed under the caption “ Risk Factors ” in our Annual Report on Form 10-K for the year ended September 30, 2024, as amended.

other risks and uncertainties, including those listed under the caption “ Risk Factors ” in our Annual Report on Form 10-K for the year ended September 30, 2025.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

You should refer to the “ Risk Factors ” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC, on December 13, 2024, as amended, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

You should refer to the “ Risk Factors ” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on December 12, 2025 for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

We operate in an evolving environment and new risk factors and uncertainties may emerge from time to time.

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Food and Drug Administration (“FDA”) for the same study.

Preparation for the manufacturing campaign began in our fiscal second quarter, and we have evaluated multiple development and manufacturing pathways to produce our drug.

We anticipate data to be submitted to the FDA by the end of calendar 2025 based on the current availability of manufacturing slots at third party service providers.

Subject to regulatory approval, we anticipate initiating enrollment by midyear 2026.

Our Medical Dermatology assets also include EB01 (1.0% daniluromer cream), a Phase 3-ready asset developed for use as a potential therapy for moderate-to-severe chronic Allergic Contact Dermatitis (“ACD”), a common occupational skin condition.

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Paridiprubart represents a new class of emerging therapies called Host-Directed Therapeutics (“HDTs”) that are designed to modulate the body’s own immune response when confronted with infectious diseases or even chemical agents.

EB05 is currently being evaluated in the U.S.

government-funded “Just Breathe” study investigating three novel threat-agnostic HDTs in hospitalized adult patients with Acute Respiratory Distress Syndrome (ARDS), a life-threatening form of respiratory failure.

During the third fiscal quarter, the U.S.

government announced that the first randomizations of EB05 and other host directed therapeutics were completed.

In October 2025, we reported that paridiprubart met primary and secondary endpoints with statistical significance, providing clinically meaningful improvement in survival and recovery, in a truncated Phase 3 clinical study of hospitalized patients with Acute Respiratory Distress Syndrome (“ARDS”), a life-threatening form of respiratory failure.

We are currently evaluating subgroup data for additional efficacy signals among subjects with certain comorbidities.

Paridiprubart is also being evaluated in an ongoing U.S.

government-funded platform study investigating three novel threat-agnostic HDTs in hospitalized patients with ARDS.

Certain development expenses, including manufacturing scale-up, for our EB05 program are also eligible for reimbursement from the Government of Canada under a 2023 grant and funding award.

We are also pursuing additional uses for paridiprubart in chronic diseases, such as pulmonary fibrosis (EB07 program).

In light of our other development priorities, we are evaluating the timing for the next steps in our EB07 program.

We are also pursuing additional uses for paridiprubart in chronic diseases.

Recent Developments

In October 2024, we entered into an At The Market Offering Agreement with H.C.

Wainwright & Co., LLC as a sales agent (HCW ATM) pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $3.87 million in gross proceeds.

Wainwright & Co., LLC as a sales agent (“HCW ATM”) pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program.

We have no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms.

For the nine months ended June 30, 2025, we sold a total of 304,057 common shares pursuant to the agreement for net proceeds of $0.8 million after deducting sales agent commissions of $25,000.

We have not sold any common shares pursuant to the HCW ATM subsequent to June 30, 2025.

Amended Articles

On October 30, 2024, we filed Amended Articles to amend the rights, preferences, restrictions and other matters pertaining to our newly designated Series A-1 Convertible Preferred Shares (Series A-1 Preferred Shares).

The Series A-1 Preferred Shares have no par value and a stated value of $10,000 per share and rank, with respect to redemption payments, rights upon liquidation, dissolution or winding-up of the Company, or otherwise, senior in preference and priority to our common shares.

On February 12, 2025, we filed Amended Articles to create the rights, preferences, restrictions and other matters pertaining to our newly designated Series B-1 Convertible Preferred Shares (Series B-1 Preferred Shares).

The Series B-1 Preferred Shares have no par value and a stated value of $10,000 per share and rank, with respect to rights upon liquidation, dissolution or winding-up of the Company, or otherwise, senior in preference and priority to our common shares and each other class or series of shares that rank junior to the Series B-1 Preferred Shares.

