What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 301 added, 237 removed, 782 unchanged (41% of the section changed)

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• Results of operations.

This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 2024 to the results for the year ended December 31, 2023 and the results for the year ended December 31, 2023 to the results for the year ended December 31, 2022.

This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations and comprehensive loss by comparing the results for the year ended December 31, 2025 to the results for the year ended December 31, 2024.

• Liquidity and capital resources.

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Material Trends and Developments

We intend to wind down commercialization of SUSTOL over the next 12 months while we evaluate potential product updates.

Subject to development progress, manufacturing readiness, and regulatory feedback, we may consider reintroducing SUSTOL as early as late 2027.

During the wind down, we will continue to support customers

and manage inventory responsibly, and we expect one-time transition costs, which we will quantify as plans are finalized .

Impact of Global Business, Political and Macroeconomic Conditions

Uncertainty in the political and macroeconomic environments presents significant risks to our business.

We are subject to continuing risks and uncertainties, including increasing financial market volatility and uncertainty,

inflation, interest rate fluctuations, uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, natural or man-made disasters, including severe weather, epidemics, pandemics, cyberattacks, acts of war or terrorism, armed conflict, or global pandemics.

We are subject to continuing risks and uncertainties, including increasing financial market volatility and uncertainty, inflation, interest rate fluctuations, uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, natural or man-made disasters, including severe weather, epidemics, pandemics, cyberattacks, acts of war or terrorism, armed conflict, or global pandemics.

We closely monitor the impacts of these factors on all aspects of our business, including the impacts on our clinical trial patients, employees, partners, suppliers, and vendors.

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Net Product Sales

Net product sales include revenue recognized for sales of ZYNRELEF, APONVIE, CINVANTI, and SUSTOL (collectively, our “Products”) to a limited number of specialty distributors and full line wholesalers (collectively, “Customers”), less applicable sales allowances.

Net product sales include revenue recognized for sales of ZYNRELEF, APONVIE, CINVANTI, and SUSTOL (collectively, our "Products") to a limited number of specialty distributors and full line wholesalers (collectively, our "customers"), less applicable sales allowances.

The revenues we generate are dependent upon and subject to several factors, including those discussed in the "Risk Factors" section of this Annual Report on Form 10-K.

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Other Income (Expense), Net

Other income (expense), net primarily consists of interest expense, income earned on our cash, cash equivalents and short-term investments, the amortization of debt issuance costs related to our Senior Convertible Notes payable, the amortization of debt discount related to our Working Capital Facility, and write-off of property and equipment.

Other income (expense), net primarily consists of interest expense, income earned on our cash, cash equivalents and short-term investments, the amortization of debt issuance costs and debt discount related to our 2026 Convertible Notes, 2031 Convertible Notes and our Working Capital Facility Agreement, and write-off of property and equipment.

We may be able to control the timing and extent of the operating expenses, but some expenses may be incurred without regard to our actions due to contractual commitments.

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A summary of the significant accounting policies is provided in Note 2 to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

The 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 accounting principles generally accepted in the U.S.

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles ("GAAP").

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory, accrued clinical and manufacturing liabilities, income taxes and stock-based compensation.

We evaluate our estimates on an ongoing basis, including those related to revenue recognition, investments, inventory and the related reserves, accrued clinical and manufacturing liabilities, income taxes, stock-based compensation and accounting for debt and equity transactions.

We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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and (v) recognize revenue when (or as) we satisfy the performance obligations.

We recognize revenue from product sales when there is a transfer of control of the product to our Customers.

revenue from product sales when there is a transfer of control of the product to our customers.

We typically determine transfer of control based on when the product is delivered, and title passes to our customers.

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We believe our estimated allowance for product returns and GPO discounts requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors.

We allow our Customers to return product for credit for up to 12 months after its product expiration date.

We allow the majority of our customers to return product for credit beginning three months prior to the product expiration date and up to 12 months after the product expiration date.

As such, there may be a significant period of time between the time the product is shipped and the time the credit is issued on returned product.

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If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required, which would be recorded as cost of product sales.

Accrued Research and Development Expenses

Accrued Clinical and Manufacturing Liabilities

We estimate certain costs and expenses and accrue for these liabilities as part of our process of preparing financial statements.

Examples of areas in which subjective judgment may be required include, among other things, costs associated with services provided by contract organizations for preclinical and clinical development, and manufacturing of our Products.

Examples of areas in which subjective judgment may be required include, among other things, costs associated with services provided by contract organizations for manufacturing of our Products.

We accrue for costs incurred as the services are being provided by monitoring the status of the services provided, and the invoices received from our external service providers.

In the case of clinical trials, we rely on estimates of the progress of the clinical trials and related expenses incurred.

Changes to estimates are recorded to research and development expense in the period in which the facts that gave rise to the revision become known.

To date, our estimates have not differed materially from the actual costs incurred.

However, subsequent changes in estimates may result in a material change to our accruals, which could also materially affect our results of operations and financial condition.

Revisions are recorded to research and development expense or inventory in the period in which the facts that give rise to the revision become known.

Historically, revisions have

not resulted in material changes to research and development expense or inventory.

However, a modification could result in a material charge to our results of operations.

We make certain estimates and judgments in determining income tax expense for financial statement purposes.

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This process involves estimating our current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and financial statement purposes.

At December 31, 2024, we established a valuation allowance to offset our deferred tax assets due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets.

On December 31, 2025, we established a valuation allowance to offset our deferred tax assets due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets.

To date, our estimates have not materially changed.

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However, subsequent changes in our assumptions could impact our stock-based compensation expense, which could materially affect our net loss and net loss per share.

Accounting for debt and equity transactions

We evaluate our debt and equity transactions in accordance with ASC Topic 470, Debt, ASC 480-10, Distinguishing Liabilities from Equity and ASC Subtopic 815-40, Contracts in Entity's Own Equity (“ASC 815-40”).

Through our evaluation of our debt transactions, we consider whether the transaction represents a troubled debt restructuring, an extinguishment or modification.

Furthermore, consider whether the transaction includes embedded derivatives and whether any embedded derivatives require bifurcation.

Changes in our judgments and conclusions could impact the effective interest expense and loss recognized on debt extinguishment, which could materially affect our net loss and net loss per share.

During the year ended December 31, 2025, we issued Series A convertible preferred stock, which required evaluation of classification of the Series A convertible preferred stock.

Changes in our judgments and conclusions could impact the classification and carrying value of the Series A convertible preferred stock, which could affect our net loss and net loss per share.

Recent Accounting Pronouncements

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Results of Operations

The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the year ended December 31, 2025 to the year ended December 31, 2024.

A similar discussion and analysis that compares the year ended December 31, 2024 to the year ended December 31, 2023 can be found in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Comparison of Results of Operations

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Total Net Product Sales Growth

Total acute care net product sales increased 57.3% during the year ended December 31, 2024, as compared to the prior year, primarily driven by an increase in the units sold as a result of increase in market share and new customers to the products for both ZYNRELEF and APONVIE.

In addition, the increase is attributed to the commercial launch of APONVIE in March 2023.

Total acute care net product sales increased 87.5% during the year ended December 31, 2023, as compared to the prior year, driven by an increase in the units sold as a result of increase in market share and new customers to the products, as well as commercial launch of APONVIE in the U.S.

in March 2023.

Total oncology net product sales increased 5.8% during the year ended December 31, 2024, as compared to the prior year, primarily driven by an increase in the units sold.

Total oncology net product sales increased 10.7% during the year ended December 31, 2023, as compared to the prior year, driven by an increase in the units sold.

Total acute care net product sales increased 65.1% during the year ended December 31, 2025, as compared to the prior year, primarily driven by an increase in the units sold as a result of increase in market share and new customers for both ZYNRELEF and APONVIE.

Total oncology net product sales decreased 7.8% during the year ended December 31, 2025, as compared to the prior year, primarily driven by an increase in gross to net adjustments to maintain market share of 23.0% and a decrease in SUSTOL units sold of 6.7%, offset by an increase in CINVANTI units sold of 21.8%.

Cost of Product Sales

Cost of sales decreased 40.6% during the year ended December 31, 2024, as compared to the prior year and as a percentage of sales, decreased 24.4% during the same period, primarily driven by a 29.2% decrease due to reduction in inventory reserves recorded, as the year-ended December 31, 2023 included write-offs for excess and obsolete inventory, for which there were not similar reserves or write-offs in the current year, and a 10.3% decrease due to scaled production achieved in late 2022, resulting in a lower cost per unit.

Cost of sales increased 18.6% during the year ended December 31, 2023, as compared to the prior year and as a percentage of sales, increased 0.2% during the same period, primarily driven by a 20.8% increase due to inventory

reserves recorded.

This increase was partially offset by a 1.8% decrease due to scaled production achieved in late 2022, resulting in a lower cost per unit.

Cost of product sales increased 7.0% or $2.7 million during the year ended December 31, 2025, as compared to the prior year and as a percentage of sales, decreased 0.1% during the same period.

The increase in cost of product sales during the year ended December 31, 2025 was primarily driven by an increase in the units sold and product mix, which contributed $0.5 million to the increase in cost of product sales and an increase in inventory reserves and write-offs recorded of $2.1 million in the year ended December 31, 2025.

Research and Development Expense

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Total research and development expense

Research and development expense decreased 57.4% during the year ended December 31, 2024, compared to the prior year and as a percentage of sales, decreased 19.2% during the same period, primarily due to decreased headcount and related costs as a result of the restructuring implemented in the year ended December 31, 2023, as well as a decrease in corresponding non-cash, stock-based compensation expense.

The decrease is also partially due to APONVIE becoming commercially available in March 2023, which resulted in lower research and development expense in the year ended December 31, 2024 for APONVIE.

Research and development expense decreased 52.7% during the year ended December 31, 2023, compared to the prior year and as a percentage of sales, decreased 46.0% during the same period, primarily due to decreases in costs related to ZYNRELEF and CINVANTI, as product scale-up, validation activities and raw materials qualification were completed in 2022.

