What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-13 · 133 added, 182 removed, 106 unchanged (75% of the section changed)

2 unchanged sentences

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026 (the “Annual Report”) and our unaudited interim condensed consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to the Company’s plans and strategy for its business, includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

2 unchanged sentences

As a result of many factors, including those factors set forth in Part I, Item 1A of the Annual Report under the heading “Risk Factors”, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

The following discussion should be read in conjunction with our Annual Report and the condensed consolidated financial statements and accompanying notes included elsewhere in this report.

We are a commercial-stage biopharmaceutical company focused on our only product PEDMARK ® .

On September 20, 2022, we received approval from the FDA for PEDMARK ® (sodium thiosulfate injection) to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of unmet medical need.

On October 17, 2022, we announced commercial availability of PEDMARK ® in the U.S.

In addition, in January 2023, PEDMARK ® was included in the National Comprehensive Cancer Network (“NCCN”) clinical practice guidelines for Adolescent and Young Adult (“AYA”) Oncology with a category 2A recommendation.

In June 2023, we received European Commission Marketing Authorization for PEDMARQSI ® (known as PEDMARK ® in the U.S.) Further, the decision included the receipt of a PUMA in the EU with up to 8 years of data exclusivity plus 2 years of market protection.

In March 2024, the Company announced an exclusive licensing agreement with Norgine, which will commercialize PEDMARQSI ® in Europe, Australia and New Zealand.

The licensing agreement provided us with approximately $43,200 up front and may provide us with up to approximately $230,000 in milestone and royalty payments in the future.

Norgine announced the launch of Germany and the U.K.

in early 2025.

In the U.S., we sell PEDMARK ® through an experienced field force.

Further, the Company utilizes medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® .

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, and the condensed consolidated financial statements and accompanying notes included elsewhere in this report.

Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia, was originally formed under the name Adherex Technologies Inc.

and subsequently changed its name on September 3, 2014.

Fennec is a commercial stage specialty pharmaceutical company dedicated to preventing cisplatin-induced ototoxicity (“CIO”), a serious and often irreversible side effect of cancer treatment, with one FDA approved and European Commission approved product, PEDMARK ® in the U.S.

and PEDMARQSI ® , which is the branded name for PEDMARK ® outside of the U.S.

(collectively, “PEDMARK”), developed to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

The Company has four wholly owned subsidiaries:

Oxiquant, Inc.

and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian corporation, and Fennec Pharmaceuticals (EU) Limited, an Ireland company (“Fennec Limited”).

With the exception of Fennec Pharmaceuticals, Inc., all subsidiaries are inactive.

On September 20, 2022, we received approval from the FDA for PEDMARK ® (sodium thiosulfate injection).

This approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of significant unmet medical need.

On October 17, 2022, we announced commercial availability of PEDMARK ® in the United States.

Further, PEDMARQSI ® received European Commission Marketing Authorization in June 2023 and received U.K.

approval in October 2023.

PEDMARK ® is currently the only FDA-approved therapy indicated to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

In clinical studies in this population, treatment with PEDMARK ® resulted in an approximate 50% relative reduction in the incidence of cisplatin-induced hearing loss compared to cisplatin alone, without evidence of materially compromised antitumor efficacy.

PEDMARK ® is administered as a short intravenous infusion and has generally been associated with a mild-to-moderate and manageable safety profile consistent with its known pharmacology.

In March 2024, we announced that we entered into an agreement with Norgine, a leading European specialist pharmaceutical company.

This is an exclusive licensing agreement under which Norgine will commercialize

PEDMARQSI ® in Europe, Australia and New Zealand.

PEDMARQSI ® is the first and only approved therapy in the EU and U.K.

for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients one month to eighteen years of age with localized, non-metastatic solid tumors.

During 2025, Norgine made PEDMARQSI ® commercially available and expects additional launches to occur in 2026 and beyond.

Under the terms of the Norgine licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties (up to the mid-twenties) on net sales of PEDMARQSI ® in the licensed territories.

To date, Fennec has not received any milestone payments.

Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.

In the United States, we sell our product through an experienced field force including Territory Managers and we utilize medical science liaisons within our medical team who help educate the medical communities and patients about CIO and our programs supporting patient access to PEDMARK ® .

Further, we have established Fennec HEARS ® , a comprehensive single source program designed to connect PEDMARK ® patients to both patient financial and product access support.

