Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a biotechnology company developing novel small molecule therapeutics to treat diseases across several therapeutic areas, including, central nervous system (“CNS”) disorders, lysosomal storage disorders (“LSDs”) and metabolic disorders through molecular chaperoning to stabilize misfolded proteins and increase their activity, as well as other diseases that can be targeted through protein inactivation or modulation, such as oncology. We use our computational target and drug discovery platform, Magellan™, to discover novel allosteric binding sites on proteins implicated in a disease and to identify proprietary small molecules that bind these sites to modulate protein function and treat the underlying cause of the disease. We believe that Magellan™ is uniquely suited to identify allosteric binding sites on the protein surface, which are different from the active (or orthosteric) binding site where the natural ligand of the protein binds. Targeting an allosteric binding site instead of the active binding site of a protein provides numerous advantages, including: the ability to regulate proteins implicated in disease through several different mechanisms of action covering both functional and conformational effects, including stabilization, destabilization, targeted degradation, allosteric inhibition, and allosteric activation of the targeted protein; improved specificity of small molecules because binding to an allosteric binding site is non-competitive with the natural substrate that binds to the active binding site; and the ability to identify small molecules with more favorable drug-like properties. We have used our drug discovery platform to identify novel allosteric sites and small molecules for all of our pipeline programs. We plan to continue to advance our existing research programs and initiate additional programs targeting allosteric binding sites identified with the Magellan™ platform in various therapeutic areas through academic partnerships, co-development and licensing arrangements.
Our clinical stage product candidate, GT-02287, is being developed for the treatment of Parkinson’s disease with and without GBA1 mutations. We have generated an extensive preclinical data package providing evidence of the mechanism of action, in vivo pharmacology, and safety of GT-02287. In preclinical models of GBA1 Parkinson’s disease, GT-02287 has been shown to restore glucocerebrosidase, or GCase, function in the lysosome, reduce toxic lipid substrates and toxic forms of alpha-synuclein, reduce endoplasmic reticulum stress, improve mitochondrial health and overall survival of dopaminergic neurons, increasing dopamine levels, restoring locomotor and cognitive function, and reducing plasma-based neurodegeneration maker, neurofilament light chain (NfL), back to the level of control animals.
As of December 31, 2025, two clinical studies of GT-02287 have been completed, and one is ongoing. GT-02287 was initially characterized in a first-in-human Phase 1a clinical study to assess the safety, tolerability, pharmacokinetics, and food effect of GT-02287 in healthy participants. The study design included a single ascending dose part during which the study participants received one dose of GT-02287 at different dose levels, and a multiple ascending dose part during which the study participants received one daily dose of GT-02287 for 14 days at different dose levels. The Phase 1a study started in September 2023 and was completed in July 2024 and the quality assurance audited interim report was finalized in the third quarter of 2024. In the second quarter of 2025, a Phase 1 relative
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bioavailability study in healthy volunteers was initiated. The purpose of this study was to compare two oral formulations of GT-02287. This study was completed in the third quarter of 2025.
In March 2025, we enrolled the first participant with Parkinson’s disease in our two-part Phase 1b safety and tolerability study to further evaluate the safety, tolerability and biomarker evidence of activity for GT-02287. In Part 1 of this study, participants dose daily with GT-02287 for 90 days. In August 2025, we amended the Phase 1b clinical study to include an additional nine (9) months of daily oral administration of GT-02287 in the optional Part 2 of the Phase 1b. Participants enrolled in the Phase 1b are also followed for clinical signs of worsening or improvement. Through September 2025 a total of 21 patients were enrolled in the Phase 1b. Samples of cerebrospinal fluid were taken at the initiation of dosing and at day 90 following completion of Part 1, and blood samples were taken at multiple timepoints. In November 2025 a total of 19 patients had completed Part 1 of the Phase 1b and we will be presenting the full analysis of Part 1 throughout 2026. Of the 19 patients who completed Part 1 of the Phase 1b, a total of 16 patients elected to continue on daily oral administration of GT-02287. We expect to complete Part 2 of the Phase 1b study in September 2026.
We continue to monitor the impacts on our operations and access to financing, global and worsening macroeconomic conditions, such as the war in Ukraine, the recent conflict in Iran and the Middle East, global geopolitical tension, exchange rate fluctuations, supply chain disruptions, liquidity concerns and increases in commodity, energy and fuel prices.