In addition, the decrease in research and development expense was due to decreased headcount and related costs as a result of restructurings in the years ended December 31, 2023 and December 31, 2022, as well as a decrease in corresponding non-cash, stock-based compensation expense.

These decreases were offset by an increase in APONVIE related costs to support commercial launch in March 2023.

Research and development expense decreased 25.5% or $4.3 million during the year ended December 31, 2025, compared to the prior year and as a percentage of sales, decreased 3.6% during the same period.

The decrease is primarily due to decreased personnel and related costs of $2.2 million due to terminations during the year ended December 31, 2024.

The decrease is also due to $1.7 million more in asset write-offs in the year ended December 31, 2024 than in the year ended December 31, 2025.

General and Administrative Expense

General and administrative expense decreased 18.8% during the year ended December 31, 2024, compared to the prior year and as a percentage of sales, decreased 14.8% during the same period, primarily due to decreased headcount and related costs, as a result of the restructuring implemented in the year ended December 31, 2023, and operational efficiencies.

These decreases were offset by increased legal costs due to ongoing patent litigation.

General and administrative expense increased 5.7% during the year ended December 31, 2023, compared to the prior year and as a percentage of sales, decreased 6.0% during the same period, primarily due to severance and non-cash, stock-based compensation expense in connection with the executive departures in the second and third quarters of 2023, and ongoing legal costs associated with the CINVANTI patent litigation.

General and administrative expense increased 2.3% or $1.2 million during the year ended December 31, 2025, compared to the prior year and as a percentage of sales, decreased 1.7% during the same period.

The increase in general and administrative expenses during the year ended December 31, 2025 was due to a $0.9 million increase in expenses due to timing and an increase of $0.3 million in legal expenses primarily due to timing of litigation.

Sales and Marketing Expense

Sales and marketing expense decreased 30.4% during the year ended December 31, 2024, compared to the prior year and as a percentage of sales, decreased 20.6% during the same period, primarily due to decreased headcount and related costs, as a result of the restructuring implemented in the year ended December 31, 2023, and operational efficiencies.

Sales and marketing expense decreased 18.0% during the year ended December 31, 2023, compared to the prior year and as a percentage of sales, decreased 23.4% during the same period, primarily due to a decrease in costs to support the ongoing commercialization of ZYNRELEF, offset by costs to support commercialization of APONVIE, and due to improved operational efficiencies.

Sales and marketing expense increased 4.2% or $2.0 million during the year ended December 31, 2025, compared to the prior year and as a percentage of sales, decreased 0.9% during the same period.

The increase in sales and marketing expense was primarily due to an increase in marketing costs of $2.7 million, primarily related to the promotion of ZYNRELEF.

This increase was offset by a net decrease in personnel and related costs of $0.6 million as a result of an increase in headcount during the year ended December 31, 2025 contributing $1.3 million in expense, offset by a decrease in stock compensation expense of $1.9 million primarily due to one-time stock compensation expense in the year ended December 31, 2024.

Other (Expense) Income, Net

Other (expense) income, net decreased $2.1 million during the year ended December 31, 2024, compared to the prior year, primarily due to the interest expense associated with the Working Capital Facility Agreement, which was entered into August 2023.

Other (expense) income, net increased $7.4 million during the year ended December 31, 2023, compared to the prior year, primarily due to the write-off of property and equipment at a third-party manufacturing site in 2022, as well as an increase in interest income earned on our invested cash balances in 2023.

Other (expense) income, net increased $15.6 million during the year ended December 31, 2025, compared to the prior year, primarily due to the loss on debt extinguishment of $11.3 million, an increase in interest expense associated with our debt agreements, of $3.6 million, and a decrease in interest income of $0.7 million as a result of lower interest rates.

Liquidity and Capital Resources

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Securities and Exchange Commission.

However, we expect that we will need to refinance, or otherwise satisfy, our current indebtedness of $175.5 million to fully fund our current business plan and meet all commitments discussed below.

We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance.

Our net loss for the year ended December 31, 2024 was $13.6 million, or $0.09 per share, compared to a net loss of $110.6 million, or $0.80 per share, for the same period in 2023, and $182.0 million or $1.67 per share for the same period in 2022.

Our net loss for the year ended December 31, 2025 was $20.2 million, or $0.12 per share, compared to a net loss of $13.6 million, or $0.09 per share, for the same period in 2024.

Our net cash used in operating activities for the year ended December 31, 2025 was $27.6 million, compared to $22.5 million for the same period in 2024.

The decrease in net cash used in operating activities was primarily due to a decrease in net loss as a result of decreases in operating spend and stock-based compensation expenses, primarily as a result of the restructuring implemented in 2023, offset by the net increase in write-offs of property and equipment of $3.8 million during the year ended December 31, 2024, and changes in working capital, specifically accounts receivable due to timing of collections, inventory as a result of write-offs incurred, prepaid assets due to the timing of payments, and accounts payable and accrued expenses, including payroll and employee liabilities due to the timing of payments and reduced headcount.

The increase in net cash used in operating activities was primarily due

to changes in working capital, specifically, purchases of inventory, accounts receivable due to the timing of collections and accounts payable and accrued expenses due to the timing of payments.

Our net cash provided by investing activities for the year ended December 31, 2025 was $16.0 million, compared to $18.7 million for the same period in 2024.

The increase in cash provided by investing activities was primarily due to net maturities of short-term investments of $20.4 million for the year ended December 31, 2024, compared to net maturities of short-term investments of $19.5 million for the same period in 2023.

The decrease in cash provided by investing activities was primarily due to net maturities of short-term investments of $16.2 million for the year ended December 31, 2025, compared to net maturities of short-term investments of $20.4 million for the same period in 2024, offset by a decrease in purchases of property and equipment of $1.4 million during the year ended December 31, 2025 as compared to the prior year.

Our net cash provided by financing activities for the year ended December 31, 2025 was $14.4 million, compared to $0.9 million for the same period in 2024.

The decrease in cash provided by financing activities was primarily due to net proceeds of $54.1 million received from debt and equity financings completed in the third quarter of 2023.

There were no comparable transactions in the year ended December 31, 2024.

The net cash provided by financing activities for the year ended December 31, 2024 was a result of proceeds from transactions under the Employee Stock Purchase Plan and the equity incentive plan.

The increase in cash provided by financing activities was primarily due to net proceeds of $13.4 million received from debt and equity financings completed in the third quarter of 2025.

The increase in net cash provided by financing activities for the year ended December 31, 2025 was also a result of an increase in proceeds from transactions under the Employee Stock Purchase Plan and the equity incentive plan of $0.1 million.

Historically, we have financed our operations, including technology and product research and development, primarily through sales of our common stock, product sales and debt financings.

Material Cash Requirements

As of December 31, 2024, $150.0 million in aggregate principal amount of the Senior Convertible Notes were outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).

The Senior Convertible Notes mature on May 26, 2026, unless earlier converted, redeemed or repurchased.

As of December 31, 2024, $25.5 million aggregate principal amount under the Working Capital Facility was outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).

The Working Capital Facility has a four year term and matures on the earlier of earlier of (a) September 1, 2027 and (b) to the extent that any of the Senior Convertible Notes remain outstanding on such date, (i) May 12, 2026 or (ii) in the event that the maturity date of any of the Senior Convertible Notes is extended, prior to May 12, 2026, to August 11, 2026 or later, the date that is ninety-one days prior to the maturity date of such further extended Senior Convertible Notes.

As of December 31, 2024, the total amount of availability under the Working Capital Facility is approximately $10 million.

At December 31, 2024, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers in connection with the manufacturing of our Products.

Total purchase obligations of $49.2 million were not included in our consolidated financial statements for the year ended December 31, 2024, with $37.4 million due in one year and $11.8 million due within two years.

As of December 31, 2025, $111.2 million in aggregate principal amount, including accumulated paid-in-kind interest, under the Working Capital Facility Agreement were outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).

The Working Capital Facility agreement matures September 1, 2030.

As of December 31, 2025, $35.9 million aggregate principal amount, including accumulated paid-in-kind interest, for the 2031 Convertible Notes was outstanding (see Note 8 to the Consolidated Financial Statements included in this Annual Report on Form 10-K).

The 2031 Convertible Notes mature on March 1, 2031, unless earlier converted, redeemed or repurchased.

On December 31, 2025, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers in connection with the manufacturing of our Products.

Total purchase obligations of $19.0 million were not included in our consolidated financial statements for the year ended December 31, 2025, all of which are due within one year.

We intend to use our current financial resources to fund our commitments under these purchase obligations.

As of December 31, 2024, we had an operating lease for 52,148 square feet of laboratory and office space in San Diego, California, with a lease term that expires on December 31, 2025.

In October 2021, we entered into a sublease agreement to sublet 23,873 square feet of laboratory and office space.

The space was delivered to the subtenant in March 2022.

The sublease agreement expires on December 31, 2025 and is coterminous with the operating lease for the subleased space.

In September 2023, we also entered into a sublease agreement to sublet 5,840 square feet of office space in Cary, North Carolina, with a lease term that expires on April 30, 2025.

In September 2024, we entered into a short-term sublease agreement to sublet 9,882 square feet of office space in Cary, North Carolina, with a lease term that expires on August 31, 2025.

As of December 31, 2024, we had total operating lease obligations of $3.0 million, all of which is due within one year.

As of December 31, 2025, we have a short-term operating lease for 9,882 square feet of office space in Cary, North Carolina, which was entered into in December 2025 and will expire on February 28, 2026.

In August 2025, we entered into a lease agreement for 16,837 square feet of office space in Cary, North Carolina, with the lease term expected to commence no later than May 25, 2026 ("lease commencement date") and expire 111 months from the lease commencement date, with the option to extend for one additional period of 84 months upon written notice.

We enter into agreements with contract manufacturing organizations for the manufacture and supply of commercial materials and drug product.