The program offers assistance and resources, regardless of insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met.

Fennec HEARS ® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.

We received Orphan Drug Exclusivity for PEDMARK ® in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022, until September 20, 2029.

We currently have six patents listed for PEDMARK ® in the FDA Orange Book.

In September 2022, the USPTO issued Patent No.

We currently have six patents listed for PEDMARK ® in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“FDA Orange Book”).

In September 2022, the United States Patent and Trademark Office (“USPTO”) issued Patent No.

11,291,728 (the “US ‘728 Patent”), in December 2022, the USPTO issued Patent No.

3 unchanged sentences

The US ‘728, US ‘984, US ‘793, US ‘018, US ‘530, and US ‘604 Patents will expire in 2039.

We are also pursuing additional patent applications in both the U.S.

and internationally for PEDMARK ® .

Additionally, on May 27, 2025, we were granted US 12,311,026 (the “US ‘026 Patent”) covering a method of using pharmaceutical compositions comprising sodium thiosulfate and specific stabilizers to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer.

The US ‘026 Patent has an expiration date of July 2039.

Additional patents covering PEDMARK ® formulation have been granted in Australia, Canada, the European Patent Office (EPO) (described further below), Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, and Russia, and patent applications covering PEDMARK ® are pending in Brazil, China, the European Patent Office (EPO), Hong Kong, Israel, Korea, Mexico, New Zealand, Singapore, and Thailand.

Patents covering alternative sodium thiosulfate formulations have been granted in the United States (US 12,311,026 (the “US ‘026 Patent”), Canada, Korea, Mexico, and Russia, and patent applications covering alternative sodium thiosulfate formulations are pending in the United States, Australia, the EPO, Hong Kong, Indonesia, Japan, Malaysia, Mexico, and New Zealand.

Applications from these patent families, where granted, valid, and enforceable, will expire in July 2039, exclusive of any patent term adjustment or extension.

On March 16, 2026, we announced that we had entered into a settlement and license agreement with Cipla Limited and Cipla USA, Inc.

resolving the PEDMARK® patent litigation pending in the United States District Court for the District of New Jersey.

Under the terms of the agreement, the lawsuit will be dismissed with each party bearing its own costs, and Cipla will not enter the U.S.

market with its generic sodium thiosulfate product until September 1, 2033, or earlier under certain specified circumstances.

We believe this settlement, together with our existing patent and regulatory protections, provides additional visibility into the long-term exclusivity profile of PEDMARK® in the United States.

There can be no assurance that we do not or will not infringe on patents held by third parties or that third parties in the future will not claim that we have infringed on their patents.

In the event that our product or technologies infringe or violate the patent or other proprietary rights of third parties, there is a possibility we may be prevented from pursuing product development, manufacturing or commercialization of our product until the underlying patent dispute is resolved.

For example, there may be patents or patent applications held by others that contain claims that our product or operations might be determined to infringe or that may be broader than we believe them to be.

Given the complexities and

uncertainties of patent laws, there can be no assurance as to the impact that future patent claims against us may have on our business, financial condition, results of operations, or prospects.

PEDMARK ® Product Overview

4 unchanged sentences

In the United States, PEDMARK® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin in pediatric patients aged one month and older with localized, non-metastatic solid tumors.

Further, the National Comprehensive Cancer Network (NCCN) recommend the use of PEDMARK ® to reduce the risk of cisplatin-induced ototoxicity in patients with localized, non-metastatic solid tumors (category 2A) for Adolescent and Young Adult (AYA) Oncology.

Further, the National Comprehensive Cancer Network (NCCN) recommended the use of PEDMARK ® to reduce the risk of cisplatin-induced ototoxicity in patients with localized, non-metastatic solid tumors (category 2A) for Adolescent and Young Adult (AYA) Oncology.

As of January 2025, all medical compendia have incorporated Fennec’s clinical updates, and AHFS, the largest online platform for pharmacists, has updated its content to reflect and differentiate PEDMARK ® in accordance with its labeling.

PEDMARK ® is the first and only FDA- and EMA-approved agent designed to reduce the risk of cisplatin-induced hearing loss (CIO) in children with localized solid tumors.

PEDMARK ® is the first and only FDA- and EMA-approved agent designed to reduce the risk of CIO in pediatric patients with localized solid tumors.

The strategic imperatives driving the execution of PEDMARK ® ’s strategy include increasing awareness of unmet patient needs and emphasizing the importance of preventing CIO among oncologists.