Financial Condition
Since our inception in 2017, we have devoted substantially all of our resources to identify and develop next-generation brain-penetrant allosteric small molecules for the treatment of devastating diseases with high-unmet medical needs using our Magellan™ platform. As of December 31, 2025 our efforts have led to the advancement of our lead clinical candidate, GT-02287 for the treatment of Parkinson’s disease through Phase 1 testing and preparing to initiate Phase 2 clinical testing during the third quarter of 2026. Our operations have consisted primarily of organizing and staffing the Company, expanding its operations, securing financing, performing research, conducting preclinical studies and acquiring, developing and securing our in-licensed technology. To date, we do not have any product candidates approved for sale and have not generated any revenue from product sales, and as a result, we face risks associated with early-stage biotechnology companies whose product candidates are in development. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. We expect our research and development expenses to remain significant, and to increase to support progress in our research and development activities. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities. These efforts require significant amounts of additional capital for us to complete our research and development, achieve our research and development objectives, defend our intellectual property rights, and recruit and retain skilled personnel, and key members of management. Even if our product development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.
At our annual meeting held on June 24, 2025, the stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to increase our authorized shares of common stock from 50,000,000 to 100,000,000. The amendment did not change any of the current rights and privileges of our common stock or its par value, and did not affect the number of shares of our common stock outstanding.
In December 2025, 482,290 investor warrants and 240,652 placement agent warrants issued in 2023, in connection with a public and private offering, were exercised. In connection with the cashless exercise of the placement agent warrants, 68,356 shares were issued and 172,296 shares were withheld and canceled. The exercise resulted in net proceeds to us of $1.3 million.
In July 2025, we completed the public offering of 4,501,640 shares of our common stock and warrants to purchase 2,250,820 shares of our common stock. The warrants were offered and sold at a rate of one warrant for every two shares of common stock purchased. The public offering price for each set of two shares of common stock and accompanying warrant to purchase one share of common stock was $3.11, yielding an effective price of $1.55 per share and $0.01 per warrant. Each warrant has an exercise price of $1.65 per share of common stock and was immediately exercisable on the date of issuance. The public offering resulted in gross proceeds to us of $7.0 million,
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which included $1.0 million in offering expenses, such as underwriter fees and legal, audit, and advisory costs, for net proceeds to us of $6.0 million. As of December 31, 2025, 1,146,821 public warrants were exercised resulting in the issuance of 1,146,821 shares of common stock and net proceeds to us of $1.9 million.
Following completion of the July 2025 public offering, the underwriter exercised its over-allotment option to purchase an additional 675,246 shares of common stock, and warrants to purchase 337,623 shares of common stock, which resulted in additional gross proceeds to us of $1.1 million, which included $0.1 million in offering expenses, such as underwriter fees, for net proceeds to us of $1.0 million. In connection with the public offering, we issued the underwriter warrants to purchase 362,382 shares of common stock at an exercise price of $1.94 per share as consideration for the services provided. The underwriter warrants provide for cashless exercise.
On July 20, 2025, 225,387 warrants issued in 2020 in connection with the Series B Preferred Stock to designees of the placement agent were not exercised within their five year exercisable period and were therefore forfeited. On May 6, 2025, 200,000 warrants issued in 2021 to an investment bank for banking services and financial advisory were not exercised within their four year exercisable period and were therefore forfeited.
In September 2024, we entered into an Equity Distribution Agreement (the "Distribution Agreement”) with Oppenheimer & Co. Inc., serving as agent ("Oppenheimer”) with respect to an at-the-market ("ATM”) offering program (the "2024 ATM Program”). Under the 2024 ATM Program we may offer and sell, from time to time at our sole discretion, shares of common stock having an aggregate offering price of up to $50.0 million. We pay Oppenheimer a commission equal to 3.0% of the gross sales proceeds of any shares sold through Oppenheimer under the Distribution Agreement. For the year ended December 31, 2025, we sold an aggregate of 6,850,679 shares of common stock at an average selling price of $2.74 per share under the 2024 ATM Program, raising gross proceeds of $18.8 million, which included $0.7 million of sales commissions and other offering expenses for net proceeds to us of $18.1 million. As of December 31, 2025, we have sold an aggregate of 8,447,807 shares of common stock at an average selling price of $2.60 per share under the 2024 ATM Program, raising gross proceeds of $21.9 million, which included $0.9 million of sales and commissions and other offering expenses for net proceeds to us of $21.0 million.