Series A-1 Preferred Shares Offering

On October 30, 2024, we entered into a Securities Purchase Agreement (Series A-1 Purchase Agreement) with Pardeep Nijhawan Medicine Professional Corporation (Series A-1 Purchaser), an entity controlled by Pardeep Nijhawan, our Chief Executive Officer, Secretary and member of our board of directors, pursuant to which we agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $5,000,000 of the Series A-1 Preferred Shares, each of which is initially convertible into approximately 2,903 common shares at a conversion price of $3.445 per Series A-1 Conversion Share, and warrants (Warrants) to purchase common shares (Warrant Shares) at an exercise price of $3.445 per Warrant Share.

The Series A-1 Preferred Shares and the Warrants are being sold together in a fixed combination of one Series A-1 Preferred Share and a Warrant to purchase a number of common shares equal to 75% of the underlying Series A-1 Conversion Shares at a combined purchase price of $10,272.13 per Series A-1 Preferred Share and related Warrants.

Under the Series A-1 Purchase Agreement, the Series A-1 Purchaser has purchased 150 Series A-1 Preferred Shares initially convertible into an aggregate of 435,414 Series A-1 Conversion Shares and Warrants to purchase up to an aggregate of 326,560 Warrant Shares for an aggregate purchase price of $1,540,819.

The offering of the Series A-1 Preferred Shares and Warrants was structured as an at-market offering under the rules of The Nasdaq Stock Market.

The Series A-1 Purchaser will not have the right to convert any portion of its Series A-1 Preferred Shares, or exercise any portion of the Warrants, if, together with its affiliates, it would beneficially own in excess of 19.99% of the number of common shares outstanding immediately after giving effect to such conversion or exercise.

Series B-1 Preferred Shares Offering

On February 12, 2025, we entered into a Securities Purchase Agreement (Series B-1 Purchase Agreement) with a lead investor and several additional investors signatory thereto (the Series B-1 Investors), pursuant to which we sold to the Series B-1 Investors in a private placement, an aggregate of (i) 834 shares (Series B-1 Preferred Shares) of the Company’s newly designated Series B-1 Convertible Preferred Shares, stated value $10,000 per share, each of which is initially convertible into approximately 5,208 common shares (Series B-1 Conversion Shares) at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

The purchase price per Series B-1 Preferred Share was $10,000 and the purchase price per common share was $1.92.

The gross proceeds were approximately $15.0 million, prior to deducting offering expenses payable by us.

A holder of Series B-1 Preferred Shares will not have the right to convert any portion of its Series B-1 Preferred Shares, if, together with its affiliates, it would beneficially own in excess of 4.99% (or, at the option of the holder, 9.99%) of the number of common shares outstanding immediately after giving effect to such conversion, provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving 61 days’ notice to the Company, but not to any percentage in excess of 19.99%.

For the three months ended December 31, 2025, we sold 1,177,568 common shares pursuant to the HCW ATM under the prospectus supplement filed on September 9, 2025 for net proceeds of approximately $3.4 million, after deducting sales agent commissions.

On December 12, 2025, we filed a prospectus supplement with the SEC authorizing the offer and sale of up to approximately $2.26 million of common shares pursuant to the HCW ATM.

We did not sell any common shares under the December 12, 2025 prospectus supplement.

Significant Accounting Policies and Estimates

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Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

Total operating expenses for each of the three months ended June 30, 2025 and June 30, 2024 were $1.9 million.

The following table summarizes our R&D expenses incurred during the three months ended June 30, 2025 and 2024, together with the dollar increase or decrease in those items:

Three Months Ended June 30, 2025

June 30, 2025

June 30, 2024

Program-specific external costs:

Other development and discovery programs

Total program-specific costs

Unallocated internal costs

Non-program specific external costs

Unallocated internal costs

Total unallocated internal costs

Total research and development costs

Research and development (R&D) expenses were $0.9 million for each of the three months ended June 30, 2025 and June 30, 2024, as an increase in EB06-related expenses associated with preparations for the Phase 2 clinical study was offset by a decrease in external research expenses related to EB05.

Our R&D expenses consist primarily of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in R&D functions; expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material; costs associated with clinical activities, including expenses for contract research organizations; and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

General and administrative (G&A) expenses were $1.0 million for each of the three months ended June 30, 2025 and June 30, 2024, as a decrease in salaries and related costs was offset by an increase in noncash share-based compensation and professional service fees.

Our G&A expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions.

G&A expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

Total other income decreased by $110,000 to $154,000 for the three months ended June 30, 2025 compared to $264,000 for the same period last year and was composed of the following:

Grant income decreased by $53,000 to $183,000 for the three months ended June 30, 2025 compared to $236,000 for the three months ended June 30, 2024.