2 unchanged sentences

Ensuring seamless access for advocacy groups, payers, and providers is also a priority, along with activating patients and caregivers through disease education to drive demand for PEDMARK ® .

Key activities supporting these objectives include an expanded sales team with a strong track record in both academic and

community settings, partnerships with group purchasing organizations, and specialty pharmacy offerings such as home infusions, white bag delivery, and direct billing.

Key activities supporting these objectives include an expanded sales team with a strong track record in both academic and community settings, partnerships with group purchasing organizations, and specialty pharmacy offerings such as home infusions, white bag delivery, and direct billing.

Furthermore, digital materials, a digital speaker bureau to engage pediatric oncologists, audiologists, nurses, and pharmacists, along with a patient access services hub and ongoing support from advocacy groups, are all integral components of the strategy.

and Europe, it is estimated that more than 10,000 pediatric patients may receive platinum-based chemotherapy on an annual basis.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.

PEDMARK ® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin, a form of platinum based chemotherapy, in pediatric patients aged one month and older with localized, non-metastatic solid tumors.

Beyond the use of PEDMARK ® , only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.

Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.

pediatric oncology landscape includes approximately 200 targeted pediatric hospital centers, such as those within the Children's Oncology Group (COG), National Cancer Institute (NCI), and National Comprehensive Cancer Network (NCCN) institutions.

Around 80% of pediatric cancer patients receive treatment at these key centers.

The Adolescent and Young Adult (AYA) oncology patient is defined as an individual between the ages of 15 and 39 at the time of initial cancer diagnosis.

In the U.S., Fennec estimates that approximately 20,000 cisplatin chemotherapy patients are treated annually with the primary tumor types of thyroid cancer, breast cancer, germ cell cancer and testicular cancer.

Adolescent and Young Adult (AYA) oncology landscape is shaped by a combination of academic and community centers across the nation.

Academic institutions play a critical role in establishing the treatment framework, with 72 NCI-designated academic centers treating approximately 20% of AYA oncology patients.

In contrast, around 80% of patients are treated at 3,750 community centers throughout the country.

Cisplatin Induced Ototoxicity (“CIO”)

Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric and adult malignancies.

Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these patients require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time.

Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement.

It is estimated that greater than 50% of pediatric patients may suffer permanent hearing loss as a result of CIO and approximately 40-80% of adult patients may suffer permanent hearing loss as a result of CIO.

and Europe, Fennec estimates that there are approximately 11,400 pediatric patients with localized, non-metastatic solid tumors each year, of which include approximately 2,157 cisplatin-treated pediatric patients in the U.S.

and 1,250 in Europe who fall within the current PEDMARK ® market.

The incidence and severity of CIO depends on the cumulative dose and duration of chemotherapy.

Many affected children ultimately require hearing aids or, in more severe cases, cochlear implants, which are costly, technically complex and do not fully restore normal hearing.

PEDMARK ® is the first and only therapy approved in the U.S.

to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

Infants and young children who experience ototoxicity during critical developmental windows are at risk for impaired speech and language development and literacy, while older children and adolescents may face long-term challenges in academic performance, social-emotional development, career potential and independent living.

In the U.S., approximately 90% of pediatric cancer patients receive care at approximately 200 key pediatric hospital centers, including institutions within the Children’s Oncology Group (COG), National Cancer Institute (NCI) and National Comprehensive Cancer Network (NCCN).

The Adolescent and Young Adult (“AYA”) oncology patient is defined as an individual between 15 and 39 years of age at the time of initial cancer diagnosis.

In the U.S., Fennec estimates that there are approximately 51,282 new AYA solid tumor cases annually, of which approximately 25,536 involve cisplatin-treated patients with localized, non-metastatic solid tumors.

The most common relevant tumor types include germ cell tumors, testicular cancer, thyroid cancer and breast cancer.

AYA oncology treatment landscape spans both academic and community settings, with 72 NCI-designated academic centers treating roughly 20% of AYA oncology patients, while approximately 80% are managed across approximately 3,750 community oncology centers nationwide.

CIO and Unmet Medical Need

Cisplatin is a cornerstone of modern cancer therapy for many pediatric and AYA solid tumors, with reported overall survival rates in some cisplatin-treated cancers exceeding 80%.

However, cisplatin is associated with a high incidence of ototoxicity.