In June 2024, we completed the public offering of 7.1 million shares of our common stock and 1.0 million pre-funded warrants (the "Pre-Funded Warrants”) to purchase an equal amount of our common stock at the nominal exercise price of $0.0001. The public offering price was $1.35 per share while the purchase price of each pre-funded warrant was equal to the public offering price at which a share of common stock was sold to the public in this offering, minus $0.0001. The public offering resulted in gross proceeds of $11.0 million, which included $1.2 million of underwriting commissions and other expenses connected with the financing round. As of December 31, 2025, 1,031,602 Pre-Funded Warrants were exercised resulting in the issuance of 1,031,602 shares of common stock.
As part of the public offering in June 2024, we granted the underwriter an over-allotment option to purchase up to an additional 1,222,222 shares of our common stock, at the public offering price of $1.35, less underwriting discounts and commissions. In July 2024, the underwriter partially exercised the over-allotment option and purchased an additional 337,076 shares of our common stock at the offering price mentioned above. The exercise of the over-allotment option resulted in gross proceeds of $0.46 million, which included $0.42 million of underwriting commissions and other expenses connected with the exercise of the option. We also issued warrants to purchase 593,965 shares of common stock at an exercise price of $1.6875 per share to the underwriter as consideration for the services provided, and such warrants provide for cashless exercise.
From inception through December 31, 2025, we have raised an aggregate of $120 million of gross proceeds through equity financings, including the issuance of convertible preferred stock, our initial public offering, secondary offerings and previous sales under our ATM programs. We have outstanding warrants for 5.8 million shares of our common stock at a weighted-average exercise price per share of $2.31 through December 31, 2025 related to public and private offerings. Of the 5.8 million outstanding warrants, 5.4 million warrants are exercisable at a weighted-average exercise price per share of $2.34 as of December 31, 2025.
As of December 31, 2025, we had cash and cash equivalents of $20.8 million. We have incurred recurring losses and negative cash flows from operations since inception and as of December 31, 2025 and 2024, had an accumulated deficit of $101.4 million and $81.2 million, respectively. We anticipate incurring additional losses until such time, if ever, that we can generate sales of our product candidates currently in development. We have not generated any product revenues and have not achieved profitable operations. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis. In addition, we will need
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significant additional financing to fund our operations and to develop our product candidates. Our ability to continue operations after our current cash resources are exhausted depends on our ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given. Cash requirements may vary materially from those now planned because of changes in direction of our research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments. If adequate additional funds are not available when required, or if we are unsuccessful in entering into partnership agreements for further development of our pipeline, management may need to curtail our development efforts and planned operations to conserve cash.
Going Concern
As of December 31, 2025 and 2024, we had an accumulated deficit of $101.4 million and $81.2 million, respectively, and as of December 31, 2025, we had cash and cash equivalents of $20.8 million. During the year ended December 31, 2025, we incurred net losses of $20.2 million and negative cash flows from operations of $18.5 million. Our current operating plan indicates that we will continue to incur losses from operations and generate negative cash flows from operating activities. Our projected cash outflows for the upcoming periods raise substantial doubt about our ability to continue as a going concern for at least 12 months from the issuance of the financial statements included elsewhere in this Annual Report. We will need to raise additional capital to fund continued operations beyond the first quarter of 2027. We plan to address our liquidity needs by taking steps to improve our operations and cash position, including identifying access to future capital and potential cost-reduction measures.
Financing Requirements; Current Financing Environment
Until such time, if ever, as we can generate substantial product revenues to support our business and corporate strategy, we expect to finance our cash needs through a combination of public and private equity offerings, including at-the-market offerings, debt financings, government or private party grants, collaborations, strategic alliances and licensing arrangements. We may not be able to obtain financing on acceptable terms, or at all, and we may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect our holdings or the rights of our stockholders. If we are unable to obtain funding, we could be required to delay, limit, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, or grant rights to develop, sell and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves, which could adversely affect our business prospects.