The decrease is related to the grant income associated with the activities under the 2023 SIF Agreement.

Interest income decreased to $600 for the three months ended June 30, 2025 compared to $33,000 for the same period last year primarily due to lower cash balances.

Foreign exchange loss was $30,000 for the three months ended June 30, 2025 compared to a loss of $5,000 for the same period last year.

For the three months ended June 30, 2025, our net loss was $1.7 million, or $0.25 per common share, compared to a net loss of $1.7 million, or $0.52 per common share for the three months ended June 30, 2024.

Comparison of the Nine Months Ended June 30, 2025 and 2024

Total operating expenses decreased by $0.6 million to $5.4 million for the nine months ended June 30, 2025 compared to $6.0 million for the nine months ended June 30, 2024.

The following table summarizes our R&D expenses incurred during the nine months ended June 30, 2025 and 2024, together with the dollar increase or decrease in those items:

Nine Months Ended June 30, 2025

June 30, 2025

June 30, 2024

Comparison of the Three Months Ended December 31, 2025 and 2024

Total operating expenses increased by $0.4 million to $2.3 million for the three months ended December 31, 2025 compared to $1.9 million for the same period last year.

The following table summarizes our R&D expenses incurred during the three months ended December 31, 2025 and 2024, together with the dollar increase or decrease in those items:

Three Months Ended December 31, 2025

December 31, 2025

December 31, 2024

Program-specific external costs:

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Total research and development costs

R&D expenses decreased by $0.4 million to $2.4 million for the nine months ended June 30, 2025 compared to $2.8 million for the same period last year primarily due to a decrease in external research expenses related to EB05 (paridiprubart), which was partially offset by an increase in costs related to EB06 associated with preparations for the Phase 2 clinical study.

G&A expenses decreased by $0.2 million to $3.0 million for the nine months ended June 30, 2025 compared to $3.2 million for the same period last year primarily due to a decrease in professional service fees and noncash share-based compensation.

Research and development (“R&D”) expenses increased by $0.1 million to $1.1 million for the three months ended December 31, 2025 compared to $1.0 million for the same period last year, primarily due to increased expenses for manufacturing-related activities and other preparations for the planned Phase 2 clinical study of EB06 in vitiligo patients, as well as increased unallocated research costs, which were offset by decreased expenses related to the completion of the Phase 3 study of paridiprubart (“EB05”).

Our R&D expenses consist primarily of employee-related expenses, including salaries, benefits, taxes, travel, and share-based compensation expense for personnel in R&D functions;

expenses related to process development and production of product candidates paid to contract manufacturing organizations, including the cost of acquiring, developing, and manufacturing research material;

costs associated with clinical activities, including expenses for contract research organizations;

and clinical trials and activities related to regulatory filings for our product candidates, including regulatory consultants.

General and administrative (“G&A”) expenses increased by $0.3 million to $1.2 million for the three months ended December 31, 2025 compared to $0.9 million for the same period last year primarily due to an increase in noncash share-based compensation.

Our G&A expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions.

G&A expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

Total other income decreased by $0.3 million to $0.5 million for the nine months ended June 30, 2025 compared to $0.8 million for the same period last year and was composed of the following:

Grant income remained decreased by $0.2 million to $0.5 million for the nine months ended June 30, 2025 compared to $0.6 million for the same period last year and the nine months ended June 30, 2024, respectively.

The decrease is related to the grant income associated with the activities under the 2023 SIF Agreement.

Interest income decreased to $3,000 for the nine months ended June 30, 2025 compared to $137,000 for the same period last year primarily due to lower cash balances.

Foreign exchange loss was $54,000 for the nine months ended June 30, 2025 compared to a loss of $10,000 for the same period last year.

For the nine months ended June 30, 2025, our net loss was $5.0 million, or $0.95 per common share, compared to a net loss of $5.2 million, or $1.64 per common share for the nine months ended June 30, 2024.

Total other income decreased by approximately $0.2 million to $0.1 million for the three months ended December 31, 2025 compared to $0.3 million for the same period last year and was composed of the following:

Grant income decreased by $0.2 million to $0.1 million for the three months ended December 31, 2025 compared to $0.3 million for the same period last year, reflecting a decrease in grant income associated with reimbursable expenses under the 2023 SRF Agreement.

Interest income was nominal for the three months ended December 31, 2025 and 2024, primarily due to minimal interest earned on cash balances and lower average interest rates.