Published data indicates that approximately 60% to 90% of cisplatin-treated patients may develop some degree of permanent, sensorineural hearing loss, with reported rates of 40% to 80% occurring in adults and 50% to 90% in children.

CIO typically begins as bilateral, high-frequency hearing loss that is progressive and irreversible, occasionally accompanied by tinnitus.

In some cases, it may ultimately require the use of hearing aids or cochlear implants.

Published literature has linked treatment-related hearing loss to impairments in speech and language development, reduced academic performance, challenges in social-emotional development, and enduring impacts on educational attainment, vocational opportunities, and independent living.

Additionally, published research indicates that severe to profound early-onset hearing loss can impose a substantial lifetime economic burden, with per-individual costs estimated at approximately $489 and potentially exceeding $1,000 on an undiscounted basis, primarily due to lost productivity, educational expenses, and medical costs.

These figures are derived from published literature regarding the disease burden of hearing loss and do not represent demonstrated health-economic outcomes specifically attributable to PEDMARK ® .

European Commission Marketing Authorization

5 unchanged sentences

for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients 1 month to < 18 years of age with localized, non-metastatic solid tumors.

In early 2025, Norgine announced the launch of PEDMARQSI ® in Germany and the U.K.

Tariffs and One Big Beautiful Bill Act

In addition, the U.S.

and other countries have recently imposed, and may continue to impose, new tariffs.

While pharmaceuticals are largely exempt from the recently imposed U.S.

tariffs, such exemptions may be terminated or may not apply to any future tariffs.

Additionally, pharmaceuticals are not exempt from certain tariffs recently imposed outside of the U.S.

We continue to evaluate the impacts of tariffs on our business and results of operations.

Based on current information, we do not believe the impact of tariffs on our business, financial condition or results of operations will be material.

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company is currently evaluating the impact of the OBBBA on the Company’s consolidated condensed financial statements and related disclosures

Under the terms of the licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties on net sales of PEDMARQSI ® in the licensed territories up to the mid-twenties.

To date, Fennec has not received any milestone payments.

Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.

Most recently, in 2025, Norgine launched PEDMARQSI ® in Germany and the U.K with plans to launch in several additional markets in 2026.

STS-J01 Investigator-Initiated Trial and Registration Plans

In Japan, an independent investigator-initiated clinical trial, known as STS-J01, has been evaluating PEDMARK ® for the prevention of CIO.

In December 2025, we announced positive topline results from this trial that demonstrated use of PEDMARK ® was associated with a significant reduction in the incidence of hearing loss compared to historically reported rates in patients receiving cisplatin alone, with no evidence of reduced antitumor activity and an approximate 95% clinical response rate.

Based on these results, we are pursuing a regulatory registration strategy for PEDMARK ® in Japan and are evaluating partnering or licensing opportunities in that market, similar to our model with Norgine in Europe.

Discussions with potential partners and regulators are ongoing.

Investigator-Initiated Studies and Lifecycle Management

In addition to our pivotal pediatric studies (SIOPEL6 and COG ACCL0431), we support a number of investigator-initiated and other clinical studies designed to further characterize the use of PEDMARK ® in additional tumor types and patient populations.

For example, City of Hope, a U.S.

cancer research and treatment organization, is conducting an investigator-

initiated clinical trial evaluating PEDMARK ® in adult men with stage II–III metastatic testicular germ cell tumors receiving cisplatin-based chemotherapy.

We also engage in medical affairs activities and data-generation initiatives to expand the clinical evidence base for PEDMARK ® , including in AYA and adult populations.

In 2026, additional investigator-sponsored studies were initiated, including a real-world study at Tampa General Hospital Cancer Institute and a Phase I/II trial at the University of Arizona Cancer Center to evaluate PEDMARK® in AYA and adult patients receiving cisplatin-based chemotherapy.

These studies are exploratory in nature, and PEDMARK ® is not currently approved for use in metastatic cancers or adult populations outside of its labeled indication.

Any potential label expansion will require additional clinical data and regulatory approvals.

Further, in April 2026, we announced that four abstracts evaluating PEDMARK ® (sodium thiosulfate injection) were accepted as part of the 2026 American Society of Clinical Oncology (ASCO) Annual Meeting program, taking place May 29-June 2, 2026 in Chicago, IL.

Results of Operations

Three months ended September 30, 2025 versus three months ended September 30, 2024:

Three months ended March 31, 2026 versus three months ended March 31, 2025:

Three Months Ended

1 unchanged sentence

In thousands of U.S.

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

PEDMARK product sales, net

11 unchanged sentences

Interest income

● The Company recorded net product sales of $12,462 in the third quarter of 2025 compared to $6,974 in the same product in 2024 as the Company increased market penetration and access for PEDMARK ® and as the Company expanded its focus to the adolescent and young adult (AYA) population.

Further, the Company recorded $70 product sales related to the Norgine royalties in the three months ended September 30, 2025.

Net income/(loss)

● The Company recorded net product sales of $15,108 in the first quarter of 2026 compared to $8,751 in 2025 as the Company increased market penetration and access for PEDMARK.

● Research and development expense decreased by $45 for the three-month period ended March 31, 2026, as compared to the same period in 2025.

Our research and development activities for this period consisted of costs associated with investigator initiated clinical trials and the global named patient program.

● Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses.

We recorded $5,210 in selling and marketing expenses for the three-month period ended September 30, 2025, as compared to $4,601 for the same period in 2024.

The increase is largely related to the Company’s increased commercial and marketing efforts in the United States.

● There was a $631 increase in general and administrative expenses for the three-month period ended September 30, 2025 compared to the same period in 2024.

● Interest expense decreased by $439 for the three-month period ended September 30, 2025, compared to the same period in 2024.

The decrease was driven mainly by lower long-term debt due to Company’s debt paydown of $13,000 in December 2024.

● Interest income decreased in the three-month period ended September 30, 2025, as compared to the same period in 2024 by $364, due to lower average cash balances in money market accounts for the comparable periods.

Nine months ended September 30, 2025, versus nine months ended September 30, 2024:

Nine Months Ended

In thousands of U.S.

September 30, 2025

September 30, 2024

PEDMARK product sales, net

Licensing revenue

Total revenue

Operating expenses:

Cost of product sales

Research and development

Selling and marketing

General and administration

Total operating expenses

(Loss) / income from operations

Unrealized loss on securities

Amortization expense

Interest expense

Unrealized foreign exchange gain/(loss)

Interest income

Net (loss) / income

● The Company recorded net product sales of $30,865 in the first three quarters of 2025 compared to $21,655 in the same product in 2024 as the Company increased market penetration and access for PEDMARK ® and as the Company expanded its focus to the adolescent and young adult (AYA) population.

For the nine months ended September 30, 2025 the Company recorded $390 in Norgine royalties within product sales.

Further, the Company recorded $17,958 in licensing revenue related to the Norgine transaction in 2024.

● We recorded $12,510 in selling and marketing expenses for the nine-month period ended September 30, 2025, as compared to $14,482 for the same product in 2024.

The decrease is largely related to the elimination of European pre commercial activities in 2024 which were completed after the Norgine transaction offset by increased commercial infrastructure spending in the United States including personnel and marketing expenses..

● There was a $996 increase in general and administrative expenses for the nine-month period ended September 30, 2025 compared to the same period in 2024.

There was an increase in the comparable periods in the following expense categories:

salaries with increased headcount;

consulting and professional costs;

and intellectual property expenses related to ongoing patent litigation.

● Amortization expense decreased by $26 for the nine-month period ended September 30, 2025 as compared to the same period in 2024.

● Interest expense decreased by $1,331 for the nine-month period ended September 30, 2025, compared to the same period in 2024.

The decrease was driven mainly by lower debt balance on long-term debt due to Company’s debt paydown of $13,000 in December 2024.

● Interest income decreased in the nine-month period ended September 30, 2025, as compared to the same period in 2024 by $724, due to lower average cash balances in money market accounts for the comparable periods.

We recorded $11,422 in selling and marketing expenses for the three-month period ended March 31, 2026, as compared to $3,227 for 2025.

The increase is largely related to the higher commercial headcount and related expenses to support the expansion of our sales organization to enhance coverage of the U.S.

market as well as higher commercial headcount .

● There was a $2,679 decrease in general and administrative expenses for the three-month period ended March 31, 2026 compared to 2025.

The decrease was primarily due to lower legal and professional fees as litigation activities concluded.

● Amortization expense decreased $13 for the three-month period ended March 31, 2026 as compared to the same period in 2025 reflecting completion of deferred financing costs related to Petrichor note.

● Interest expense decreased by $585 for the three-month period ended March 31, 2026 compared to the same period in 2025.