Uncertain macroeconomic conditions, including the risk of inflation, fluctuating interest rates, changing international trade and import policies, potential impact of tariffs, instability in the financial system, the war in Ukraine, global geopolitical tension, as well as rising healthcare costs continue to have unpredictable impacts on global societies, economies, financial markets, and business practices. Volatility in the capital markets, and related market uncertainty, may impact our ability to obtain additional financing when needed on favorable terms or at all.
Strategic Transactions; Collaboration and Licensing Arrangement
We routinely evaluate business development opportunities for the advancement of our lead program, GT-02287, our earlier stage pipeline, and our Magellan TM computational platform technology, including potential licensing, co-development, commercialization, and other strategic alternatives. These discussions may involve pharmaceutical companies, biotechnology companies, or other strategic partners.
While we continue to assess opportunities that could enhance shareholder value and support the advancement of our development programs, there can be no assurance that any such discussions will result in the execution of a definitive agreement. We intend to pursue transactions that we believe align with our strategic objectives, strengthen our financial position, and accelerate the development and potential commercialization of our lead candidate.
Components of Our Consolidated Results of Operations
Revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future, if at all. If we fail to complete the development of our product candidates in
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a timely manner or fail to obtain their regulatory approval and successfully commercialize them, we will not generate revenues in the future.
Operating Expenses
Our operating expenses since inception have consisted solely of research and development and general and administrative costs.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, which include:
● expenses incurred under collaborations with third parties, including contract research organizations (“CROs”) and universities, that conduct research, preclinical and clinical studies, such as in-vitro and in-vivo absorption, distribution, metabolism and excretion (“ADME”), cell model studies, in-vivo pharmacology and pharmacokinetic studies, toxicology studies and chemical synthesis, stability studies, manufacturing and control materials, process characterization, scale-up and transfer, clinical trial expenses, on our behalf;
● employee salaries, benefits and other related costs, including stock-based compensation expenses, for employees engaged in research and development functions and overhead allocations consisting of various support and facilities-related expenses, which include rent, utilities and maintenance of our facilities, depreciation, travel and conference expenses;
● fees paid to consultants who assist with research and development activities and related travel expenses; and
● the cost of sponsored research, which includes laboratory materials and supplies, manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical studies.
The following table provides a breakout of our research and development expenses by major category:
Year Ended
December 31,
2025
2024
Change
Pre-clinical activities, clinical activities and outside services
$
7,325,507
$
8,395,066
$
(1,069,559)
Personnel expenses
4,164,025
4,174,178
(10,153)
Other
537,261
369,693
167,568
Research grants
(1,814,011)
(2,147,879)
333,868
Total research and development expenses
$
10,212,782
$
10,791,058
$
(578,276)
We recognize research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses. We anticipate that our research and development expenses will increase substantially in future periods to support progress in our research and development activities, including the progression of the clinical trials for product candidates we are developing. These increases will likely also result from expanded infrastructure and increased insurance costs. Such expenses are offset by contributions from research grants, which are recorded as a reduction to research and development expenses when we have reasonable assurance of collection and based on our best estimate of the periods in which the related expenditures are incurred and activities performed.
Our primary research and development focus since inception has been the application of our Magellan™ platform to various indications and targets, and more recently the development of our clinical stage lead product candidate GT-02287 for the treatment of Parkinson’s disease and other neurodegenerative diseases. As of December 31, 2025 our efforts have led to the advancement of GT-02287 through Phase 1 testing and preparing to initiate Phase 2 clinical testing during third quarter of 2026.
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Research and development activities are central to our business model. Product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses may increase in the foreseeable future as we (i) increase personnel costs, including stock-based compensation, (ii) continue preclinical development of our lead compounds, (iii) progress our clinical trials for certain product candidates, (iv) continue to discover and develop additional product candidates, and (v) pursue later stages of clinical development of product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, bonuses and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel expenses, and facility-related expenses, and other operating costs.
We will continue to focus on preserving our liquidity resources while we seek to maximize shareholders’ value.
Other Financial Income (Expense)
Other financial income (expense) consists of interest income, interest expense and foreign exchange gain or loss, net.
Consolidated Results of Operations
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024.