Foreign exchange loss decreased to $9,000 for the three months ended December 31, 2025 compared to $21,000 for the same period in 2024.

For the three months ended December 31, 2025, our net loss was $2.2 million, or $0.28 per common share, compared to a net loss of $1.6 million, or $0.48 per common share for the three months ended December 31, 2024.

Capital Expenditures

Our capital expenditures primarily consist of computer and office equipment.

There were no significant capital expenditures for the three and nine months ended June 30, 2025 and 2024.

There were no significant capital expenditures for the three months ended December 31, 2025 and 2024.

Liquidity and Capital Resources

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Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in accounts payable and accrued expenses.

Net cash used in operating activities was $5.6 million and $3.9 million for the nine months ended June 30, 2025 and 2024, respectively.

We incurred net losses of $5.0 million and $5.2 million, respectively, for those same periods.

On February 12, 2025, we entered into the Series B-1 Purchase Agreement with the Series B-1 Investors, pursuant to which we sold to the Series B-1 Investors in a private placement, an aggregate of (i) 834 Series B-1 Preferred Shares, each of which is initially convertible into approximately 5,208 Series B-1 Conversion Shares at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

Net cash used in operating activities was $2.1 million for the three months ended December 31, 2025, compared to $1.5 million for the same period in 2024.

We incurred net losses of $2.2 million for the three months ended December 31, 2025, compared to $1.6 million for the same period in 2024.

We ended the quarter with $12.1 million in cash and cash equivalents and working capital of $12.0 million, compared to $10.8 million in cash and cash equivalents and working capital of approximately $10.4 million as of September 30, 2025.

On February 12, 2025, we entered into a Securities Purchase Agreement (the “Series B-1 Purchase Agreement”) with a lead investor and several additional investors signatory thereto (the “Series B-1 Investors”), pursuant to which we sold to the Series B-1 Investors in a private placement, an aggregate of (i) 834 Series B-1 Preferred Shares, each of which is initially convertible into approximately 5,208 common shares (the “Series B-1 Conversion Shares”) at a conversion price of $1.92 per Series B-1 Conversion Share, and (ii) 3,468,746 common shares.

The purchase price per Series B-1 Preferred Share was $10,000 and the purchase price per common share was $1.92.

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A holder of Series B-1 Preferred Shares will not have the right to convert any portion of its Series B-1 Preferred Shares if, together with its affiliates, it would beneficially own in excess of 4.99% (or, at the option of the holder, 9.99%) of the number of common shares outstanding immediately after giving effect to such conversion, provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving 61 days’ notice to the Company, but not to any percentage in excess of 19.99%.

In October 2024, we entered into the HCW ATM pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $3.87 million in gross proceeds.

For the three months ended June 30, 2025 there were no common shares sold pursuant to the agreement.

For the nine months ended June 30, 2025, we sold a total of 304,057 common shares pursuant to the agreement for net proceeds of $0.8 million after deducting sales agent commissions of $25,000.

We have not sold any common shares pursuant to the HCW ATM subsequent to June 30, 2025.

In October 2024, we entered into the Series A-1 Purchase Agreement with the Series A-1 Purchaser, an entity controlled by our Chief Executive Officer, Secretary and member of our board of directors, pursuant to which we agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $5 million of Series A-1 Preferred Shares, each of which is initially convertible into approximately 2,903 Series A-1 Conversion Shares, at a conversion price of $3.445 per Series A-1 Conversion Share, and Warrants to purchase the Warrant Shares at an exercise price of $3.445 per Warrant Share.

In July 2025, we filed with the SEC a shelf registration statement on Form S-3, allowing for the offer and sale of up to $150.0 million of securities , which was declared effective on September 9, 2025.

Such registration statement replaced our previous shelf registration statement that expired in August 2025.

In October 2024, we entered into the HCW ATM pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program.

For the three months ended December 31, 2025, we sold a total of 1,177,568 common shares pursuant to the HCW ATM agreement for net proceeds of approximately $3.4 million.

For the three months ended December 31, 2024, we sold 220,269 common shares for net proceeds of approximately $0.6 million pursuant to the HCW ATM .

We have not sold any common shares pursuant to the HCW ATM subsequent to December 31, 2025.

On December 12, 2025, we filed a prospectus supplement with the SEC to increase the maximum aggregate offering amount of common shares issuable under the HCW ATM by $2.26 million.