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Under certain of these agreements, we may be subject to penalties in the event that we prematurely terminate these agreements.

At this time, due to the variability associated with clinical site agreements, contract research organization agreements and contract manufacturing agreements, we are unable to estimate with certainty the future costs we will incur.

At this time, due to the variability associated with contract manufacturing agreements, we are unable to estimate with certainty the future costs we will incur.

We intend to use our current financial resources to fund our obligations under these commitments.

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FINANCIAL STATEMENT S AND SUPPLEMENTARY DATA.

RE port of Independent Regist ered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Heron Therapeutics, Inc.

Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Heron Therapeutics, Inc.

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Definition and Limitations of Internal Control Over Financial Reporting

An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance

with accounting principles generally accepted in the United States of America.

An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;

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Description of the Matter

As discussed in Notes 2 and 5 to the consolidated financial statements, the Company earns its revenue through the sale of its products, CINVANTI, SUSTOL, ZYNRELEF, and APONVIE, to specialty distributors.

As discussed in Notes 2 and 5 to the consolidated financial statements, the Company earns its revenue through the sale of its products, CINVANTI, SUSTOL, ZYNRELEF, and APONVIE, in the U.S.

through a limited number of specialty distributors and full line wholesalers.

The Company’s net product sales totaled $154.9 million for the year ended December 31, 2025.

The amount of revenue recognized is net of product sales allowances for product returns, distributor fees, group purchase organization fees, discounts and rebates, and Medicare rebates, which totaled $37.4 million as of December 31, 2024.

The amount of revenue recognized is net of product sales allowances for product returns, distributor fees, group purchasing organization (GPO) discounts and rebates, GPO administrative fees, Medicare rebates, and prompt pay discounts.

As of December 31, 2025, the Company’s liability related to product sales allowances was $46.0 million.

The allowances are recorded in the same period that the related revenue is recognized and create variability in the consideration that the Company expects to receive.

Management’s estimated allowance for product returns requires a high degree of judgment and is subject to change based on various quantitative and qualitative factors.

Management’s estimated allowance for product returns requires a high degree of judgment and is subject to change based on various quantitative and qualitative factors due to the significant period of time that may occur between the time the product is shipped and the time the product may be returned.

Accordingly, extensive audit effort and a high degree of auditor judgment were needed to evaluate management’s estimates and assumptions used in the determination of the allowance for product returns.

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To address this matter, through our integrated audit approach, we performed both control testing as well as substantive audit procedures.

We obtained an understanding of, evaluated the design and tested the operating effectiveness of management’s controls over the Company’s processes related to recording the allowance for product returns, including testing management’s quarterly control to perform a hindsight analysis and review historical returns rates.

We also evaluated the significant accounting policies relating to product returns, as well as management’s application of the policies, for appropriateness and reasonableness.

As part of our substantive testing procedures, we selected a sample of customer transactions and performed the following procedures for each selection:

• Obtained and read contract source documents and management’s contract analyses.

As part of our substantive testing procedures, we performed the following procedures:

• Obtained and read contract source documents to understand the key terms related to the Company’s contracts.

• Tested the reasonableness of management’s assumptions in calculating the allowance for product returns by comparing the assumptions to historical data, peer group information, and, where available, subsequent product returns.

• Evaluated whether the selected estimates were applied consistently across similar arrangements.

• Tested the reasonableness of management’s assumptions in calculating the allowance for product returns by comparing them to historical data, peer group information, and, where available, subsequent product returns.

• Where management used actual shipments and returns to estimate product returns, we tested the third-party reports used by management for completeness and accuracy.

• Selected a sample of transactions used in management’s assessment of its allowance for product returns analysis to test the completeness and accuracy of the data used in the analysis.

Additionally, we tested the mathematical accuracy of management’s calculation of revenue, net of product sales allowances, including product returns, and the associated timing of revenue recognition, in the consolidated financial statements.

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Right-of-use lease assets

LIABILITIES AND STOCKHOLDERS’ DEFICIT

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

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Total current liabilities

Non-current lease liabilities

Non-current notes payable, net

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400,000,000 shares authorized;

152,127,878 shares issued and outstanding at December 31, 2024 and 225,000,000 shares authorized;

150,285,044 shares issued and outstanding at December 31, 2023

188,314,430 shares issued and outstanding at December 31, 2025 and 152,127,878 shares issued and outstanding at December 31, 2024

Series A convertible preferred stock, $ 0.01 par value:

2,500,000 shares authorized;

70,012 shares issued and outstanding at December 31, 2025 and no shares issued and outstanding at December 31, 2024

Additional paid-in capital

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Accumulated deficit

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

See accompanying Notes to Consolidated Financial Statements.

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Interest expense

Other income (expense)

Loss on debt extinguishment

Total other (expense) income, net

Other comprehensive income (loss):

Unrealized gains (losses) on short-term investments

Other comprehensive (loss) income:

Unrealized (losses) gains on short-term investments

Comprehensive loss

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(In thousands)

Preferred Stock

Comprehensive

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Balance, December 31, 2022

Issuance of common stock under

Employee Stock Purchase Plan

Issuance of common stock under

equity incentive plan

Issuance of common stock in a

private placement

Issuance of common stock under Employee Stock Purchase Plan

Issuance of common stock under equity incentive plan

Issuance of common stock in a private placement

Issuance of common stock on exercise of pre-funded warrants

Issuance of warrant in debt financing

Stock-based compensation expense

Net unrealized loss on short-term

Net unrealized gain on short-term investments

Comprehensive loss

Balance, December 31, 2023

Issuance of common stock under

Employee Stock Purchase Plan

Issuance of common stock under

equity incentive plan

Issuance of common stock in a

private placement

Issuance of common stock on

exercise of pre-funded warrants

Issuance of warrant in debt financing

Issuance of common stock under Employee Stock Purchase Plan

Issuance of common stock under equity incentive plan

Stock-based compensation expense

Net unrealized gain on short-term

Comprehensive loss

Balance, December 31, 2024

Issuance of common stock under

Employee Stock Purchase Plan

Issuance of common stock under

equity incentive plan

Issuance of common stock under Employee Stock Purchase Plan

Issuance of common stock under equity incentive plan

Issuance of common stock in settlement of 2026 Convertible Notes

Issuance of common stock in a private placement equity offering

Issuance of Series A convertible preferred stock in a private placement equity offering

Conversion of Series A convertible preferred stock to common stock

Stock-based compensation expense

Net unrealized loss on short-term investments

Comprehensive loss

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(Gain)/Loss on disposal of property and equipment

Loss on extinguishment of debt

Change in operating assets and liabilities:

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Proceeds from the sale of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Financing activities:

Net proceeds from sale of common stock

Net proceeds from notes financing

Net proceeds from the sale of common stock

Proceeds from sale of Series A Convertible Preferred Stock

Cash paid for convertible notes extinguishment

Cash paid for notes payable extinguishment

Net proceeds from convertible note issuance

Net proceeds from notes payable issuance

Proceeds from warrant exercises

Proceeds from purchases under the Employee Stock Purchase Plan

Receipts (payments) for stock issued under the equity incentive plan

Proceeds from warrant exercises

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Reclassification of Certain Expenses

The consolidated statements of operations and comprehensive loss for the year ended December 31, 2023 and December 31, 2022, reflect reclassification of certain expenses from research and development to general and administrative expenses to align with the Company's presentation for the year ended December 31, 2024, as a result of the restructuring implemented in 2023 and the realignment of the Company's departments.

The consolidated statements of operations and comprehensive loss for the year ended December 31, 2023 reflects reclassification of certain expenses from research and development to general and administrative expenses to align with the Company's presentation for the year ended December 31, 2024 and December 31, 2025, as a result of the restructuring implemented in 2023 and the realignment of the Company's departments.

These reclassifications resulted in no change to total operating expenses, loss from operations or net loss and no pro forma financial information is necessary.

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Available-for-sale securities are stated at fair

market value, with net changes in unrealized gains and losses reported in other comprehensive loss and realized gains and losses included in other income (expense), net.

market value, with net changes in unrealized gains and losses reported in other comprehensive loss and realized gains and losses included in other (expense) income, net.

The cost of securities sold is based on the specific identification method.

Interest and dividends on securities classified as available-for-sale are included in interest income within other income (expense), net.

Interest and dividends on securities classified as available-for-sale are included in interest income within other (expense) income, net.

Our bank and investment accounts have been placed under a control agreement in accordance with our Working Capital Facility Agreement (see Note 8).

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Short-term available-for-sale investments are carried at fair value.

Our convertible notes and non-current notes payable outstanding at December 31, 2024 and 2023 do not have a readily available ascertainable market value, however, their carrying value, which is measured at carrying value less unamortized debt issuance costs or debt discounts, is considered to approximate their fair value.

Our convertible notes and non-current notes payable outstanding at December 31, 2025 and 2024 do not have a readily available ascertainable market value, however, their carrying value, which is measured at carrying value less unamortized debt issuance costs or debt discounts, is considered to approximate their fair value as the terms were based on market conditions.

Concentration of Credit Risk

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ZYNRELEF, APONVIE, CINVANTI and SUSTOL (collectively, our "Products") are distributed in the U.S.

through a limited number of specialty distributors and full line wholesalers (collectively, “Customers”) that resell to healthcare providers and hospitals, the end users of our Products.

through a limited number of specialty distributors and full line wholesalers (collectively, our "customers") that resell to healthcare providers and hospitals, the end users of our Products.

The following includes the percentage of net product sales and accounts receivable balances for our three major customers, each of which comprised 10% or more of our net product sales:

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Our product sales allowances include:

• Product Returns—We allow our Customers to return product for credit up to 12 months after the product expiration date.

• Product Returns - We allow the majority of our customers to return product for credit beginning three months prior to the product expiration date and up to 12 months after the product expiration date.

As such, there may be a significant period of time between the time the product is shipped and the time the credit is issued on returned product.