The decrease was primarily due to full repayment of the Petrichor convertible notes in the fourth quarter of 2025, which eliminated related interest and accretion in 2026.

● Interest income increased in the three-month period ended March 31, 2026 as compared to the same period in 2025 by $103, driven by higher average cash balances on money market investments.

Liquidity and Capital Resources

Selected Asset and Liability Data (thousands):

September 30, 2025

March 31, 2026

December 31, 2025

7 unchanged sentences

Accumulated deficit

Stockholders’ deficit

● There was a $4,687 net decrease in cash and cash equivalents between September 30, 2025, and December 31, 2024.

The net decrease was primarily the result of cash operating expenses and the timing of working capital collections as the Company’s net sales increased.

● The increase in other current assets of $6,627 between September 30, 2025, and December 31, 2024, primarily relates to an increase in accounts receivable from increased net product sales during the period.

● Current liabilities at September 30, 2025, increased $2,896 compared to December 31, 2024.

● Working capital decreased by $956 between September 30, 2025, and December 31, 2024.

The following table illustrates a summary of cash flows data for the nine-month periods of September 30, 2025 and 2024:

Stockholders’ equity

● There was a $3,391 net increase in cash and cash equivalents between March 31, 2026, and December 31, 2025.

The increase was primarily driven by net cash provided by operating activities reflecting profitable operations and favorable working capital movements, and including the timing of working capital collections.

● The decrease in other current assets of $3,554 between March 31, 2026, and December 31, 2025, primarily due to a decrease in accounts receivable as the Company collected outstanding balances, partially offset by modest increases in prepaid expenses and other current assets.

● Current liabilities at March 31, 2026 decreased $932 compared to December 31, 2025 mainly reflecting lower accrued liabilities as prior-year accruals were settled.

● Working capital increased by $769 between March 31, 2026, and December 31, 2025 driven by higher cash balance and reduction in current liabilities noted above.

The following table illustrates a summary of cash flows data for the three-month periods of March 31, 2026 and 2025:

Selected Cash Flow Data

Nine Months Ended September 30,

Three Months Ended

(dollars and shares in thousands)

Net cash (used in)/provided by operating activities

March 31, 2026

March 31, 2025

Net cash provided by/(used in) by operating activities

Net cash provided by investing activities

1 unchanged sentence

Net cash flow

The net cash used in operating activities for the nine-month period ended September 30, 2025 was approximately $6,511 as compared to $28,454 net cash provided by operating activities during the same period in 2024.

There was an increase in net loss of $6,108 in the nine-month period ended September 30, 2025, as compared to the same period in 2024.

The comparable decrease in net cash flow is primarily a result of the proceeds received from the Norgine transaction during 2024 of approximately $43,200.

The net cash provided by operating activities for the three-month period ended March 31, 2026 was approximately $2,379 as compared to $4,318 net cash used in operating activities during the same period in 2025.

The year-over-year improvement was primarily driven by the shift from a net loss of $1,165 to net income of $201 and a favorable swing in working capital, including a significant decrease in accounts receivable in 2026 versus a build-up of receivables in 2025.

Net cash provided by financing activities was $1,012 in 2026 versus $359 in 2025, driven mainly by higher proceeds from stock option exercises.

We continue to pursue various strategic alternatives including collaborations with other pharmaceutical and biotechnology companies.

3 unchanged sentences

our ability to enter into collaborations that provide us with up-front payments, milestones or other payments;

results of our research and development activities;

progress or lack of progress in our preclinical studies or clinical trials;

unfavorable toxicology in our clinical programs;

our drug substance requirements to support clinical programs;

unfavorable toxicology in our clinical programs, our drug substance requirements to support clinical programs;

change in the focus, direction, or costs of our research and development programs;

4 unchanged sentences

our business development activities;

new regulatory requirements implemented

by regulatory authorities;

new regulatory requirements implemented by regulatory authorities;

the timing and outcome of any regulatory review process;

1 unchanged sentence

Outstanding Share Information

Our outstanding share data as of September 30, 2025 and December 31, 2024 was as follows (in thousands):

September 30,

Our outstanding share data as of March 31, 2026 and December 31, 2025 was as follows (in thousands):

Outstanding Share Type

Common shares

RSU and PSU Awards

Stock options

1 unchanged sentence

We invest excess cash and cash equivalents in high credit quality investments held by financial institutions in accordance with our investment policy designed to protect the principal investment.