Year Ended
December 31,
Increase
2025
2024
(Decrease)
Operating expenses:
Research and development
$
(10,212,782)
$
(10,791,058)
$
(578,276)
General and administrative
(8,497,920)
(9,559,534)
(1,061,614)
Total operating expenses
(18,710,702)
(20,350,592)
(1,639,890)
Loss from operations
(18,710,702)
(20,350,592)
(1,639,890)
Other income (expense):
Interest income, net
244,394
357,096
(112,702)
Foreign exchange (loss) gain, net
(833,673)
119,120
(952,793)
Loss before income tax
(19,299,981)
(19,874,376)
(574,395)
Income tax
(861,118)
(536,815)
324,303
Net loss
$
(20,161,099)
$
(20,411,191)
$
(250,092)
Net loss per shares:
Net loss per share attributable to common stockholders - basic and diluted
$
(0.61)
$
(0.89)
$
(0.28)
Weighted average common stock - basic and diluted
32,968,336
22,881,415
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Comparison of the Years Ended December 31, 2025 and 2024
Research and development expenses
Research and development expenses decreased by $0.6 million to $10.2 million for the year ended December 31, 2025, as compared to $10.8 million for the year ended December 31, 2024. The decrease in research and development expenses was primarily related to optimization of our pipeline costs. The decrease was partially offset by unfavorable foreign exchange currency translation as the Swiss franc strengthened against the U.S. dollar.
General and administrative expenses
General and administrative expenses decreased by $1.1 million to $8.5 million for the year ended December 31, 2025 from $9.6 million for the year ended December 31, 2024. The decrease in general and administrative expenses was primarily attributable to lower stock-based compensation and lower legal fees. The decrease was partially offset by higher personnel costs and unfavorable foreign exchange currency translation as the Swiss franc strengthened against the U.S. dollar.
Interest income, net
Interest income, net decreased by $113 thousand to $244 thousand for the year ended December 31, 2025 from $357 thousand for the year ended December 31, 2024. The decrease was mainly attributable to lower interest income from treasury securities that reached final maturity in April 2024 and a lower balance in our money market fund over the comparative period.
Foreign exchange gain (loss), net
Foreign exchange loss, net increased by $953 thousand to a loss of $834 thousand for the year ended December 31, 2025 from a gain of $119 thousand for the year ended December 31, 2024 due to the unfavorable foreign currency exchange as the Swiss franc strengthened against the U.S. dollar.
Income taxes
Income taxes were $0.9 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively. The increase was mainly attributable to higher income taxes payable in Australia.
Liquidity and Capital Resources
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. We have not yet received approval for or commercialized any products or technologies, and we do not expect to generate revenue from sales of any products in the near term, if at all. As described in additional detail under “Financial Condition” above, we have funded our operations to date primarily through a combination of sales of our securities and research grants.
As of December 31, 2025 and 2024, we had $20.8 million and $10.4 million in cash and cash equivalents, respectively, and an accumulated deficit of $101.4 million and $81.2 million, respectively. We had indebtedness of $0.4 million as of December 31, 2025 and 2024. For the year ended December 31, 2025, we raised $7.0 million in net proceeds from our July 2025 public offering, $3.2 million in net proceeds from the exercise of warrants, and $18.1 million in net proceeds under the 2024 ATM Program. Our cash and cash equivalents available at December 31, 2025 are expected to be sufficient to fund our anticipated operating and capital requirements into the first quarter of 2027 and will not be sufficient to finance our operations for one year from the issuance of the financial statements included in this Annual Report. Therefore, we have reported that there is substantial doubt about our ability to continue as a going concern. Please refer to the discussion above titled “Going Concern”.
Our ability to continue operations after our current cash resources are exhausted depends on our ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given. Cash requirements may vary materially from those now planned because of changes in direction of our research and development programs, competitive and technical advances, patent developments, regulatory changes, or other developments. If adequate additional funds are not available when required, or if we are unsuccessful in entering into
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partnership agreements for further development of our pipeline, management may need to curtail our development efforts and planned operations to conserve cash.
Until such time, if ever, as we can generate substantial product revenues to support our business and corporate strategy, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, at-the-market offerings, government or private party grants, collaborations, strategic alliances, and licensing arrangements. As of December 31, 2025, we did not maintain any lines of credit or equity capital committed for funding with the exception of the 2024 ATM Program.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. We may not be able to obtain additional funds through equity or debt financings when needed on favorable terms or at all, including as a result of rising interest rates, liquidity concerns at, and failures of, banks and other financial institutions, volatility in the capital markets and related market uncertainty. Further, if we are unable to obtain additional funding to support our current or proposed activities and operations, we may not be able to continue our operations as currently anticipated, which may require us to suspend or terminate any ongoing development activities, modify our business plan, curtail various aspects of our operations, cease operations, or seek relief under applicable bankruptcy laws.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Year Ended
December 31,
2025
2024
Cash used in operating activities
$
(18,465,432)
$
(18,873,827)
Cash provided by investing activities
—
4,977,507
Cash provided by financing activities
28,447,766
13,012,076
Effect of exchange rate changes
474,032
(527,168)
Net increase (decrease) in cash, cash equivalents and restricted cash
$
10,456,366
$
(1,411,412)
Cash Flows from Operating Activities
During the years ended December 31, 2025 and 2024, we used $18.5 million and $18.9 million, respectively of cash in operating activities, primarily to fund our operations related to the development of our pipeline and product candidates as well as related general and administrative support activities.
Cash Flows from Investing Activities
During the year ended December 31, 2024, net cash provided by investing activities was $5.0 million, primarily due to the maturity of marketable securities.
Cash Flows from Financing Activities
During the year ended December 31, 2025, cash provided by financing activities was $28.4 million which consisted of the following: $7.4 million of net proceeds from the issuance of shares in the July 2025 public offering, $18.1 million of net proceeds from the issuance of shares pursuant to the 2024 ATM Program, $3.5 million provided by the exercise of stock options and public warrants, partially offset by $0.4 million payment of offering costs and $0.1 million repayment of long-term debt.
During the year ended December 31, 2024, cash provided by financing activities was $13.0 million primarily related to the following: $10.3 million provided by net proceeds from the issuance of shares and warrants in the public
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offering, $3.0 million provided by net proceeds from issuance of shares pursuant to the 2024 ATM Program, $0.2 million provided by the exercise of stock options and public warrants, partially offset by $0.3 million payment of offering costs and $0.1 million repayment of long-term debt.
Funding Requirements
Our primary use of cash is to fund our operating expenses, which consist of research and development and general and administrative expenditures.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
● the number and characteristics of the product candidates we pursue;
● the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;
● costs associated with growing our workforce;
● the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates;
● the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates;
● the extent to which we encounter increased costs as a result of global and macroeconomic conditions, including high interests rates, supply chain disruptions, fluctuating exchange rates, and increases in commodity, energy and fuel prices;
● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
● the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;
● our ability to establish additional collaborations on favorable terms, if at all;
● the costs required to scale up our clinical, regulatory and manufacturing capabilities;
● the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;
● the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and
● revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.
We will need additional funding to meet our operational needs and capital requirements for our preclinical studies and clinical trials, other research and development expenditures, and business development activities. Because of the numerous risks and uncertainties associated with the development of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, including at-the-market offerings, debt financings, government or private
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party grants, collaborations, strategic alliances and licensing arrangements. We may not be able to obtain additional funds through equity or debt financings when needed on favorable terms or at all.
Critical Accounting Policies and Use of Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements and related disclosures require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, defined benefit pension liability, stock-based compensation, warrants, recognition of research grants and the going concern assessment. Our actual results may differ from these estimates under different assumptions or conditions. During the year ended December 31, 2025, there were no material changes to our critical accounting policies. While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements included elsewhere in this Annual Report, we believe the following accounting policies are the most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Accrued expenses
As part of the process of preparing our financial statements, we are required to estimate our accrued expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time at the date of the preparation of the financial statements. There may be instances in which payments made to our vendors exceed the level of services provided, and result in a prepayment reported under other current assets, which are subsequently expensed in the Consolidated Statements of Operations when the related activity has been performed. To date, there have been no material differences between our estimates of accrued expenses reported at each balance sheet date and the amounts actually incurred.
Pension obligations
We operate defined benefit pension plans and defined contribution pension plans in accordance with local regulations and practices. These plans are funded by regular contributions made by the employer and the employees to a third-party. For defined benefit pension plans, the liability recognized in the balance sheets is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The overfunded or underfunded status of the defined benefit plans is calculated as the difference between plan assets and the projected benefit obligations. Estimates are used in determining the assumptions incorporated in the calculation of the pension obligations, which are supported by input from independent actuaries. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in “Accumulated Other Comprehensive Income (Loss)” in the Consolidated Statements of Changes in Stockholders’ Equity and are charged or credited to income over the employees’ expected average remaining working lives. The measurement date used for our employee defined benefit plan is December 31 st .
Stock-based compensation
We recognize compensation costs related to stock-based compensation awards granted to employees, consultants, and directors based on the estimated fair value of the awards as of the grant date. We estimate the grant date fair value and the resulting stock-based compensation using the Black-Scholes option-pricing model for stock option awards. The grant date fair value of the stock option awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. We estimate the fair value of stock options using the Black-Scholes option-pricing model, which requires assumptions, including volatility, the expected term of exercise, the risk free interest rate for a period that approximates the expected term of exercise, and our expected dividend yield. Certain assumptions used in our Black-Scholes option-pricing model represent
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management’s best estimates and involve a number of assumptions and the application of management’s judgment, as they are inherently subjective.
We recognize expenses related to Restricted Stock Units (or RSUs) based on their fair market value, determined as the closing price on the Nasdaq of our common stock as of the grant date, on a straight-line basis over the requisite service period.
Warrants
We account for warrants to purchase shares of our common stock as equity instruments. We evaluate each warrant at issuance to determine the appropriate classification. Warrants that are indexed to our own common stock and meet the criteria for equity classification are recorded at fair value as of the issuance date within stockholders' equity and are not subsequently remeasured. The Black-Scholes option pricing model is also used for the warrants issued, using consistent inputs and methodology to quantify such inputs, as described above in relation to stock-based compensation. Certain assumptions used in our Black-Scholes option-pricing model represent management's best estimates and involve the application of management's judgment, as they are inherently subjective.
Research grants
Under the terms of the research and development grants awarded, we are entitled to receive upfront payments or reimbursement of our allowable direct expenses. Contributions from research and development activities under the grants are recorded based on management’s best estimate of the periods in which the related expenditures are incurred and activities performed and are classified in the Consolidated Statements of Operations as a reduction to research and development expenses.
Under the Australian government’s Research and Development Tax Incentive (“R&DTI”) program, we are also eligible to obtain certain research and development tax credits. The tax credits are available on the basis of specific criteria with which we must comply. The tax credits are administered through the local tax authority and can be realized regardless of whether we have generated taxable income in the respective jurisdictions. The tax credits are based on a percentage of eligible research and development activities under the program and are recorded based on management’s best estimate of the periods in which the related expenditures are incurred and activities performed and are classified in the Consolidated Statements of Operations as a reduction to research and development expenses when collectability is reasonably assured.
Going concern assessment
At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The assessment over going concern is based on management’s most updated budget and forecast and does not take into consideration estimated future cash inflows that are not certain as of the date of preparation of the financial statements. Please refer to the discussion above titled “Going Concern”.
Jumpstart Our Business Startups (“JOBS”) Act
We qualify as an “emerging growth company”, as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to public companies that are not emerging growth companies. These provisions include, but are not limited to: being permitted to report only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial conditions and results of operations disclosure; an exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; reduced disclosure obligations regarding executive compensation arrangements in our periodic reports, registration statements and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. As a result, the information we provide might be different from the information that is available for other public companies. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result,
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there may be a less active trading market for our common stock, and the market price of our common stock may be more volatile.
We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenue of $1.235 billion or more, (ii) December 31, 2026, (iii) the date on which we have issued more than $1.0 billion of non-convertible debt instruments during the previous three fiscal years or (iv) the date on which we are deemed a “large accelerated filer” under the rules of the SEC with at least $700 million of outstanding equity securities held by non-affiliates.
Recent Accounting Pronouncements
A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our audited financial statements included elsewhere in this Annual Report.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Under SEC rules and regulations, because we are considered to be a “smaller reporting company”, we are not required to provide the information required by this item in this Annual Report.
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