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We accrue clinical and manufacturing costs based on work performed, which relies on estimates of the progress of the work completed and the related expenses incurred.

Contracts for clinical trials and manufacturing vary significantly in duration, and may be for a fixed amount, based on the achievement of certain contingent events or deliverables, a variable amount based on actual costs incurred, capped at a certain limit or contain a combination of these elements.

Manufacturing contracts vary significantly in duration, and may be for a fixed amount, based on the achievement of certain contingent events or deliverables, a variable amount based on actual costs incurred, capped at a certain limit or contain a combination of these elements.

Revisions are recorded to research and development expense or inventory in the period in which the facts that give rise to the revision become known.

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The terms of the warrants were evaluated to determine the appropriate classification as equity or a liability.

The Company accounts for income taxes using the asset and liability method.

Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change.

We recognize the impact of a tax position in our consolidated financial statements if the position is more likely than not to be sustained on examination and on the technical merits of the position.

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Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.

Net changes in unrealized gains and losses on available-for-sale securities are included in other comprehensive income (loss) and represent the difference between our net loss and comprehensive loss for both periods presented.

Net changes in unrealized gains and losses on available-for-sale securities are included in other comprehensive loss and represent the difference between our net loss and comprehensive loss for both periods presented.

Net Loss per Share

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Warrants outstanding

Series A convertible preferred stock outstanding

Shares of common stock underlying convertible notes outstanding

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All revenues for the years ended December 31, 2025, 2024 and 2023 were generated from customers in the U.S.

The CODM allocates resources and evaluates the performance of the reportable segment, which is the consolidated entity, primarily based on net income (loss) as reported on the consolidated statements of operations and comprehensive loss.

The CODM allocates resources and evaluates the performance of the reportable segment, which is the consolidated entity, primarily based on net loss as reported on the consolidated statements of operations and comprehensive loss.

The significant expenses reviewed by the CODM are cost of product sales, research and development expenses, general and administrative expenses, and sales and marketing expenses as reported on the consolidated statements of operations and comprehensive loss.

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Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07 , Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances segment disclosures primarily by requiring disclosure of significant segment expenses.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

Retrospective application is required.

The Company adopted this standard in the year ended December 31, 2024 .

The adoption of this standard did no t have a material impact to the Company's disclosures.

Not Yet Adopted

Recently Adopted

In December 2023, FASB issued Accounting Standards Update No.

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This standard is effective for fiscal years beginning after December 15, 2024 .

The Company is currently evaluating the impact on our disclosures.

The guidance was adopted prospectively.

See Note 12 - Income taxes for additional information.

In November 2024, the FASB issued ASU No.

2024-04 , Induced Conversions of Convertible Debt Instruments ("ASU 2024-04"), to improve the consistency in application of the induced conversion guidance in Subtopic 470-20, Debt - Debt with Conversions and Other Options.

We early adopted the provisions of ASU 2024-04 during the year ended December 31, 2025 and concluded that the settlement of the 2026 Convertible Notes did

not represent an induced conversion.

Refer to Note 8 - Long-Term Debt and Convertible Notes for evaluation of the accounting of the transaction.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impact on our disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, which provides clarity regarding the existing required interim GAAP disclosures.

This standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact on our disclosures.

Fair Value Measurements

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Foreign commercial paper

commercial paper

Fair Value Measurements at Reporting Date Using

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Foreign corporate debt securities

commercial paper

Foreign commercial paper

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Foreign commercial paper

commercial paper

December 31, 2024

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Foreign corporate debt securities

commercial paper

Foreign commercial paper

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We did no t recognize any impairment losses for the years ended December 31, 2025, 2024 and 2023.

Unrealized gains and losses associated with our investments are reported in accumulated other comprehensive income (loss).

For the year ended December 31, 2024, we recorded no net unrealized gains or losses associated with our short-term investments.

Unrealized gains and losses associated with our investments are reported in accumulated other comprehensive (loss) income.

For the year ended December 31, 2025, we recorded $ 9,000 in net unrealized losses associated with our short-term investments.

For the year ended December 31, 2024, we recorded no net unrealized gains or losses associated with our short-term investments.

For the year ended December 31, 2023, we recorded $ 32,000 in net unrealized gains associated with our short-term investments.

Realized gains and losses associated with our investments, if any, are reported in the statements of operations and comprehensive loss.

We recognized $ 5,000 in realized gains during the year ended December 31, 2024, $ 1,000 in realized losses during the year ended December 31, 2023.

We did no t recognize any realized gains or losses during the year ended December 31, 2025.

We recognized $ 5,000 in realized gains during the year ended December 31, 2024, $ 1,000 in realized losses during the year ended December 31, 2023.

Inventory consists of the following (in thousands):

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Total inventory

As of December 31, 2024, total inventory included $ 11.8 million related to ZYNRELEF, $ 36.6 million related to CINVANTI, $ 3.2 million related to SUSTOL and $ 1.6 million related to APONVIE.

As of December 31, 2023, total inventory included $ 11.2 million related to ZYNRELEF, $ 26.4 million related to CINVANTI, $ 4.1 million related to SUSTOL and $ 0.4 million related to APONVIE.

Cost of product sales for the years ended December 31, 2024 and 2023 included charges of $ 2.5 million and $ 20.3 million, respectively, relating to the reserves and write-offs of inventory.

Total inventory

The increase in raw materials during the year ended December 31, 2025 is for the purchase of polymer to support future production of ZYNRELEF.

Cost of product sales for the years ended December 31, 2025, 2024 and 2023 included charges of $ 4.6 million, $ 2.5 million and $ 20.3 million, respectively, relating to the reserves and write-offs of inventory.

Prepaid Expenses and Other Assets

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Property and equipment, net

Depreciation and amortization expense for the years ended December 31, 2024 and 2023 was $ 2.5 million and $ 2.9 million, respectively.

Depreciation and amortization expense for the years ended December 31, 2025, 2024 and 2023 was $ 2.3 million, $ 2.5 million and $ 2.9 million, respectively.

As of December 31, 2025 and 2024, $ 1.7 million and $ 2.6 million of property and equipment, respectively, was in process and not depreciated during the respective years.

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Accrued interest

Accrued accounts payable

Total other accrued liabilities

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ZYNRELEF net product sales

SUSTOL net product sales

APONVIE net product sales

SUSTOL net product sales

Total net product sales

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Commitments and Contingencies

As of December 31, 2024, we had an operating lease for 52,148 square feet of laboratory and office space in San Diego, California, with a lease term that expires on December 31, 2025 .

In October 2021, we entered into a sublease agreement to sublet 23,873 square feet of laboratory and office space.

Litigation and other contingencies

The Company is, from time to time, subject to a variety of litigation and other proceedings incidental to its business, including lawsuits involving claims relating to intellectual property matters, employment matters, commercial disputes;

as well as regulatory investigations or enforcement.

The Company may also become subject to lawsuits as a result of past or future acquisitions, or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with divested businesses.

Some of these lawsuits may include claims for punitive and consequential as well as compensatory damages.

Based upon experience, current information and

applicable law, the Company does not believe that these proceedings and claims will have a material adverse effect on its financial position, results of operations or cash flows.

As of December 31, 2025, our operating lease for 52,148 square feet of laboratory and office space in San Diego, California expired.

In October 2021, we entered into a sublease agreement to sublet 23,873 square feet of laboratory and office space in San Diego, California.

The space was delivered to the subtenant in March 2022.

As a result of the sublease agreement, our one five -year option to renew the lease on expiration applies only with respect to our remaining 28,275 square feet of laboratory and office space.

In September 2023, we also entered into a sublease agreement to sublet 5,840 square feet of office space in Cary, North Carolina, with a lease term that expires on April 30, 2025 .

In September 2024, we entered into a short-term sublease agreement to sublet 9,882 square feet of office space in Cary, North Carolina, with a lease term that expires on August 31, 2025 .

Annual future minimum lease payments as of December 31, 2024 are as follows (in thousands):

Year ended December 31:

Total future minimum lease payments

Total lease liabilities

As a result of the sublease agreement, our one five-year option to renew this lease on expiration applied only with respect to our remaining 28,275 square feet of laboratory and office space.

In September 2023, we entered into a sublease agreement to sublet 5,840 square feet of office space in Cary, North Carolina, with a lease term that expired on April 30, 2025 .

In September 2024, we entered into a short-term sublease agreement to sublet 9,882 square feet of office space in Cary, North Carolina, with a lease term that expired on November 30, 2025 .

In December 2025, we entered into a short-term lease agreement for 9,882 square feet of office space in Cary, North Carolina, with a lease term that expires on February 28, 2026 .

As the lease commencement date has not yet occurred, no right-of-use asset or lease liability has been recognized in the accompanying condensed consolidated financial statements.

We provided the landlord with a letter of credit for $ 0.2 million, which is included within cash and cash equivalents in the condensed consolidated balance sheet.

Rent expense under all operating leases totaled $ 3.1 million, $ 3.0 million and $ 2.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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Purchase Obligations

At December 31, 2024, purchase obligations primarily consisted of non-cancellable commitments with third-party manufacturers in connection with the manufacturing of our commercial products.

Total purchase obligations of $ 49.2 million were not included in our consolidated financial statements for the year ended December 31, 2024, with $ 37.4 million due in one year and $ 11.8 million due within two years .

On December 31, 2025, purchase obligations primarily consisted of non-cancellable commitments with third-party ma nufacturers in connection with the manufacturing of our commercial products.

Total purchase obligations of $ 19.0 million were not included in our consolidated financial statements for the year ended December 31, 2025, all of which are due with in one year .

Reorganization

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In June 2023, we implemented a restructuring plan under which we provided certain employees with one-time severance payments upon termination, continuation of benefits for a specific period of time, outplacement services and certain stock award modifications.

During the year ended December 31, 2023, we recognized $ 4.2 million of expense, $ 2.4 million of which was included in sales and marketing expense , $ 1.7 million of which was included in research and development expense and $ 0.1 million of which was included in general and administrative expense .