At September 30, 2025, we had approximately $1,660 in our cash accounts and $20,288 in savings and money market accounts.

As of March 31, 2026, we had approximately $3,553 in our cash accounts and $36,626 in savings and money market accounts.

While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250 amount insured by the FDIC and may lose value.

16 unchanged sentences

Critical Accounting Policies and Estimates

A summary of our critical accounting policies and use of estimates are presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report.

There have been no material changes to our critical accounting policies and use of estimates during the nine months ended September 30, 2025.

Credit Losses

The Company estimates and records a provision for its expected credit losses related to its trade receivables.

The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses.

Forward-looking information is also considered in the evaluation of current expected credit losses.

However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of excepted losses, approximates fair value and therefore, relies more on historical and current analysis of its trade receivables.

To determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of customer, as the Company determined that risk profile of its customers is consistent based on the life sciences industry.

Each class of customer component is analyzed for estimated credit losses individually.

In doing so, the Company establishes a customer profile, based on the previous collections of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers, as available.

Further, the Company considers macroeconomic factors and the status of the life sciences industry to estimate if there are current expected credit losses within its trade receivables based on the trends and the Company’s expectation of the future status of such economic and industry-specific factors.

Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.

Revenue Recognition

Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, we recognizes revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we determine we expect to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) we satisfy our performance obligation(s).

As part of the accounting for these arrangements, we must make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.

License Agreements

The Company generates revenue from license or similar agreements with pharmaceutical companies for the commercialization of its product.

Such agreements may include the transfer of intellectual property rights in the form of licenses.

Payments made by the customers may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of product.

If a license to the Company's intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to the license as revenue upon transfer of control of the license.

All other promised goods or services in the agreement are evaluated to determine if they are distinct.

If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct.

Optional future services where any additional consideration paid to the Company reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations.

If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations.

Contingent milestones at contract inception are estimated at the amount which is not probable of a material reversal and included in the transaction price using the most likely amount method.

Milestone payments that are not within the Company's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained.

The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each reporting period, the Company re-evaluates the probability of achieving development or sales-based milestone payments that may not be subject to a material reversal

and, if necessary, adjust the estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment.

For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, revenue is recognized at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied).

Stock-based Compensation

The calculation of the fair values of our stock-based compensation plans requires estimates that require management’s judgments.

Under ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model.

The valuation models require assumptions and estimates to determine expected volatility, expected life, expected dividends and expected risk-free interest rates.

The expected volatility was determined using historical volatility of our stock based on the contractual life of the award.

The risk-free interest rate assumption was based on the yield on zero-coupon U.S.

Treasury strips at the award grant date.

We also used historical data to estimate forfeiture experience.

In valuing options granted in the periods ended September 30, 2025, we used the following weighted average assumptions:

Black-Scholes Model Assumptions

September 30, 2025

Expected dividend

Risk free rate

Expected volatility

71.04 - 161.67%

Expected life

1.5 - 6.0 years

Performance-Based Units

In May and August 2025, the Board of Directors approved PSU grants whereby vesting depends on certain revenue performance milestones over the next year.

The Company estimates the likelihood of achievement of performance milestones for all PSU awards at the end of each reporting period.

To the extent those awards or portions thereof are considered probable of being achieved, such awards or portions thereof are expensed over the performance period.

As of September 30, 2025, the Company deems the achievement of the performance milestones to be probable.

Common shares and warrants

Common shares are recorded as the net proceeds received on issuance after deducting all share issuance costs and the relative fair value of investor warrants.

Warrants are recorded at relative fair value and are deducted from the proceeds of common shares and recorded on the consolidated statements of shareholders’ equity (deficit) as additional paid-in capital.

Newly Adopted and Recent Accounting Pronouncements

Refer to Note 2, “Significant Accounting Policies - Recent Accounting Pronouncements” to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

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

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosures of contingent assets and liabilities.

Actual results could differ from those estimates and such differences may be material to the financial statements in future periods.

There have been no material changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2025, which include, among others, revenue recognition (including variable consideration and contract liabilities), valuation of accounts receivable and related allowances, inventory valuation, stock-based compensation, and income taxes.

A detailed description of these policies is included in Note 2, “Significant Accounting Policies,” to our audited consolidated financial statements in that Form 10-K and in Note 2 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

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 2. Management’s Discussion and Analysis