In October 2024, we entered into a Securities Purchase Agreement (the “Series A-1 Purchase Agreement”) with Pardeep Nijhawan Medicine Professional Corporation (the “Series A-1 Purchaser”), an entity controlled by Pardeep Nijhawan, our Chief Executive Officer, Secretary and member of our Board, pursuant to which we agreed to issue and sell to the Series A-1 Purchaser in a private placement, up to $5 million of Series A-1 Preferred Shares, each of which is initially convertible into approximately 2,903 common shares (the “Series A-1 Conversion Shares”), at a conversion price of $3.445 per Series A-1 Conversion Share, and warrants (the “Warrants”) to purchase common shares (the “Warrant Shares”) at an exercise price of $3.445 per Warrant Share.

The Series A-1 Preferred Shares and the Warrants were being sold together in a fixed combination of one Series A-1 Preferred Share and a Warrant to purchase a number of common shares equal to 75% of the underlying Series A-1 Conversion Shares at a combined purchase price of $10,272.13 per Series A-1 Preferred Share and related Warrants.

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We have the right to require the Series A-1 Purchaser to purchase additional Series A-1 Preferred Shares and Warrants (up to an aggregate investment of $5.0 million); provided however, no more than an aggregate of $2.0 million of Series A-1 Preferred Shares and Warrants may be issued and sold pursuant to the Series A-1 Purchase Agreement without shareholder approval in accordance with applicable Canadian securities laws.

In October 2023, we entered into the 2023 SIF Agreement with the Canadian Government’s SIF.

Under the 2023 SIF Agreement, the Government of Canada committed up to C$23 million in partially repayable funding.

Of the C$23 million committed by SIF, up to C$5.8 million is not repayable by us.

In October 2023, we entered into the 2023 SRF Agreement with the Canadian Government’s SRF.

Under the 2023 SRF Agreement, the Government of Canada committed up to C$23 million in partially repayable funding.

Of the C$23 million committed by SRF, up to C$5.8 million is not repayable by us.

The remaining C$17.2 million is conditionally repayable starting in 2032 only if and when we earn gross revenue.

For the three months ended June 30, 2025 and 2024, we recorded grant income of $0.2 million and $0.2 million, respectively, related to the 2023 SIF Agreement.

For the nine months ended June 30, 2025 and 2024, we recorded grant income of $0.5 million and $0.6 million, respectively, related to the 2023 SIF Agreement.

In October 2023, we entered into $10.0 million revolving credit agreement with an entity controlled by the Company’s Chief Executive Officer and Secretary and member of our board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $3.5 million (Credit Limit) which was available immediately.

For the three months ended December 31, 2025 and 2024, we recorded grant income of $0.1 million and $0.3 million, respectively, related to the 2023 SRF Agreement.

On September 30, 2025, the 2023 SRF Agreement was amended to, among other things, extend the program period to December 31, 2028 from December 31, 2025 and defer the start of the conditional repayment period from 2029 to 2032.

In October 2023, we entered into a $10.0 million revolving credit agreement with PN MPC, an entity controlled by Pardeep Nijhawan, our Chief Executive Officer and Secretary and member of our Board (“Credit Agreement”), providing an unsecured revolving credit facility, with a credit limit of $3.5 million (“Credit Limit”) which was available immediately.

The line of credit bore interest at the Canadian Imperial Bank of Commerce US Base-Interest Rate plus 3% per annum and has a maturity date of March 31, 2026, unless terminated earlier by either party with 90 days’ notice.

Advances under the line of credit were tied to a borrowing base (Borrowing Base) consisting of eligible grant receivables from SIF, future potential license fee receivables and any other accounts receivable.

Advances under the line of credit were tied to a borrowing base (“Borrowing Base”) consisting of eligible grant receivables from SRF, future potential license fee receivables and any other accounts receivable.

At no time could the aggregate principal amount of all advances outstanding have exceeded the lesser of (i) the Credit Limit and (ii) an amount equal to 85% of the Borrowing Base.

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We incurred no termination penalties in connection with the termination of the Credit Agreement.

In August 2022, we filed a $150.0 million shelf registration statement.

In March 2023, we entered into an equity distribution agreement with Canaccord, as sales agent, pursuant to which we may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20 million in gross proceeds, subject to certain offering limitations that currently allow us to offer and sell common shares having an aggregate gross sales price of up to $8.4 million (Canaccord ATM).