During the year ended December 31, 2023, we recognized $ 4.2 million of expense, $ 2.4 million of which was included in sales and marketing expense , $ 1.7 million of which was included in

research and development expense and $ 0.1 million of which was included in general and administrative expense .

As of December 31, 2024, we paid all of the total cash severance charges.

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As of December 31, 2024, we paid all of the total cash severance charges.

June 2022 Reorganization

In June 2022, we implemented a restructuring plan under which we provided certain employees one-time severance payments upon termination, continuation of benefits for a specific period of time, outplacement services and certain stock award modifications.

The total amount incurred for these activities was $ 5.4 million, $ 5.0 million of which was primarily for severance and $ 0.4 million of which was for non-cash, stock-based compensation

expense related to stock award modifications.

For the year ended December 31, 2022, we recognized the $ 5.4 million of expense, $ 4.2 million of which was included in research and development expense , $ 1.0 million of which was included in sales and marketing expense , and $ 0.2 million of which was included in general and administrative expense .

As of December 31, 2023, we paid all of the total cash severance charges.

We have accounted for these expenses in accordance with the FASB ASC Topic 420, Exit or Disposal Cost Obligations .

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Working Capital Facility Agreement

On August 9, 2023, we entered into a working capital facility agreement (the “Working Capital Facility Agreement”) with Hercules Capital, Inc., as administrative agent and collateral agent, and the lenders party thereto (the “Lenders”).

The Working Capital Facility Agreement provides an aggregate principal amount of up to $ 50.0 million with tranched availability as follows:

$ 25.0 million at closing (“tranche 1A”), $ 5.0 million available through December 15, 2024 (“tranche 1B”), and $ 20.0 million available from the earlier of:

(1) the full draw of tranche 1B and (2) the expiration of tranche 1B, and available through December 15, 2025 (“tranche 1C”), and in the case of tranches 1B and 1C, subject to certain customary conditions to draw down.

The Working Capital Facility Agreement has a term of four years , with a springing maturity date that is 91 days prior to the stated maturity of our existing Senior Convertible Notes (as defined below) (if still outstanding at such time).

The loans thereunder do not have any scheduled amortization payments and accrue interest at a floating rate equal to, as of closing, 9.95 % per annum, payable in cash on a monthly basis and upon maturity or payoff.

In addition, under the terms of the Working Capital Facility Agreement, the loans also accrue paid-in-kind interest monthly at a fixed-rate of 1.5 % per annum which is due upon maturity or payoff.

In addition, in connection with the tranche 1A funding, we issued warrants to the Lenders to purchase up to 297,619 shares of our common stock at an exercise price of $ 1.68 per share (the "Lender Warrants").

The Lender Warrants are equal to 2.00 % of the principal amount of loans funded by the Lenders (the “Warrant Coverage”).

The Working Capital Facility Agreement also requires that we issue additional warrants to the Lenders at the time of each draw down of tranches 1B and 1C with the same Warrant Coverage.

On August 9, 2023, we entered into a working capital facility agreement (the "Initial Working Capital Facility Agreement") with Hercules Capital, Inc., as administrative agent, collateral agent, and lender (the "Lender").

The Initial Working Capital Facility Agreement provided for an aggregate principal amount of up to $ 50.0 million with tranched availability as follows:

(i) $ 25.0 million at closing on August 9, 2023 ("tranche 1A"), (ii) $ 5.0 million available through December 15, 2024 ("tranche 1B") and (iii) $ 20.0 million available from the earlier of:

(a) the full draw of tranche 1B and (b) the expiration of tranche 1B, and available through December 15, 2025 ("tranche 1C"), and in the case of tranches 1B and 1C, subject to certain customary conditions to draw down .

The Initial Working Capital Facility Agreement had a term of four years , with a springing maturity date that was 91 days prior to the stated maturity of our 2026 Convertible Notes (as defined below), if still outstanding at such time.

The loans thereunder did not have any scheduled amortization payments and accrued interest at a floating rate equal to 9.95 % per annum, payable in cash on a monthly basis and upon maturity or payoff.

In addition, any loans under the Initial Working Capital Facility Agreement also accrued paid-in-kind interest at a fixed rate of 1.5 % per annum which was due upon maturity or payoff.

In addition, in connection with the tranche 1A funding, we issued warrants to the Lender to purchase up to 297,619 shares of our common stock at an exercise price of $ 1.68 per share (the "Lender Warrants").

The Lender Warrants are equal to 2.00 % of the principal amount of the tranche 1A loans funded by the Lender (the "Warrant Coverage").

The Initial Working Capital Facility Agreement also required that we issue additional warrants to the Lender at the time of each draw down of tranches 1B and 1C with the same Warrant Coverage.

Each Lender Warrant is exercisable for seven years from the date of issuance.

The Working Capital Facility Agreement contains a minimum cash covenant, beginning on the closing date, that requires us to hold cash of no less than $ 8.5 million, if our market capitalization is less than $ 400 million.

The Working Capital Facility Agreement also contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions.

We were in compliance with all covenants of the Working Capital Facility Agreement as of December 31, 2024.

On February 13, 2025, the Working Capital Facility Agreement was amended to extend the maturity date to the earlier of (a) September 1, 2027 and (b) to the extent that any of the Company’s Senior Convertible Notes remain outstanding on such date, (i) May 12, 2026 or (ii) in the event that the maturity date of any of the Senior Convertible Notes is extended, prior to May 12, 2026, to August 11, 2026 or later, the date that is ninety-one days prior to the maturity date of such further extended Senior Convertible Notes.

The Working Capital Facility Agreement was accounted for in accordance with ASC Topic 470, Debt , ASC Topic 480, Distinguishing Liabilities from Equity and ASC Topic 815, Derivatives and Hedging .

The initial tranche 1A funding of $ 25.0 million and the warrants issued upon closing to purchase 297,619 shares of our common stock are accounted for as freestanding debt and equity financial instruments, respectively, as they are legally detachable and separately exercisable.

The additional borrowings available under the Working Capital Facility Agreement plus the additional warrants to purchase shares of our common stock, which would be issued concurrently, are accounted for as a single freestanding financial instrument that are not assets or obligations of ours;

this financial instrument meets the loan commitment derivative scope exception and will be accounted for when and if we borrow additional

tranches in the future.

The initial funding of $ 25.0 million was recorded as a liability on the condensed consolidated balance sheets.

In connection with the Working Capital Facility Agreement, we recognized the initial Lender Warrants at their relative fair value of $ 0.4 million, and we incurred debt issuance costs of $ 0.6 million, both of which were recorded as debt discounts.

The debt discounts and the end of term fee, of $ 0.8 million, are being amortized and accreted into interest expense using the effective interest rate method over the term of the Working Capital Facility Agreement, resulting in an effective interest rate of 14.5 %.

For the years ended December 31, 2024 and 2023, interest expense related to the Working Capital Facility Agreement was $ 3.7 million and $ 1.3 million, respectively.

Interest expense for the year ended December 31, 2024 included $ 2.6 million, related to the stated interest rate, $ 0.4 million, related to paid-in-kind interest, and $ 0.7 , related to the amortization of the debt discounts and accretion of the end of term fee.

Interest expense for the year ended December 31, 2023, included $ 1.0 million, related to the stated interest rate, $ 0.2 million related to paid-in-kind interest and $ 0.1 million related to the amortization of the debt discounts and accretion of the end of term fee.

As of December 31, 2024, the carrying value of tranche 1A was $ 25.0 million, which is comprised of the $ 25.0 million principal amount outstanding, and $ 0.5 million of accumulated paid-in-kind interest, less debt discounts of $ 0.5 million.

The Lender Warrant issued in conjunction with the tranche 1A funding remains outstanding on December 31, 2025.

On February 13, 2025, we entered into an amendment to the Initial Working Capital Facility Agreement (the "First Amendment to the Working Capital Facility Agreement") to extend the maturity date to the earlier of (a) September 1, 2027 and (b) to the extent that any of the 2026 Convertible Notes remain outstanding on such date, (i) May 12, 2026 or (ii) in the event that the maturity date of any 2026 Convertible Notes is extended, prior to May 12, 2026, to August 11, 2026, or later, the date that is 91 days prior to the maturity date of such further extended 2026 Convertible Notes.

On August 8, 2025, we entered into an amendment to the Initial Working Capital Facility Agreement, as amended by the First Amendment to the Working Capital Facility Agreement (the "Second Amendment to the Working Capital Facility Agreement").

The Second Amendment to the Working Capital Facility Agreement (i) provides for an aggregate principal amount of up to $ 150.0 million plus the accrued and unpaid paid-in-kind interest on the existing debt under the Initial Working Capital Facility Agreement at closing on August 12, 2025, (ii) extends the maturity date under the First Amendment to the Working Capital Facility Agreement to September 1, 2030 , (iii) adjusts the interest rate to Prime, with a 7.5 % floor, plus 1.95 %, (iv) adjusts the paid-in-kind interest rate to 1.0 % per annum, which is due upon maturity or payoff, (iv) provides for payment of a 1.0 % upfront facility charge and an

end of term charge of up to 6.25 % of principal drawn.

The loans under the Second Amendment to the Working Capital Facility Agreement do not have any scheduled amortization payments.

The approximately $ 150.0 million aggregate principal has tranched availability as follows:

(i) $ 110.0 million plus capitalized paid-in-kind interest of approximately $ 0.8 million on August 12, 2025 ("tranche 1"), (ii) $ 20.0 million available through December 15, 2026 ("tranche 2") and (iii) $ 20.0 million available from the earlier of:

(a) the full draw of tranche 2 and (b) September 30, 2027 ("tranche 3"), and in the case of tranches 2 and 3, subject to certain customary conditions to draw down.

The Second Amendment to the Working Capital Facility Agreement contains a minimum cash covenant, a minimum revenue covenant and a minimum EBITDA covenant.

The Second Amendment to the Working Capital Facility Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions, subject to certain exceptions.

We were in compliance with all covenants of the Second Amendment to the Working Capital Facility Agreement as of December 31, 2025.

On January 30, 2026, we entered into an amendment to the Initial Working Capital Facility Agreement, as amended by the First Amendment to the Working Capital Facility Agreement and the Second Amendment to the Working Capital Facility Agreement (the “Third Amendment to Working Capital Facility Agreement”) to increase the end of term charge to be up to 6.50 %, depending on the end of term.

The Initial Working Capital Facility Agreement, together with the First Amendment to the Working Capital Facility Agreement, the Second Amendment to the Working Capital Facility Agreement and the Third Amendment to the Working Capital Facility Agreement are referred to collectively as the "Working Capital Facility Agreement".

The Second Amendment to the Working Capital Facility Agreement was accounted for in accordance with ASC Topic 470, Debt .

Amendments are assessed by management to determine appropriate treatment as troubled debt restructurings, extinguishments or modifications.

The Second Amendment to the Working Capital Facility Agreement qualifies as a debt extinguishment and issuance of a new debt instrument.

We recorded a loss on extinguishment during the year ended December 31, 2025, of $ 5.5 million, equal to the carrying value of the Second Amendment to the Working Capital Facility Agreement less the carrying value of the First Working Capital Facility Agreement on August 12, 2025 of $ 0.3 million, the facility charge of $ 1.1 million paid to the lenders, the remaining Initial Working Capital Facility Agreement end of term fee of $ 0.2 million and the present value of Second Amendment to the Working Capital Facility Agreement end of term fee of $ 3.9 million.

The Initial Working Capital Facility Agreement end of term fee is payable on September 1, 2027.

The remaining Second Amendment to the Working Capital Facility Agreement end of term fee will be accreted to interest expense over the term of the agreement using the effective interest rate method.

The tranche 1 funding under the Second Amendment to the Working Capital Facility Agreement of $ 110.0 million plus the accrued and unpaid paid-in-kind interest of $ 0.7 million from the Initial Working Capital Facility Agreement are accounted for as debt and was recorded as a liability on the condensed consolidated balance sheets.

In addition, the additional borrowings available under the Second Amendment to the Working Capital Facility Agreement are accounted for as a single freestanding financial instrument that are not assets or obligations of ours and will be accounted for when and if we borrow additional tranches in the future.

In connection with the Second Amendment to the Working Capital Facility Agreement, we incurred debt issuance costs of $ 3.5 million, which was recorded as a debt discount.

The debt discount is being amortized into interest expense using the effective interest rate method over the term of the Second Amendment to the Working Capital Facility Agreement.

The effective interest rate as of December 31, 2025 is 11.6 %.

For the year ended December 31, 2025, interest expense related to the Working Capital Facility Agreement was $ 7.1 million, which included $ 5.7 million related to the stated interest rate, $ 0.7 million related to paid-in-kind interest, and $ 0.7 million related to the amortization of the debt discounts and accretion of the end of term fee.

For the year ended December 31, 2024, interest expense related to the Working Capital Facility Agreement was $ 3.7 million, which included $ 2.6 million related to the stated interest rate, $ 0.4 million related to paid-in-kind interest, and $ 0.7 million related to the amortization of the debt discounts and accretion of the end of term fee.

For the year ended December 31, 2023, interest expense related to the Working Capital Facility Agreement was $ 1.3 million, which included $ 1.0 million related to the stated interest rate, $ 0.2 million related to paid-in-kind interest and $ 0.1 million related to the amortization of the debt discounts and accretion of the end of term fee.

As of December 31, 2025, the carrying value of the Working Capital Facility Agreement was $ 107.9 million, which is comprised of the $ 110.8 million principal amount outstanding, $ 0.4 million of accumulated paid-in-kind interest, less debt discounts of $ 3.3 million.

The end of term fee accreted as of December 31, 2025, of $ 4.8 million is recorded in other non-current liabilities on the condensed consolidated balance sheet s.

As of December 31, 2024, the carrying value of the Working Capital Facility Agreement was $ 25.0 million, which is comprised of the $ 25.0 million principal amount outstanding, and $ 0.5 million of accumulated paid-in-kind interest, less debt discounts of $ 0.5 million.

The end of term fee accreted as of December 31, 2024, of $ 0.4 million is recorded in other non-current liabilities on the condensed consolidated balance sheets.

As of December 31, 2023, the carrying value of tranche 1A was $ 24.3 million, which is comprised of the $ 25.0 million principal amount outstanding, and $ 0.2 million of accumulated paid-in-kind interest, less debt discounts of $ 0.9 million.

2026 Senior Unsecured Convertible Notes

In May 2021, we entered into a note purchase agreement with funds affiliated with Baker Bros.

Advisors LP for a private placement of $ 150.0 million in Senior Unsecured Convertible Notes (“Senior Convertible Notes”).

We received a total of $ 149.0 million, net of issuance costs, from the issuance of these Senior Convertible Notes.

The Senior Convertible Notes were issued at par.

The Senior Convertible Notes bear interest at a rate of 1.5 % per annum, payable in cash semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021 .

The Senior Convertible Notes mature on May 26, 2026 , unless earlier converted, redeemed or repurchased.

The Senior Convertible Notes will be subject to redemption at our option, between May 24, 2024 and May 24, 2025, but only if the last reported sale price per share of our common stock exceeds 250 % of the conversion price for a specified period of time, or on or after May 24, 2025 if the last reported sale price per share of our common stock exceeds 200 % of the conversion price for a specified period of time.

The redemption price will be equal to the principal amount of the Senior Convertible Notes to be redeemed, plus accrued and unpaid interest.

Upon conversion, we will settle the Senior Convertible Notes in shares of our common stock.

The initial conversion rate for the Senior Convertible Notes is 65.4620 shares per $ 1,000 principal amount of the Senior Convertible Notes (equivalent to an initial conversion price of $ 15.276 per share of common stock).

If a holder of the Senior Convertible Notes converts upon a make-whole fundamental change or company redemption, the holder may be eligible to receive a make-whole premium through an increase to the conversion rate.

In May 2021, we filed a registration statement with the SEC to register for resale 12.4 million shares of our common stock underlying the Senior Convertible Notes, including the maximum number of shares of common stock issuable under the make-whole premium.

The Senior Convertible Notes were accounted for in accordance with ASC Subtopic 470-20, Debt with Conversion and Other Options (“ASC 470-20”) and ASC Subtopic 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”).

Advisors LP for a private placement of $ 150.0 million aggregate principal amount of senior unsecured convertible notes due in 2026 (the "2026 Convertible Notes").

We received a total of $ 149.0 million, net of issuance costs, from the issuance of the 2026 Convertible Notes.

The 2026 Convertible Notes bear interest at a rate of 1.5 % per annum, payable in cash semi-annually in arrears on June 15 and December 15 of each year with a maturity date of May 26, 2026 , unless earlier converted, redeemed or repurchased.

The 2026 Convertible Notes were accounted for in accordance with ASC Subtopic 470-20, Debt with Conversion and Other Options ("ASC 470-20"), and ASC Subtopic 815-40, Contracts in Entity's Own Equity ("ASC 815-40").

Under ASC 815-40, to qualify for equity classification (or non-bifurcation, if embedded), the instrument (or embedded feature) must be both (1) indexed to the issuer's stock and (2) meet the requirements of the equity classification guidance.

Based upon our analysis, it was determined that the Senior Convertible Notes do contain embedded features indexed to our own stock, but do not meet the requirements for bifurcation, and therefore do not need to be separately accounted for as an equity component.

Since the embedded conversion feature meets the equity scope exception from derivative accounting, and, also since the embedded conversion option does not need to

be separately accounted for as an equity component under ASC 470-20, the proceeds received from the issuance of the Senior Convertible Notes were recorded as a liability on the consolidated balance sheets.

We incurred issuance costs related to the Senior Convertible Notes of $ 1.0 million, which we recorded as debt issuance costs and are included as a reduction to the Senior Convertible Notes on the consolidated balance sheets.

The debt issuance costs are being amortized to interest expense using the effective interest rate method over the term of the Senior Convertible Notes, resulting in an effective interest rate of 1.6 %.

For the year ended December 31, 2024, interest expense related to the Senior Convertible Notes was $ 2.4 million, which included $ 2.2 million related to the stated interest rate and $ 0.2 million related to the amortization of debt issuance costs.

Based upon our analysis, it was determined that the 2026 Convertible Notes do contain embedded features indexed to our common stock, but do not meet the requirements for bifurcation, and therefore do not need to be separately accounted for as an equity component.

Since the embedded conversion feature meets the equity scope exception from derivative accounting, and, also since the embedded conversion option does not need to be separately accounted for as an equity component under ASC 470-20, the proceeds received from the issuance of the 2026 Convertible Notes were recorded as a liability on the condensed consolidated balance sheets.

We incurred issuance costs related to the 2026 Convertible Notes of $ 1.0 million, which we recorded as debt issuance costs and were included as a reduction to the 2026 Convertible Notes on the condensed consolidated balance sheets.

The debt issuance costs are being amortized to interest expense using the effective interest rate method over the term of the 2026 Convertible Notes, resulting in an effective interest rate of 1.6 %.

On August 8, 2025, we entered into an exchange agreement pursuant to which $ 150.0 million aggregate principal amount of the 2026 Convertible Notes outstanding were exchanged for (i) 16,666,666 shares of common stock for an aggregate principal amount of $ 25.0 million of the 2026 Convertible Notes and (ii) the remaining $ 125.0 million plus accrued and unpaid interest under the 2026 Convertible Notes paid in cash, and which closed on August 12, 2025.

As of December 31, 2025, no 2026 Convertible Notes remain outstanding.

The exchange agreement was accounted for in accordance with ASC 470-20, after the adoption of ASU 2024-04, whereby we concluded that the exchange did not qualify as an induced conversion.