During the three months ended December 31, 2023, the Company sold a total of 89,249 common shares pursuant to the agreement for gross proceeds of approximately $0.3 million after deducting sales agent commissions of $9,000.

The Canaccord ATM was terminated in October 2024.

At June 30, 2025, we had an accumulated deficit of $63.6 million and working capital of $12.1 million, including $12.4 million in cash and cash equivalents.

In the nine months ended, June 30, 2025, we received proceeds of $1.5 million from the initial sale of Series A-1 Preferred Shares to the Series A-1 Purchaser and gross proceeds of $15.0 million from the sale of common shares and Series B-1 Preferred Shares in a private placement.

We expect that our cash and cash equivalents at June 30, 2025, including the net proceeds from the Series A-1 Purchase Agreement, the $15.0 million in gross proceeds from the sale of common shares and Series B-1 Preferred Shares, HCW ATM and reimbursements of eligible R&D expenses under the 2023 SIF Agreement will be used to fund our operating expenses including the advancement of the vitiligo program through the end of fiscal 2026.

At December 31, 2025, we had an accumulated deficit of $68.2 million and working capital of $12.0 million, including $12.1 million in cash and cash equivalents.

We expect that our cash and cash equivalents at December 31, 2025, future sales of common shares pursuant to the HCW ATM and reimbursements of eligible R&D expenses under the 2023 SRF Agreement will not be sufficient to fund our operating expenses including the advancement of the vitiligo program through the end of fiscal 2026.

Management has flexibility to adjust this timeline by making changes to planned expenditures related to, among other factors, the size and timing of clinical trial expenditures and manufacturing campaigns, staffing levels, and the acquisition or in-licensing of new product candidates.

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Net cash used in operating activities

Net cash used in operating activities was $5.6 million for the nine months ended June 30, 2025 compared to $3.9 million for the nine months ended June 30, 2024, primarily due to an improvement in net loss offset by an investment in working capital of $1.1 million, compared to a recovery of working capital $0.7 million in the comparable period.

Net cash used in operating activities was $2.1 million for the three months ended December 31, 2025 compared to $1.5 million for the three months ended December 31, 2024, primarily due to a higher net loss and an increase in our investment in working capital of $0.3 million.

Net cash used in investing activities

There was no cash used in investing activities for the nine months ended June 30, 2025 and 2024, respectively.

There was no cash used in investing activities for the three months ended December 31, 2025 and 2024, respectively.

Net cash provided by financing activities

Net cash provided by financing activities was $16.8 million for the nine months ended June 30, 2025, as compared to $0.6 million for the nine months ended June 30, 2024.

In the current period, we received $15.0 million in proceeds from the sale of common shares and the sale of Series B-1 Preferred Shares, $1.5 million in proceeds from the sale of the Series A-1 Preferred Shares and proceeds of $0.8 million from the HCW ATM, partially offset by issuance costs of $0.5 million.

In the comparative period, we received $0.7 million in net proceeds from the Canaccord ATM.

Net cash provided by financing activities was $3.4 million for the three months ended December 31, 2025 compared to $2.1 million for the three months ended December 31, 2024.

In the current period, we received approximately $3.5 million of net proceeds from sales under the HCW ATM, partially offset by approximately $0.1 million of offering costs.

In the comparable period, we received approximately $0.6 million of net proceeds from sales under the HCW ATM and $1.5 million from the sale of the Series A-1 Preferred Shares, partially offset by approximately $0.1 million of offering costs.

Research and Development

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R&D expenses, which have historically varied based on the level of activity in our clinical programs, are significantly influenced by study initiation expenses and patient recruitment rates, and as a result are expected to continue to fluctuate, sometimes substantially.

Our R&D expenses were $0.9 million and $2.4 million for the three and nine months ended June 30, 2025, compared to $0.9 million and $2.8 million for the same period last year.

The decrease was primarily related to lower clinical expenses related to EB05, partially offset by an increase in costs related to EB06 as we prepare for the Phase 2 clinical study.

Our R&D expenses were $ 1.1 million and $1.0 million for the three months ended December 31, 2025 and 2024, respectively.

The increase primarily reflects manufacturing-related activities and other preparations for the planned Phase 2 study of EB06 (vitiligo) and manufacturing support and wind-down activities for paridiprubart (“EB05”), including BARDA-related work, partially offset by lower spend on other discovery programs.

Off-Balance Sheet Arrangements

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

What changed 10-Q

Item 1. Financial Statements