Thus, we accounted for the exchange as a debt extinguishment.

We recorded a loss on extinguishment during the year ended December 31, 2025 of $ 5.8 million, which was equal to the carrying value of the 2026 Convertible Notes less the fair value of the consideration offered in the exchange.

The fair value of the consideration offered in the exchange was determined to be $ 125.0 million for the cash consideration and $ 30.7 million for the common shares offered.

The fair value of the common stock exchanged was determined using the closing price of the common stock on August 7, 2025.

For the year ended December 31, 2025, interest expense related to the 2026 Convertible Notes was $ 1.6 million, which included $ 1.5 million related to the stated interest rate and $ 0.1 million related to the amortization of debt issuance costs.

For the year ended December 31, 2024, interest expense related to the 2026 Senior Convertible Notes was $ 2.4 million, which included $ 2.2 million related to the stated interest rate and $ 0.2 million related to the amortization of debt issuance costs.

For the year ended December 31, 2023, interest expense related to the 2026Senior Convertible Notes was $ 2.5 million, which included $ 2.3 million related to the stated interest rate and $ 0.2 million related to the amortization of debt issuance costs.

As of December 31, 2024, the carrying value of the Senior Convertible Notes was $ 149.7 million, which is comprised of the $ 150.0 million principal amount of the Senior Convertible Notes outstanding, less debt issuance costs of $ 0.3 million.

As of December 31, 2023, the carrying value of the Senior Convertible Notes was $ 149.5 million, which is comprised of the $ 150.0 million principal amount of the Senior Convertible Notes outstanding, less debt issuance costs of $ 0.5 million.

2031 Senior Unsecured Convertible Notes

On August 8, 2025, we entered into a note purchase agreement with a fund affiliated with Rubric Capital Management LP, for a private placement of $ 35.0 million aggregate principal amount of senior unsecured convertible notes due 2031 (the "2031 Convertible Notes"), which closed on August 12, 2025.

We received a total of $ 31.9 million, net of issuance costs and original issuance discount, from the issuance of the 2031 Convertible Notes.

The 2031 Convertible Notes were issued at par.

The 2031 Convertible Notes bear interest at a rate of 5.0 % per annum, payable in cash semi-annually in arrears on March 1 and September 1 of each year, or at a rate of 7.0 % per annum for paid-in-kind interest prior to September 1, 2026.

The 2031 Convertible Notes mature on March 1, 2031 , unless earlier converted, redeemed or repurchased.

The 2031 Convertible Notes are subject to redemption at our option, after September 1, 2026, but only if the last reported sale price per share of our common stock exceeds 200 % of the conversion price for a specified period of time.

The redemption price will be equal to the principal amount of the 2031 Convertible Notes to be redeemed, plus accrued and unpaid interest.

The 2031 Convertible Notes can be settled in either shares of common stock, cash or a combination of cash and shares of common stock based on the conversion rate in effect on the date of conversion.

The initial conversion rate for the 2031 Convertible Notes is 555.5556 shares per $ 1,000 principal amount of the 2031 Convertible Notes (equivalent to an initial conversion price of $ 1.80 per share of common stock), subject to certain adjustments.

If a holder of the 2031 Convertible Notes converts upon a make-whole fundamental change or Company redemption, the holder may be eligible to receive a make-whole premium through an increase to the conversion rate.

The 19,444,444 shares of common stock issuable upon the conversion, at the option of the holder, of the 2031 Convertible Notes, which includes the maximum number of shares of common stock issuable under the make-whole premium, are registered for resale pursuant to a registration statement filed with and declared effective by the SEC in September 2025.

At a special meeting of stockholders held on October 13, 2025, the Company’s stockholders approved, pursuant to Nasdaq Listing Rule 5635(d), the issuance of shares of common stock in connection with the conversion of the 2031 Convertible Notes, which could, under certain circumstances that may occur in the future, exceed 19.99 % of the number of shares of the common stock issued and outstanding prior to such issuance.

The 2031 Convertible Notes were accounted for in accordance with ASC 470-20 and ASC 815-40.

Based upon our analysis, it was determined that the 2031 Convertible Notes do contain embedded features indexed to our common stock, but do not meet the requirements for bifurcation, and therefore do not need to be separately accounted for as an equity component.

Since the embedded conversion feature meets the equity scope exception from derivative accounting, and, also since the embedded conversion option does not need to be separately accounted for as an equity component under ASC 470-20, the proceeds received from the issuance of the 2031 Convertible Notes were recorded as a liability on the condensed consolidated balance sheets.

We incurred issuance costs related to the 2031 Convertible Notes of $ 1.4 million, which we recorded as debt issuance costs and are included as a reduction to the 2031 Convertible Notes on the condensed consolidated balance sheets.

We also incurred an original issuance discount of $ 1.8 million, which we recorded as a reduction to the 2031 Convertible Notes on the condensed consolidated balance sheets.

The debt issuance costs and original issuance discount are being amortized to interest expense using the effective interest rate method over the term of the 2031 Convertible Notes, resulting in an effective interest rate of 7.14 %.

For the year ended December 31, 2025, interest expense related to the 2031 Convertible Notes was $ 0.9 million, which included $ 0.9 million related to paid-in-kind interest and nil related to the amortization of debt issuance costs.

As of December 31, 2025, the carrying value of the 2031 Convertible Notes was $ 32.7 million, which is comprised of the $ 35.0 million principal amount of the 2031 Convertible Notes outstanding, $ 0.9 million of accumulated paid-in-kind interest, less debt issuance costs of $ 3.2 million.

Stockholders’ Equity

2025 Private Placement

On July 21, 2023, we entered into a Securities Purchase Agreement (the “2023 Private Placement”) with Rubric Capital Management L.P., Velan Capital, Clearline Capital and Hercules Capital, Inc.

(collectively, the “Purchasers”) whereby we sold 20.7 million shares of our common stock in a private placement at a purchase price of $ 1.37 per share.

On August 8, 2025, we entered into a securities purchase agreement with the purchasers party thereto, for a private placement of (i) 13,225,227 shares of common stock at a purchase price of $ 1.50 per share and (ii) 524,141 shares of Series A convertible preferred stock, which would automatically convert upon stockholder approval and subject to beneficial ownership limitations, into 5,241,410 shares of common stock, at a conversion price of $ 1.50 per share (stated value of $ 15.00 per share) for aggregate gross proceeds of $ 27.7 million, and which closed on August 12, 2025 .

In connection with the private placement equity offering, we incurred issuance costs of $ 1.5 million.

The Series A convertible preferred stock is convertible to common stock at a ratio of ten shares of common stock for each share of Series A convertible preferred stock and has a par value of $ 0.01 .

The Series A convertible preferred stock ranks senior to common stock with respect to dividend rights and rights on the distribution of assets in an event of liquidation.

The Series A convertible preferred stockholders have no voting rights and are entitled to receive dividends on an as converted basis in the same form as dividends granted to holders of common stock.

Upon a liquidation, the proceeds available for distribution would be paid pari passu among the holders of shares of common stock and Series A convertible preferred stock, pro rata based on the number of shares held by each such holder and on an as converted basis.

We evaluated the terms of the Series A convertible preferred stock under the guidance of ASC 480-10, Distinguishing Liabilities from Equity, and ASC 815-40 and recorded the Series A convertible preferred stock in stockholders’ equity in the condensed consolidated balance sheets.

The 13,225,227 shares of common stock and 5,241,410 shares of common stock issuable upon automatic conversion of the Series A convertible preferred stock are registered for resale pursuant to a registration statement filed with and declared effective by the SEC in September 2025.

At a special meeting of stockholders held on October 13, 2025, the Company’s stockholders approved, pursuant to Nasdaq Listing Rule 5635(d), the issuance of shares of common stock in connection with the conversion of the Series A convertible preferred stock, which could, under certain circumstances that may occur in the future, exceed 19.99 % of the number of shares of the common stock issued and outstanding prior to such issuance.

Upon shareholder approval in October 2025, 454,129 shares of Series A convertible preferred stock were converted to common stock, resulting in the issuance of 4,541,290 shares of common stock.

The remaining 70,012 shares of Series A convertible preferred stock are subject to beneficial ownership limitations and thus did not convert to common stock as of December 31, 2025.

2023 Private Placement

On July 21, 2023, we entered into a Securities Purchase Agreement (the "2023 Private Placement") with the purchasers party thereto, whereby we sold 20.7 million shares of our common stock in a private placement at a purchase price of $ 1.37 per share.

In addition, as a component of the 2023 Private Placement, we sold 1.2 million pre-funded warrants to purchase shares of our common stock at a purchase price of $ 1.3699 per share.

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The 2023 Private Placement closed on July 25, 2023.

In August 2023, we filed a registration statement with the SEC to register for resale 21.9 million shares of our common stock.

The registration statement was declared effective on August 31, 2023.

2022 Private Placement

On August 8, 2022, we entered into an agreement to sell 16.1 million shares of our common stock in a private placement at a purchase price of $ 3.10 per share (“2022 Private Placement”).

In addition, as a component of the 2022 Private Placement, we agreed to sell 8.5 million pre-funded warrants to purchase shares of our common stock at a purchase price of $ 3.0999 per share.

The pre-funded warrants have an exercise price of $ 0.0001 per share.

The total net proceeds from the sale of the common stock and pre-funded warrants was $ 75.1 million (net of $ 1.4 million in issuance costs).

The 2022 Private Placement closed on August 10, 2022.

In October 2022, we filed a registration statement with the SEC to register for resale 24.6 million shares of our common stock.

The registration statement was declared effective on October 18, 2022.

The aggregate 21.9 million shares of our common stock issued pursuant to the 2023 Private Placement are registered for resale pursuant to a registration statement filed with and declared effective by the SEC in August 2023.

Common Stock Reserved for Future Issuance

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Shares of common stock underlying warrants

Shares of common stock underlying Series A Convertible Preferred Stock (see Note 9)

Shares of common stock underlying convertible notes outstanding (see Note 8)

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Employee Stock Purchase Plan

In 1997, our stockholders approved our Employee Stock Purchase Plan (“ESPP”) at which time a maximum of 10,000 shares of common stock were available for issuance.

In December 2007, May 2009, June 2011, May 2014, May 2015, June 2016, June 2017, June 2019, June 2021, May 2022, June 2023 and June 2024, our stockholders authorized increases in the number of shares reserved for issuance under the ESPP by 5,000 , 10,000 , 25,000 , 25,000 , 100,000 , 100,000 , 200,000 , 300,000 , 200,000, 850,000, 400,000 and 1,200,000 shares, respectively, for a total of 3,425,000 shares reserved at December 31, 2024.

In 1997, our stockholders approved our Employee Stock Purchase Plan ("ESPP").

As of December 31, 2025, a total of 3,425,000 shares are reserved for our ESPP.

Under the terms of the ESPP, employees can elect to have up to a maximum of 10 % of their base earnings withheld to purchase shares of our common stock.

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We currently have one equity incentive plan from which we can grant options, restricted stock awards, restricted stock units ("RSUs"), and stock appreciation rights to employees, officers, directors and consultants.

In December 2007, the stockholders approved our 2007 Amended and Restated Equity Incentive Plan (“2007 Plan”) at which time a maximum of 150,000 shares of common stock were available for grant.

In May 2010, June 2011, May 2014, May 2015, June 2016, June 2017, June 2019, June 2021, May 2022, June 2023 and June 2024, our stockholders approved amendments to our 2007 Plan to increase the maximum number of shares of common stock available for grant by 100,000 , 4,500,000 , 1,750,000 , 4,300,000 , 3,000,000 , 5,000,000 , 7,000,000 , 2,000,000, 2,900,000, 8,490,000 and 7,500,000 shares of common stock, respectively, resulting in an aggregate of 46,690,000 shares of common stock authorized for issuance as of December 31, 2024.

At December 31, 2024, there were 12,125,013 shares available for future grant under the 2007 Plan.

The stockholders approved our 2007 Amended and Restated Equity Incentive Plan ("2007 Plan") and as of December 31, 2025, 46,690,000 shares of common stock are authorized for issuance under the 2007 Plan.

On December 31, 2025, there were 8,493,275 shares available for future grant under the 2007 Plan.

Any shares that are subject to awards granted pursuant to the 2007 Plan that expire, are cancelled or are forfeited are available for future grant under the 2007 Plan.

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As of December 31, 2025, options outstanding have a weighted-average remaining contractual term of 7.64 years and options exercisable have a weighted-average remaining contractual term of 6.98 years.

Total intrinsic value of options outstanding, which is the difference between the exercise price and the closing price of our common stock on the last trading day of the calendar year, was $ 1.5 million at December 31, 2024 and $ 2.8 million at December 31, 2023.

The were no options outstanding and in-the-money at December 31, 2022.

Total intrinsic value of options outstanding, which is the excess of the closing price of our common stock on the last trading day of the calendar year and the exercise price, was $ 0.5 million on December 31, 2025, $ 1.5 million on December 31, 2024 and $ 2.8 million on December 31, 2023.

The total intrinsic value of stock option exercises, which is the difference between the exercise price and closing price of our common stock on the date of exercise, during the years ended December 31, 2025, 2024 and 2023 was $ 167,000 , $ 385,000 and $ 10,000 , respectively.

There were no option exercises during the year ended December 31, 2022.

As of December 31, 2024 and 2023, the total intrinsic value of options outstanding and exercisable was $ 385,000 and $ 137,000 , respectively.

As of December 31, 2022, there were no options outstanding and exercisable that were in-the-money.

As of December 31, 2025, 2024 and 2023, the total intrinsic value of options outstanding and exercisable was $ 0.2 million, $ 0.4 million and $ 0.1 million, respectively.

Years Ended December 31,

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Exercise prices and weighted-average remaining contractual lives for the options outstanding as of December 31, 2025 were:

Life (in years) of

Exercise Prices

Life (in years)

Options Exercisable

$ 0.97 - $ 1.51

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$ 38.20 - $ 57.30

Included within outstanding options of 28,705 at December 31, 2025 was 6,350 market-based stock option awards.

On December 31, 2025, we had reserved 32,503,914 shares of common stock for future issuance upon exercise of outstanding options and vesting of outstanding restricted stock units granted under the 2007 Plan, as well as the inducement award grants.

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Expected life (months)

The weighted-average fair value of options granted was $ 1.40 and $ 1.13 for the years ended December 31, 2024 and 2023, respectively.

The weighted-average grant date fair value of options granted was $ 1.32 , $ 1.40 and $ 1.13 for the years ended December 31, 2025, 2024, and 2023 respectively.

The weighted-average fair value of shares purchased through the ESPP was $ 1.68 , $ 1.53 and $ 0.64 for the years ended December 31, 2025, 2024 and 2023, respectively.

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We have a defined contribution 401(k) plan ("Plan") covering substantially all of our employees.

For the year ended December 31, 2024, we made matching cash contributions equal to 50 % of each participant's contribution during the Plan year up to 6 % per pay period.

For the year ended December 31, 2023 and 2022, we made matching cash contributions equal to 50 % of each participant’s contribution during the Plan year up to a maximum amount equal to the lesser of 3 % of each participant’s annual compensation or $ 9,900 and $ 9,150 , respectively.

For the year ended December 31, 2025 and 2024, we made matching cash contributions equal to 50 % of each participant's contribution during the Plan year up to 6 % per pay period.

For the year ended December 31, 2023, we made matching cash contributions equal to 50 % of each participant’s contribution during the Plan year up to a maximum amount equal to the lesser of 3 % of each participant’s annual compensation or $ 9,900 .

Such amounts were recorded as expense in the corresponding years.

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For the years ended December 31, 2024, 2023 and 2022, we did not record a provision for income taxes due to a full valuation allowance against our deferred tax assets.

The difference between the provision for income taxes and income taxes computed using the effective U.S.

federal statutory rate is as follows (in thousands):

Tax at statutory federal rate

State tax, net of federal benefit

Research and development credits

Following the adoption of ASU 2023-09, our tax provision and effective tax rate differed from the statutory federal rate as follows:

Provision for income taxes at statutory federal income tax rate

State income taxes, net of federal income tax effect

Non-taxable or non-deductible items:

Stock-based compensation expense

Non-deductible compensation

Employee retention credit adjustment

Loss on debt extinguishment

Change in valuation allowance

Other reconciling items:

Provision to return adjustment

Provision for income taxes

Total tax provision and effective tax rate

State taxes paid for all states where we are required to file was less than $ 10,000 during the year ended December 31, 2025.

Alabama, California, and Tennessee made up the majority (greater than 50%) of the tax effect in the state tax, net of federal benefit category.

Prior to the adoption of ASU 2023-09, our tax provision and effective tax rate differed from the statutory federal rate as follows:

Provision for income taxes at statutory federal income tax rate

State income taxes, net of federal income tax effect

Stock-based compensation expense

Non-deductible compensation

Change in valuation allowance

Provision to return adjustment

Total tax provision and effective tax rate

Deferred income tax assets and liabilities arising from differences between accounting for financial statement purposes and tax purposes, less valuation allowance at year-end are as follows (in thousands):

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We have established a valuation allowance to offset net deferred tax assets as of December 31, 2025 and 2024 due to the uncertainty of realizing future tax benefits from such assets.

As of December 31, 2024 and December 31, 2023, we had federal and state net operating loss (“NOL”) carryforwards of $ 1.3 billion and $ 1.3 billion, respectively.

As of December 31, 2025, we had federal net operating loss ("NOL") carryforwards of $ 1.3 billion and state NOL carryforwards of $ 0.9 billion.

The federal NOL carryforwards consist of $ 541.7 million generated before January 1, 2018, which began to expire in 2025 , and $ 793.9 million that can be carried forward indefinitely, but are subject to the 80 % taxable income limitation.

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The federal research and development credit carryforwards began to expire in 2025 .

The state research and development credit carryforwards will be carried forward indefinitely.

The st ate research and development credit carryforwards will be carried forward indefinitely.

Internal Revenue Code ("IRC") Sections 382 and 383 place a limitation on the amount of taxable income that can be offset by NOL and credit carryforwards after a change in control (generally greater than 50% change in ownership within a three-year period) of a loss corporation.

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State jurisdictions have similar rules.

We have performed an analysis of IRC Sections 382 and 383 through July 31, 2023 and determined there were ownership changes in 2007, 2011 and 2013.

We have performed an analysis of IRC Sections 382 and 383 through August 2025 and determined there were ownership changes in 2007, 2011 and 2013.

The limitation in the federal and state NOL and research and development credit carryforwards that expire unused would reduce the deferred tax assets, which are fully offset by a valuation allowance.

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It is the Company’s practice to recognize interest and penalties related to income tax matters in income tax expense.

As of December 31, 2024, we had no accrued interest and penalties related to uncertain tax positions.

As of December 31, 2025 and 2024, we had no accrued interest and penalties related to

uncertain tax positions.

We do not expect any material changes to the estimated amount of liability associated with our uncertain tax positions within the next 12 months.

On July 4, 2025, the One Big Beautiful Bill was enacted (“OBBBA”), introducing significant and wide-ranging changes to the U.S.

federal tax system.

Significant components include restoration of 100 % accelerated tax depreciation on qualifying property including expansion to cover qualified production property.

Another major aspect includes the return to immediate expensing of domestic research and experimental expenditures (“R&E”) which in some cases may include retroactive application back to 2021 for businesses with gross receipts of less than $ 31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses.

The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent.

Less favorable business provisions include limitations on tax deductions for charitable contributions.

The Company has analyzed the changes in the OBBBA and incorporated those that are relevant to the financial statements for the current year.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted and signed into law in response to the COVID-19 pandemic.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis