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Item 9A. Controls and Procedures

2026-04-15 compared with 2025-03-31 · 779 added, 867 removed, 1170 unchanged (58% of the section changed)

2 unchanged sentences

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025.

The term “disclosure controls and

procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective.

Management’s annual report on internal control over financial reporting

9 unchanged sentences

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on that assessment, our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective.

Based on that assessment and the most recent change in business strategy, our management noted the following deficiency that was believed to be material weakness.

● Insufficient personnel following the Company’s restructuring has resulted in key controls over the financial reporting process not being fully implemented or operating effectively to support financial reporting in accordance with U.S.

GAAP and SEC reporting requirements.

Our management is planning to implement the following to remediate the above mentioned deficiency:

(i) hiring additional accounting and financial personnel to address the staffing shortage following the Company’s restructuring and to support the proper design and operation of key controls over financial reporting;

(ii) organizing regular training for accounting staff to enhance their understanding of U.S.

GAAP and SEC reporting requirements and to strengthen the execution of key controls;

(iii) developing and implementing a U.S.

GAAP accounting policies and procedures manual, which will be maintained, reviewed, and updated on a regular basis to support consistent application of accounting standards and improve the effectiveness of financial reporting controls.

As a non-accelerated filer and a “smaller reporting company”, as defined in Rule 12-b-2 under the Exchange Act, our independent registered public accounting firm is not required to issue an attestation report on the internal control over financial reporting.

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Other Information

(b) None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the three months ended December 31, 2024.

(a) Loan and Security Agreement

On February 9, 2026, the Company made the Loan in the principal amount of $7,000,000 evidenced by a secured promissory note to the Borrower, Minglemint Solutions LLC in connection with the Company’s determination that a portion of its cash on hand was in excess of its near-term working capital requirements and operational needs.

In order to optimize the return on such excess cash, rather than holding the full balance in a bank deposit account, which offered a materially lower yield, the Company elected to deploy that portion into the Loan, which bears interest at a rate of 8.0% per annum.

The Company believes that the interest rate obtained under the Loan, together with the security interest granted to the Company over all fixtures and personal property of the Borrower, provides a more favorable risk-adjusted return on idle cash than the return available through conventional bank deposit arrangements, while preserving the Company’s ability to meet its anticipated working capital and operational obligations.

The Loan bears interest at a rate of 8.0% per annum, and is due and payable on February 9, 2027.

The Note includes customary event of default provisions, including, but not limited to, for a breach of any representations and warranties or covenants, any bankruptcy or insolvency proceedings of the Borrower, and the failure of the Borrower to pay, upon 15 days’ written notice of default, any principal amount of the Loan or interest due.

The Note provides for a default interest rate of 13.0%.

As described in the Note, upon the occurrence of certain events of default, the Company may, among other remedies, declare the outstanding balance of the Note including all accrued interest thereon immediately due and payable.

Additionally, the Note is secured by the Collateral, a continuing first priority lien and security interest in all fixtures and personal property of the Borrower, pursuant to the Security Agreement with the Borrower dated February 9, 2026.

The Collateral includes, but is not limited to, all accounts, goods, documents, instruments, securities and investment properties, money, accounts and rights to payment of the Borrower, and any proceeds, records and obligations relating to the foregoing, as more fully detailed in the Security Agreement.

(b) 10b-1 Insider Trading Arrangements

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the three months ended December 31, 2025.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Executive Officers and Directors

Set forth below are the names of, ages as of March 1, 2025, and certain other information for, each executive officer and member of our board of directors.

There are no family relationships among any of our directors or executive officers.

Set forth below are the names, ages as of March 31, 2026 and positions of each of the current directors and executive officers of the Company.

Each director has served on the Board since January 2026.

Executive Officers

Todd Bazemore

Interim Chief Executive Officer, President and Chief Operating Officer

Kim Brazzell, Ph.D.

Head of Research and Development and Chief Medical Officer

Darius Kharabi

Chief Business Officer

Mary Reumuth, C.P.A.

Chief Financial Officer, Treasurer and Secretary

Non-Employee Directors

Chair of the Board

Marjan Farid, M.D.(2)(3)

Daniel Myers(1)(2)

Avi Minkowitz

Chief Executive Officer, Chief Financial Officer and Director

Avi Minkowitz

Chief Executive Officer, Chief Financial Officer and Director

Chaim (Dovi) Berger (1) (3)

Yonatan Colman (1) (2)

Brendan Purdy (2) (3)

Hillel Posen (1) (2) (3)

(1) Member of the Audit Committee.

1 unchanged sentence

(3) Member of the Nominating and Corporate Governance Committee.

Executive Officers

Todd Bazemore has served as our interim Chief Executive Officer since February 2025, as our President since December 2021 and as our Chief Operating Officer since November 2017.

Previously, he served as Executive Vice President and Chief Operating Officer of Santhera Pharmaceuticals (USA) Inc., or Santhera, a pharmaceutical company and subsidiary of Santhera Pharmaceuticals Holdings AG, from September 2016 until November 2017.

Prior to joining Santhera, Mr.

Bazemore served as Executive Vice President and Chief Commercial Officer of Dyax Corp., or Dyax, a biopharmaceutical company focused on orphan diseases, between April 2014 and January 2016, when Dyax was acquired by Shire plc.

Bazemore oversaw all aspects of Dyax’s commercial department including sales, marketing, commercial analytics, market access and patient services.

Between April 2012 and September 2013, he served as Vice President, Managed Markets at Sunovion Pharmaceuticals, Inc., or Sunovion (a subsidiary of Dainippon Sumitomo Pharma Co.

Ltd.), a global biopharmaceutical company focused on serious medical conditions.

Prior to that, Mr.

Bazemore held several roles of increasing responsibility at Sunovion, including Vice President of Sales and Vice President of Respiratory Business Unit.

Since October 2020, Mr.

Bazemore has served on the board of directors of Pulmatrix Inc., a clinical stage publicly traded biopharmaceutical company.

He received his Bachelor of Science from the University of Massachusetts, Lowell.

Kim Brazzell, Ph.D.

has served as our Chief Medical Officer since February 2013 and as our Head of Research and Development since December 2021.

Brazzell served as Chief Medical Officer of Mimetogen Pharmaceuticals, Inc., or Mimetogen, a clinical stage biotechnology company, from January 2012 until December 2015 and has served on the board of directors of Mimetogen since January 2024.

Brazzell also held several executive positions at Inspire Pharmaceuticals, Inc., or Inspire, a specialty pharmaceutical company focusing on ophthalmic and respiratory products, including Executive Vice President of Medical and Scientific Affairs from 2010 to 2011, Executive Vice President and Head of Ophthalmology Business from 2009 to 2010, and Senior Vice President of Ophthalmic Research and Development from 2004 to 2008.

Prior to joining Inspire, Dr.

Brazzell served as Global Head of Clinical R&D and Senior Vice President, U.S.

R&D, of Novartis Ophthalmics AG from 2000 to 2004.

Brazzell also served as Vice President, R&D at Ciba Vision Ophthalmics, Inc.

and as Associate Director, R&D, at Alcon Laboratories, Inc.

Brazzell received a B.S.

in Pharmacy and a Ph.D.

in Pharmaceutical Sciences from the University of Kentucky.

Darius Kharabi has served as our Chief Business Officer since November 2021.

From August 2018 to November 2021, Mr.

Kharabi was co-founder and Chief Executive Officer of Combangio Inc., or Combangio, a clinical stage ophthalmology mesenchymal stem cell secretome company that we acquired in November 2021.

He is the co-founder of Lagunita Biosciences, LLC, an early-stage medical investment company.

Since 2015, Mr.

Kharabi has served as the Chief Operating Officer of Lagunita Biosciences, LLC.

From October 2015 to August 2018 he helped create and manage multiple Lagunita portfolio life-science companies, including xCella Biosciences, acquired by Ligand, Kedalion Therapeutics, acquired by Novartis AG, and Combangio.

From October 2015 through August 2019 he served as the Chief Operating Officer of xCella Biosciences and from October 2015 through November 2017 he served as the President of Kedalion.

Prior to Lagunita, he served as Vice President, Corporate Development and International Sales at OrthAlign, a commercial stage orthopedic surgery navigation company, where his responsibilities included the launch of the KneeAlign® total knee arthroplasty navigation product line in the United States and global markets.

Kharabi started his career as a biotechnology licensing attorney at Wilson, Sonsini, Goodrich & Rosati, PC.

He received his B.S.

in Biochemistry from Georgetown University and his J.D.

degrees from Stanford University.

Mary Reumuth, C.P.A.

has served as our Chief Financial Officer since July 2017, our Secretary since April 2024, our Senior Vice President, Finance from February 2017 to July 2017, our Vice President, Finance from December 2014 to February 2017, our Senior Director, Finance from February 2014 to December 2014, our Corporate Controller from February 2014 to July 2017 and as our Treasurer since February 2014.

Prior to joining us, Ms.

Reumuth acted as an independent financial consultant from November 2012 to January 2014 and, prior to that, served as Corporate Controller for Enobia Pharma Corp., or Enobia, a global biopharmaceutical company acquired by Alexion Pharmaceuticals, Inc., from May 2011 to June 2012.

Prior to Enobia, Ms.

Reumuth served as Director of Finance at Verenium Corporation, or Verenium, a biotechnology company, from December 2007 to March 2011.

From 2001 to 2007, Ms.

Reumuth held a variety of finance and accounting positions at Genzyme Corporation, or Genzyme, (now a Sanofi Company), and ILEX Oncology, Inc., or ILEX (acquired by Genzyme).

Prior to ILEX, Ms.

Reumuth was an auditor at Ernst & Young LLP.

From April 2022 to August 2024, Ms.

Reumuth served on the board of directors of Olink Holding AB, a publicly traded company.

Reumuth earned her Bachelor’s degree in Business Administration from Texas A&M University-Corpus Christi, and is a Certified Public Accountant.

Non- Employee Directors

Mark Iwicki has served as Chair of our board of directors since September 2015.

Iwicki has served as the Chief Executive Officer of Inhibikase Therapeutics, Inc., a pharmaceutical company, since February 2025.

Iwicki served as our Chief Executive Officer from September 2015 to February 2025, our President from August 2017 to December 2021 and as Executive Chair of our board of directors from April 2015 to September 2015.

Prior to joining us, Mr.

Iwicki served as President and Chief Executive Officer of Civitas Therapeutics, Inc., or Civitas, a biopharmaceutical company, from January 2014 to November 2014.

Prior to Civitas, Mr.

Iwicki served as President and Chief Executive Officer at Blend Therapeutics, Inc., or Blend, a biopharmaceutical company, from December 2012 to January 2014.

Prior to Blend, Mr.

Iwicki was President and Chief Executive Officer of Sunovion.

Iwicki was at Sepracor Inc./Sunovion from October 2007 to June 2012.

Prior to joining Sepracor Inc., Mr.

Iwicki was Vice President and Business Unit Head at Novartis Pharmaceuticals Corporation, a biopharmaceutical company.

He was at Novartis from March 1998 to October 2007.

Prior to that, Mr.

Iwicki held management positions at Astra Merck Inc.

and Merck & Co., Inc.

In addition to serving on our board of directors, Mr.

Iwicki also currently serves on the boards of Aerovate Therapeutics, Inc., Merus N.V., or Merus, a public clinical-stage immuno-oncology company, Akero Therapeutics, Inc., Third Harmonic Bio, Inc.

and Q32 Bio Inc.

and formerly served on the board of Aimmune Therapeutics, Inc.

and Pulmatrix Inc., all publicly-traded companies.

Iwicki holds a B.S.

in Business Administration from Ball State

University and an M.B.A.

from Loyola University.

We believe that Mr.

Iwicki’s extensive experience as a pharmaceutical industry leader managing all stages of drug development and commercialization in multiple therapeutic areas qualifies him to serve as a member of our board of directors.

Marjan Farid, M.D.

has served as a member of our board of directors since October 2022.

Since 2007, Dr.

Farid has served as Professor of Clinical Ophthalmology, Director of Cornea, Refractive & Cataract Surgery, and Vice Chair of Ophthalmic Faculty at the Gavin Herbert Eye Institute, University of California Irvine.

Her clinical practice is divided between patient care, teaching, and research.

Farid’s research interests focus on corneal surgery, specifically the use of the femtosecond laser for corneal transplantation.

Farid is also the founder of the Severe Ocular Surface Disease Center at the University of California Irvine, where she performs limbal stem cell transplants, as well as artificial corneal transplantation, for the treatment of patients with severe ocular surface disease.

Farid also serves as the Chair of the Corneal Clinic Committee of the American Society of Cataract and Refractive Surgery.

Farid received a B.S.

in Biology from the University of California - Los Angeles and M.D.

from the University of California - San Diego.

We believe that Dr.

Farid’s experience in the ophthalmology field qualifies her to serve as a member of our board of directors.

Koven has served as a member of our board of directors since September 2017 and as our Lead Independent Director since December 2018.

Koven was, until his retirement in January 2019, the President and Chief Business Officer of Aralez Pharmaceuticals Inc., or Aralez, a public specialty pharmaceutical company, and served in that role with the company’s predecessor, Pozen Inc., or Pozen, commencing in June 2015.

Prior to joining Pozen, Mr.

Koven served as Executive Vice President, Chief Administrative Officer and General Counsel of Auxilium Pharmaceuticals Inc., a public specialty biopharmaceutical company, from February 2012 until January 2015, when it was acquired by Endo International plc.

Koven served as President and Chief Administrative Officer and a member of the board of directors of Neurologix, Inc., a company focused on the development of multiple innovative gene therapy development programs, from September 2011 to November 2011.

Before Neurologix, Mr.

Koven served as Executive Vice President and Chief Administrative and Legal Officer of Inspire Pharmaceuticals, Inc., a public specialty pharmaceutical company, from July 2010 until May 2011 when it was acquired by Merck & Co., Inc.

Previously, Mr.

Koven served as Executive Vice President, General Counsel and Corporate Secretary of Sepracor Inc.

(now Sunovion), a public specialty pharmaceutical company, from March 2007 until February 2010 when it was acquired by Dainippon Sumitomo Pharma Co., Ltd.

Prior to joining Sepracor Inc., Mr.

Koven served as Executive Vice President, General Counsel and Corporate Secretary of Kos Pharmaceuticals, Inc., a public specialty pharmaceutical company, from August 2003 until its acquisition by Abbott Laboratories (now AbbVie) in December 2006.

Koven began his career in the pharmaceutical industry first as an Assistant General Counsel and then as Associate General Counsel at Warner-Lambert Company from 1993 to 2000, followed by his role as Senior Vice President and General Counsel at Lavipharm Corporation from 2000 to 2003.

Koven also currently serves on the board of MetaVia, Inc.

(formerly named NueroBo Pharmaceuticals Inc.), or MetaVia, a publicly-traded company, and has served as its Chair since January 2022.

Koven is also a member of MetaVia’s Audit Committee and Chair of its Nominating and Corporate Governance Committee.

From 1986 to 1992 he was a corporate associate at Cahill, Gordon & Reindel in New York.

From 1992 to 1993 he served as Counsel, Corporate and Investment Division, at The Equitable Life Assurance Society of the U.S.

Koven holds a Master of Laws (LL.M.) Degree from Columbia University School of Law and a Bachelor of Laws (LL.B.) Degree and Bachelor of Arts Degree in Political Science from Dalhousie University.

Composition of the Board of Directors

The number of directors of the Company is established by the Board, subject to the rights of holders of any of series of preferred stock of the Company to elect directors.

The Board consists of three classes:

Class I, Class II and Class III.

Each class consists of one-third of the total number of directors constituting the entire Board.

The allocation of directors among classes is determined by resolution of the Board.

Our Board currently consists of 5 members divided into 3 classes, with members of each class holding office for staggered 3-year terms.

There are currently 2 Class I directors, Hillel Posen and Chaim (Dovi) Berger, whose terms expire at the 2027 annual meeting of stockholders;

1 Class II director, Avi Minkowitz, whose term expires at the 2028 annual meeting of stockholders;

and 2 Class III directors, Yonatan Colman and Brendan Purdy, whose terms expire at the 2026 annual meeting of stockholders (in all cases subject to the election and qualification of their successors or to their earlier death, resignation or removal).

Executive Officer and Directors Biographies

Avi Minkowitz has served as a director of the Company since January 2026 and as Chief Executive Officer and Chief Financial Officer of the Company since February 2026.

He has been a director at NuRAN Wireless (CSE-listed) since November 2025 and at International Star Inc.

(OTC-listed) since October 2022, reflecting his broad involvement in public company governance.

From January 2021 to October 2024, Mr.

Minkowitz was a member of the team at Leonite Capital, where he contributed to deal structuring and strategic growth, with direct responsibilities spanning underwriting and portfolio management.

Earlier in his career, he founded and successfully exited two businesses.

Minkowitz has extensive experience with both public and private companies across real estate financing, management, and capital markets, including work with NorthLink Properties Ltd., a private real estate family office based in Toronto;

Smart Parking Solutions Canada Inc., a company he co-founded and sold to Parkit Enterprise Inc.

Enterprise Inc., a TSX-listed public company (symbol:

PKT), where he subsequently served as VP of Acquisitions.

He has advised startups and finance firms and has been involved in community-based entrepreneurship initiatives, including teaching real estate.

Minkowitz holds a Specialized Honours bachelor’s in psychology and a Master's in Disaster and Emergency Management from York University (Toronto).

We believe that Mr.

Koven’s extensive experience in the pharmaceutical industry qualifies him to serve as a member of our board of directors.

Daniel Myers has served as a member of our board of directors since October 2021.

Myers served as the Chief Executive Officer of MediPrint Ophthalmics, Inc.

(formerly Leo Lens Pharma), a private eye-care company, from April 2020 to April 2022.

Previously, Mr.

Myers co-founded Alimera Sciences, Inc., or Alimera, a publicly traded pharmaceutical company, and served as its Chief Executive Officer from 2003 until January 2019.

Before co-founding Alimera, Mr.

Myers was an initial employee of Novartis Ophthalmics (formerly CIBA Vision Ophthalmics), a pharmaceutical company, and served as its Vice President of sales and marketing from 1991 to 1997 and as President from 1997 to 2003.

Myers served as a director of Alimera from 2003 to August 2023, and as chairman of its board of directors from January 2019 to August 2023.

Minkowitz's experience as an entrepreneur and finance professional spanning real estate, private equity, and business development makes him a highly qualified member of our Board.

Chaim (Dovi) Berger serves as Managing Attorney at Berger Law Firm LLC, a New York-based law firm where he has provided lead transactional counsel to a multi-strategy family office, overseeing deal structuring, negotiation, and execution across private equity, real estate, and specialty finance transactions since July 2019.

Berger has also served as an Assistant Professor at Touro College since September 2007, teaching courses in accounting, finance, and law.

He previously worked at Deloitte Tax from 2007 to 2009 and is a licensed CPA in New York State.

Berger has held executive positions in finance roles at Edison Home Health Care and Reliance Global Holdings.

He currently serves as a director of Nova Minerals Ltd., an Australian public company, where he is a member of the Audit Committee.

We believe Mr.

Berger's legal expertise and experience with negotiating and executing financing transactions qualifies him to serve as a member of our board of directors.

Hillel Posen has served on the board of directors of Rio Verde Industries Inc.

since December 2020, where he also serves on the Audit Committee.

He has served as Regional Operations Manager for High Tide Inc., a publicly traded national retail chain with over 200 stores across Canada since October 2018, where he oversees store openings, staffing and scheduling, procurement initiatives, and coordination among construction, compliance, marketing, sales, HR, and IT functions.

Prior to his current role, Mr.

Posen held a series of positions with this national retail chain, including business development and customer service roles supporting retail store purchasing, vendor relationships, and process efficiencies.

Posen holds a Bachelor of Judaic Studies from Talpiot College.

We believe Mr.

Posen has expertise in business development and operations which qualifies him to serve as a director.

Yonatan Colman has served as Director of Leadership Development at NCSY since 2008, where he oversees organizational growth through talent development with a focus on people, strategy, and transformation.

Colman regularly consults internationally, helping executives and their organizations transform, lead change, and build thriving, people-focused cultures.

He holds a B.A.

in Psychology from York University and an M.S.

in Organizational Leadership from Colorado State University Global.

Colman has served as a director of Rio Verde Industries Inc.

since December 2020 and as a director of Newfoundland Goldbar Resources Inc.

since May 2021, serving on the Audit Committee of each.

He has also served as a board member of Yeshivas Limudei Hashem Society, a registered charity, since November 2021.

He previously served as a director and Audit Committee member of Global Tactical Metals Corp.

from November 2021 to December 2022 and of Green Scientific Labs Holdings Inc.

from July 2021 to November 2021.

Colman's qualifications to serve on the Board include his expertise in organizational leadership and strategy, his international consulting experience, and his service on the boards and audit committees of multiple public companies.

Brendan Purdy is a practicing securities lawyer and has served as a Partner at Fish Purdy LLP since June 2022.

Prior to that, he served as President and Director of Purdy Law Professional Corporation from February 2018 to June 2022.

Purdy's private practice is focused on the resource, life sciences, and technology sectors, where he has developed extensive experience with respect to public companies, capital markets, mergers and acquisitions, and other transactions fundamental to the junior equity markets.

He also served as CEO and Director of Canadian GoldCamps Corp.

from November 2020 to April 2024, and as CEO and Director of Musk Ventures Ltd.

from November 2020 to September 2025.

Purdy holds a J.D.

from the University of Ottawa and a Bachelor of Management and Organizational Studies degree from the University of Western Ontario, where he majored in finance and administration.

Purdy has served as a director and Audit Committee member of Red White & Bloom Brands Inc., a CSE-listed company, since July 2017, of NuRan Wireless Inc., a CSE-listed company, since October 2020, of i3 Interactive Inc.

since March 2021, and of Slam Exploration Ltd., a CSE-listed company, since July 2021.

He previously served as a director of Canadian GoldCamps Corp., a CSE-listed company, from December 2016 to April 2024, of DGTL Holdings Inc., a TSXV-listed company, from April 2022 to October 2024, of Musk Ventures Ltd., a CSE-listed company, from November 2020 to September 2025, of Wellbeing Digital Sciences Inc.

from January 2021 to January 2024, of Powertap Hydrogen Capital Corp., a CSE-listed company, from March 2019 to February 2023, and of Talent Infinity Resource Developments Inc., a CSE-listed company, from December 2016 to April 2024.

Purdy's qualifications to serve on the Board include his legal expertise in securities law and capital markets, his experience as a CEO of public companies, and his extensive public company board service.

Director Selection;

Arrangements and Understandings

As required by Item 401(a) of Regulation S-K, we note the following arrangements or understandings with other persons pursuant to which certain individuals on our Board were selected as directors.

Minkowitz, Mr.

Colman and Mr.

Purdy were each selected to serve on our Board pursuant to an arrangement or understanding with AK Holdings in connection with the transactions described in the “Certain Relationships and Related Transactions, and Director Independence” of this Annual Report on Form 10-K.

Family Relationships

There are no family relationships among our directors or executive officers.

Involvement in Certain Legal Proceedings

Except as described below, none of our directors or executive officers has been involved in any of the legal proceedings required to be disclosed pursuant to Item 401(f) of Regulation S-K during the past ten years.

On May 3, 2019, Mr.

Purdy was the subject of a hearing by the Law Society of Ontario relating to a failure to provide a timely response to a client complaint and to meet certain related deadlines;

the matter was disposed of in May 2019 and resulted in a reprimand, and Mr.

Purdy remains a member of the Law Society of Ontario.

In addition, Mr.

Myers served on the board of directors of Ocular Therapeutix, Inc., a publicly traded biopharmaceutical company, from 2009 to 2012.

Myers holds a B.S.

in Industrial Management from the Georgia Institute of Technology.

We believe that Mr.

Myers’ experience in the biopharmaceutical industry, including his specific experience with ophthalmology pharmaceutical companies, qualifies him to serve as a member of our board of directors.

Perry has served as a member of our board of directors since February 2018.

Since June 2023, Mr.

Perry has served as the Chief Financial Officer for Merus.

Perry served as Chief Financial Officer for Finch Therapeutics Group, Inc., a public therapeutics company focused on the microbiome, from May 2018 to April 2022.

Previously, he served as Chief Financial and Administrative Officer of Novelion Therapeutics Inc., or Novelion, a public biopharmaceutical company, from November 2016 to December 2017.

Prior to this, Mr.

Perry was Chief Financial Officer of Aegerion Pharmaceuticals, Inc., a public biopharmaceutical company, from July 2015 until its merger with Novelion in November 2016.

Prior to that, he served as Chief Financial and Business Officer of Eleven Biotherapeutics, Inc., a public company, from January 2014 to June 2015.

Before joining Eleven Biotherapeutics, Mr.

Perry served as the Interim Chief Financial Officer of InVivo Therapeutics, a public biotechnology company, from September 2013 to December 2013, and prior to that he served as the Senior Vice President and Chief Financial Officer of ImmunoGen, Inc., a public biotechnology company, from 2009 until he was promoted in 2011 to Executive Vice President and Chief Financial Officer, a role he held until 2013.

Before that, he was the Chief Financial Officer of Elixir Pharmaceuticals.

Perry previously was Senior Vice President and Chief Financial Officer of Transkaryotic Therapies.

He has also held various financial leadership roles within PerkinElmer Inc., Domantis Ltd., Honeywell and General Electric.

From May 2016 to June 2023, Mr.

Perry served on the board of directors of Merus, including as Chair of its Audit Committee.

From December 2011 to February 2016, Mr.

Perry served on the board of directors of Ocata Therapeutics, a public biotechnology company, including as Chair of its Audit Committee and a member of its Compensation Committee, until it was acquired by Astellas Pharma Inc.

Perry received a B.A.

in Economics and Political Science from Amherst College.

We believe that Mr.

Perry’s experience in the biopharmaceutical industry, including his specific experience in financial leadership roles in biopharmaceutical companies, qualifies him to serve as a member of our board of directors.

Rosen has served as a member of our board of directors since January 2014.

Since 2008, Mr.

Rosen has served as a consultant to several companies in the biotechnology industry.

He has served at Stanford University as an adjunct professor in Chemical Engineering since 2021 and as a lecturer in Management since 2011, and he previously served as a lecturer in Chemical Engineering from 2009 until 2021.

Rosen served as Chief Executive Officer of AcelRx Pharmaceuticals, Inc.

(now Talphera, Inc.), or Talphera, a public specialty pharmaceutical company developing products for pain relief, from April 2016 to March 2017, and Interim Chief Executive Officer from April 2015 to March 2016.

Rosen also served as Interim President and Chief Executive Officer of Pearl Therapeutics, Inc.

from June 2010 to March 2011.

From 2004 to 2008, Mr.

Rosen was Vice President of Commercial Strategy at Gilead Sciences, Inc., a biopharmaceutical company.

From 2003 until 2004, Mr.

Rosen was President of ALZA Corporation, a pharmaceutical and medical systems company that merged in 2001 with Johnson & Johnson, a global healthcare company.

Prior to that, from 1994 until 2003, Mr.

Rosen held various positions at ALZA Corporation.

Rosen served on the board of directors of Talphera until February 2024 and on the board of directors of Alcobra, Ltd., a public pharmaceutical company, until November 2017.

Rosen is currently a member of the board of directors of private companies, including Firecycte Therapeutics, Inc., Hammerton, Inc.

and Entrega, Inc., and was a member of the board of directors of Metera Pharmaceuticals, Inc.

from 2018 to 2020, Aria Pharmaceuticals, Inc.

from 2020 to 2023 and Hopewell Therapeutics, Inc.

from 2022 to 2024.

Rosen holds a B.S.

in Chemical Engineering from Stanford University, an M.S.

in Chemical Engineering from the Massachusetts Institute of Technology and an M.B.A.

from the Stanford Graduate School of Business where he was an Arjay Miller Scholar and a Henry Ford II Scholar.

We believe that Mr.

Rosen’s experience in the biopharmaceutical industry, including his specific experience with the development and commercialization of pharmaceutical products, qualifies him to serve as a member of our board of directors.

Koven was, until his retirement on January 30, 2019, the President and Chief Business Officer of Aralez and served in that role with the company’s predecessor, Pozen, commencing on June 1, 2015.

On August 10, 2018, Aralez and its affiliates each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

Composition of the Board of Directors

Our board of directors is authorized to have seven members, and currently consists of six members divided into three classes, with members of each class holding office for staggered three-year terms.

There are currently three Class I directors (Marjan Farid, M.D., Andrew I.

Koven and Gregory D.

Perry), whose terms expire at the 2027 annual meeting of stockholders;

one Class II director (Mark Iwicki), whose term expires at the 2025 annual meeting of stockholders;

and two Class III directors (C.

Daniel Myers and Howard B.

Rosen) whose terms expire at the 2026 annual meeting of

stockholders (in all cases subject to the election and qualification of their successors or to their earlier death, resignation or removal).

Minkowitz, in his capacity as a director of International Star Inc., is among the directors named in litigation in Ontario arising from a dispute relating to the termination of a former officer of International Star Inc.

International Star Inc.

previously initiated litigation in Delaware against that former officer alleging material breach of contract.

Audit Committee and Audit Committee Financial Expert

The members of our audit committee are Mr.

Myers and Mr.

Rosen is the chair of the audit committee.

Prior to the reconstitution of our audit committee in September 2024, the members of our audit committee were Mark S.

Blumenkranz, M.D., a former director who served during part of the year ended December 31, 2024, Mr.

Myers and Mr.

Rosen, and Mr.

Rosen served as the chair of the audit committee.

Our board of directors has determined that Mr.

Rosen is an “audit committee financial expert” as defined in applicable SEC rules.

Our board of directors has determined that Mr.

Rosen is an “independent director” as defined under applicable Nasdaq rules and satisfies the independence criteria set forth in Rule 10A-3 under the Exchange Act.

The members of our Audit Committee of the Board are Mr.

Colman and Mr.

Berger is the chair of the Audit Committee.

Our Board has determined that Mr.

Berger is an “audit committee financial expert” as defined in applicable SEC rules.

Our Board has determined that each member of our Audit Committee is “independent” as defined under applicable Nasdaq rules and satisfies the independence criteria set forth in Rule 10A-3 under the Exchange Act.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer.

We have adopted a written code of business conduct and ethics (the “Code”) that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer.

A copy of the Code is available on the “Investors-Corporate Governance” section of our website, which is located at www.kalarx.com.

Our board of directors is responsible for overseeing the code of business conduct and ethics and must approve any waivers of the code for directors, officers and employees.

If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

Our Board is responsible for overseeing the Code and must approve any waivers of the Code.

If we make any substantive amendments to, or grant any waivers from, the Code for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K.

The information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any reference to our website address is intended to be an inactive textual reference only.

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The compensation committee conducts an annual review of director compensation and makes recommendations to the board of directors with respect thereto.

From 2018 to 2022, our compensation committee retained Aon’s Human Capital Solutions practice, a division of Aon plc (formerly Radford), as its independent compensation consultant, to provide comparative data on executive compensation practices in our industry and to advise on our executive and director compensation programs generally.

Since January 2023, our compensation committee has retained Pearl Meyer & Partners, LLC, or Pearl Meyer, as our independent compensation consultant for compensation matters.

During the year ended December 31, 2024, our

compensation committee directly engaged Pearl Meyer to provide comparative data on executive compensation practices in our industry and to advise on our executive and director compensation programs generally.

During the year ended December 31, 2024, our compensation committee directly engaged Pearl Meyer to provide comparative data on executive compensation practices in our industry and to advise on our executive and director compensation programs generally.

Although our compensation committee considers the advice and guidelines of Pearl Meyer, our compensation committee ultimately makes its own decisions about these matters and recommendations to our board about these matters.

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Executive Compensation

The following discussion relates to the compensation of our former Chief Executive Officer, Mark Iwicki, who resigned on February 11, 2025, our President and Chief Operating Officer, Todd Bazemore, who was appointed as our interim Chief Executive Officer on February 11, 2025, and our Head of Research and Development and Chief Medical Officer, Kim Brazzell, Ph.D.

for the periods presented.

These three individuals are collectively referred to herein as our named executive officers.

Each year, our compensation committee and board of directors review and determine the compensation of our named executive officers.

The following discussion relates to the compensation of:

Mark Iwicki, former CEO and principal executive officer (who served until February 2025);

Todd Bazemore, former CEO and principal executive officer (who served from February 2025 until November 2025);

Kim Brazzell, Ph.D., former Head of Research and Development and Chief Medical Officer;

and Mary Reumuth, former Chief Financial Officer.

David Lazar, who served as CEO of the Company from November 2025 until February 2, 2026 (subsequent to the reporting period) did not receive any compensation in connection with his role as CEO.

Summary Compensation Table

The following table sets forth information regarding compensation awarded to, earned by or paid to each of our named executive officers for the periods presented.

The following table sets forth information regarding the compensation awarded to or earned by the current and former executive officers listed below during the years ended December 31, 2025, and 2024.

We have opted to comply with the reduced executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for only (i) principal executive

officer, (ii) two most highly compensated executive officers other than our principal executive officer and (iii) if applicable, up to two individuals who would have qualified as our two most highly compensated executive officers other than the principal executive officer but for the fact that the individual was not serving as an executive officer of the Company at the end of the last completed fiscal year.

Throughout this document, the officers below are referred to as our “named executive officers” or “NEOs”.

Name and Principal Position

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Todd Bazemore

Interim Chief Executive Officer, President and Chief Operating Officer

Former Interim Chief Executive Officer, President and Chief Operating Officer

Kim Brazzell, Ph.D.

Head of Research and Development and Chief Medical Officer

(1) The amounts reported in the “Bonus” column reflect discretionary annual cash bonuses earned by our named executive officers for their performance in the years ended December 31, 2024 and 2023.

(2) The amounts reported in the “Stock Awards” column reflect the aggregate grant date fair value of RSUs granted during 2024 and 2023 (including, for 2023, the incremental fair value of RSUs granted upon exchange of options pursuant to our option exchange program effected in 2023, or the 2023 Option Exchange Program), computed in accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718.

Former Head of Research and Development and Chief Medical Officer

Former Chief Financial Officer

(1) The amounts reported in the “Bonus” column reflect discretionary annual cash bonuses and retention bonuses earned by our named executive officers for their performance in the years ended December 31, 2025 and 2024.

(2) The amounts reported in the “Stock Awards” column reflect the aggregate grant date fair value of RSUs granted during the periods presented, computed in accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718.

For the assumptions underlying the valuation of such RSUs, see Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements appearing at the end of this Annual Report on Form 10-K.

For more information about our 2023 Option Exchange Program, see Note 11, “Stock-based Compensation” to our consolidated financial statements appearing at the end of this Annual Report on Form 10-K.

(3) The amounts reported in the “Option Awards” column reflect the aggregate grant date fair value of stock options awarded during the periods presented, computed in accordance with the provisions of FASB ASC Topic 718 using a Black-Scholes option pricing model.

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(4) The following table describes the elements that are represented in the “All Other Compensation” column above:

Company-Paid Life

Severance, Company-Paid Life

401(k) Savings Plan

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Kim Brazzell, Ph.D.

(1) Other compensation for the year ended December 31, 2025 included a settlement of severance amount of $52,400, $37,700 and $36,613 to Mr.

Bazemore, Dr.

Brazzell and Ms.

Reumuth, respectively.

Narrative Disclosure to Summary Compensation Table

We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers.

None of our named executive officers is currently party to an

employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary.

Iwicki’s, Mr.

Bazemore’s and Dr.

Brazzell’s annual base salaries were $709,394, $535,600 and $520,000, respectively, for 2024 and for 2023.

None of our named executive officers is currently party to an employment agreement or other agreement or arrangement that provides for automatic or scheduled increases in base salary.

Annual Bonus.

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With respect to 2024 performance, our compensation committee awarded bonuses of $297,945, $187,460, $163,800 and $147,420 to Mr.

Bazemore, Dr.

Brazzell, and Ms.

Reumuth, respectively, which represented payments at 70% of each individual’s target bonus opportunity (which target bonus opportunities, expressed as a percentage of 2024 annual base salary, were 60%, 50% and 45%, respectively).

Bazemore’s individual performance-based target bonus amount for 2025, expressed as a percentage of his 2025 base salary, was 50%.

Brazzell’s individual performance-based target bonus amount for 2025, expressed as a percentage of his 2025 base salary, was 45%.

Retention Bonus .

In addition to the performance-based annual bonuses described above, in April 2025, our Compensation Committee awarded one-time cash retention bonuses of $281,190 and $260,000 to Mr.

Bazemore and Dr.

Brazzell, respectively, which represented payments at 70% of each individual’s target bonus opportunity (which target bonus opportunities, expressed as a percentage of 2024 annual base salary, were 60%, 50% and 45%, respectively).

Bazemore’s individual performance-based target bonus amount for 2025, expressed as a percentage of his 2025 base salary, is 50%.

Brazzell’s individual performance-based target bonus amount for 2025, expressed as a percentage of his 2025 base salary, is 45%.

Brazzell, respectively, in recognition of their critical roles during leadership transitions.

Such retention bonuses were conditioned upon each officer's continued service subject to certain conditions.

Equity Incentives.

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In January 2024, we granted options to purchase 64,500, 29,300, 29,300 and 20,500 shares of our Common Stock to Mr.

Bazemore and Dr.

Brazzell, respectively.

Bazemore, Dr.

Brazzell and Ms.

Reumuth, respectively.

Such options vest as to 1/48th of the shares underlying the option at the end of each successive one-month period over a four-year period following January 4, 2024, subject to continued service.

In January 2024, we granted RSUs with respect to 14,300, 6,500, 6,500 and 4,600 shares of our Common Stock to Mr.

Bazemore and Dr.

Brazzell, respectively.

Such awards vest as to 1/3 of the shares on each of January 4, 2025, January 4, 2026 and January 4, 2027, subject to continued service.

Bazemore, Dr.

Brazzell and Ms.

Reumuth, respectively.

Such awards vested as to 1/3 of the shares on each of January 4, 2025 and January 4, 2026.

Bazemore, Dr.

Brazzell and Ms.

Reumuth each left the Company prior to the vesting of their remaining shares.

In January 2025, we granted options to purchase 99,500, 45,200, 45,200 and 45,200 shares of our Common Stock to Mr.

Bazemore and Dr.

Brazzell, respectively.

Bazemore, Dr.

Brazzell and Ms.

Reumuth, respectively.

Such options vest as to 1/48th of the shares underlying the option at the end of each successive one-month period over a four-year period following January 6, 2025, subject to continued service.

In January 2025, we granted RSUs with respect to 22,100, 10,100 and 10,100 shares of our common stock to Mr.

Bazemore and Dr.

Brazzell, respectively.

Such awards vest as to 1/3 of the shares on each of January 6, 2026, January 6, 2027 and January 6, 2028, subject to continued service.

In January 2025, we granted RSUs with respect to 22,100, 10,100.

10,100 and 10,100 shares of our Common Stock to Mr.

Bazemore, Dr.

Brazzell and Ms.

Reumuth, respectively.

Such awards vested as to 1/3 of the shares on January 6, 2026.

Bazemore, Dr.

Brazzell and Ms.

Reumuth each left the Company prior to the vesting of their remaining shares.

In March 2025, in connection with Mr.

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Such options vest as to 1/12th of the shares underlying the option at the end of each successive one-month period over a one-year period following February 11, 2025, subject to continued service.

Prior to our initial public offering, or IPO, our executives were eligible to participate in our 2009 Employee, Director and Consultant Equity Incentive Plan, as amended to date, or the 2009 Plan.

Prior to our IPO, our executives were eligible to participate in our 2009 Employee, Director and Consultant Equity Incentive Plan, as amended to date, or the 2009 Plan.

Following the closing of our IPO, our employees and executives are eligible to receive stock options, RSUs and other stock-based awards pursuant to the Amended and Restated 2017 Equity Incentive Plan.

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The award of stock options to our executive officers, including our Chief Executive Officer, generally have been and going forward are expected to be made by our board of directors.

Such options have been granted with time-based and/or

performance-based vesting conditions.

Such options have been granted with time-based and/or performance-based vesting conditions.

Vesting and exercise rights cease shortly after termination of employment except in the case of death or disability and, in certain circumstances, including, upon a change in control.

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The exercise price of all stock options granted after our IPO has been and will be equal to the fair market value of shares of our Common Stock on the date of grant, which will be determined by reference to the closing market price of our Common Stock on The Nasdaq Capital Market on the date of grant.

At times, we have also used RSUs to compensate our executive officers, including in connection with our 2023 Option Exchange Program.

We have granted RSUs to our executive officers with time-based and/or performance-based vesting conditions.

RSUs with performance-based vesting conditions were all fully vested as of December 31, 2022.

Prior to settlement of the RSUs, the holder has no rights as a stockholder with respect to the shares subject to such RSUs, including no voting rights and no right to receive dividends or dividend equivalents.

None of our executive officers is currently party to an employment agreement that provides for guaranteed equity awards.

Outstanding Equity Awards at December 31, 2025

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(1) Amounts shown are based on a price of $0.56 per share, which was the closing price of our Common Stock as reported on the Nasdaq Capital Market on December 31, 2025, the last trading day of the year.

(2) The RSUs vest over three years, with 1/3 of such RSUs having vested on each of January 4, 2024 and January 4, 2025 and 1/3 of such RSUs vesting on January 4, 2026, subject to continued service.

(3) Represents replacement RSUs granted pursuant to our 2023 Option Exchange Program, which vest over two years, with 50% of such RSUs having vested on May 31, 2024 and 50% of such RSUs vesting on May 31, 2025, subject to continued service.

(4) Represents replacement RSUs granted pursuant to the Option Exchange Program, which vest over three years, with 83% of such RSUs vesting on May 31, 2025 and 17% of such RSUs vesting on May 31, 2026, subject to continued service.

(5) The RSUs vest over three years, with 1/3 of such RSUs having vested on June 22, 2024 and 1/3 of such RSUs vesting on each of June 22, 2025 and June 22, 2026, subject to continued service .

(6) The RSUs vest over three years, with 1/3 of such RSUs having vested on January 4, 2025 and 1/3 of such RSUs vesting on each of January 4, 2026 and January 4, 2027, subject to continued service.

(7) Represents replacement RSUs granted pursuant to the 2023 Option Exchange Program, which vest over three years, with 85% of such RSUs vesting on May 31, 2025 and 15% of such RSUs vesting on May 31, 2026, subject to continued service.

(8) The option vests over four years, with 25% of the shares underlying the option having vested on June 22, 2024 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.

(9) The option vests over four years, with 2.0833% of the shares vested on February 4, 2024 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.

(2) The RSUs vest over three years, with 1/3 of such RSUs having vested on each of January 4, 2024, January 4, 2025 and January 4, 2026 and 1/3 of such RSUs vested on January 4, 2026.

(3) Represents replacement RSUs granted pursuant to the Option Exchange Program, which vest over three years, with 83% of such RSUs vested on May 31, 2025.

Iwicki left the Company prior to the vesting of the remaining 17% of such RSUs.

(4) The RSUs vest over three years, with 1/3 of such RSUs having vested on June 22, 2024 and 1/3 of such RSUs vested on each of June 22, 2025 and June 22, 2026.

Iwicki and Mr.

Bazemore each left the Company prior to the vesting of their remaining RSUs.

(5) The RSUs vest over three years, with 1/3 of such RSUs having vested on January 4, 2025 and 1/3 of such RSUs vested on each of January 4, 2026.

Iwicki and Mr.

Bazemore each left the Company prior to the vesting of their remaining RSUs.

(6) The RSUs vest over three years, with 1/3 of such RSUs having vested on January 6, 2026.

Iwicki and Mr.

Bazemore each left the Company prior to the vesting of their remaining RSUs.

(7) The RSUs vest over one year on June 15, 2026.

Iwicki left the Company prior to the vesting of the remaining RSUs.

(8) Represents replacement RSUs granted pursuant to the 2023 Option Exchange Program, which vest over three years, with 85% of such RSUs vested on May 31, 2025.

Bazemore left the Company prior to the vesting of his remaining RSUs.

(9) The option vests over four years, with 25% of the shares underlying the option vested on June 22, 2024 and 2.0833% of the shares vesting monthly thereafter.

Iwicki and Mr.

Bazemore each left the Company prior to the vesting of their remaining shares.

(10) The option vests over four years, with 2.0833% of the shares vested on February 4, 2024 and 2.0833% of the shares vesting monthly thereafter.

Iwicki and Mr.

Bazemore each left the Company prior to the vesting of their remaining shares.

(11) The option vests over four years, with 2.0833% of the shares vested on February 6, 2025 and 2.0833% of the shares vesting monthly thereafter.

Iwicki and Mr.

Bazemore each left the Company prior to the vesting of their remaining shares.

(12) The option vest over one year on June 15, 2026.

Iwicki left the Company prior to the vesting of his remaining shares.

(13) The option vests over one year, with 8.33% of the shares vested on March 11, 2025 and 8.33% of the shares vesting monthly thereafter.

Bazemore left the Company prior to the vesting of his remaining shares.

(14) The option vests over four years, with 2.0833% of the shares vested on September 29, 2025 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.

Bazemore each left the Company prior to the vesting of his remaining shares.

Policies and Practices Related to the Grant of Certain Equity Awards

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Iwicki resigned as our Chief Executive Officer, effective February 11, 2025.

Iwicki continues to serve as the Chair of our board of directors.

Letter Agreement with Mr.

Bazemore was appointed as our Chief Operating Officer pursuant to a letter agreement with us dated November 6, 2017, and was appointed as our President commencing December 16, 2021 and our interim Chief Executive Officer commencing February 11, 2025.

Bazemore is an at-will employee, and his employment with us can be terminated by him or us at any time and for any reason.

Bazemore’s base salary is subject to annual review and adjustment by our compensation committee.

Bazemore resigned as our Chief Operating Officer on December 19, 2025.

Bazemore’s base salary was subject to annual review and adjustment by our compensation committee.

Bazemore’s annual base salary was $535,600, effective January 1, 2025.

In addition, Mr.

Bazemore is eligible to receive a discretionary bonus in a target amount of 50% of his annual base salary, as determined by our board of directors in its sole discretion.

Bazemore was eligible to receive a discretionary bonus in a target amount of 50% of his annual base salary, as determined by our board of directors in its sole discretion.

On March 11, 2019, Mr.

Bazemore’s employment letter agreement was amended to revise the severance benefits he is entitled to receive upon termination in connection with the following events.

Subject to his execution and nonrevocation of a release of claims in our favor, in the event of the termination of Mr.

Bazemore’s employment letter agreement was amended to revise the severance benefits he is entitled to receive upon termination in connection with certain events.

Subject to his execution and non-revocation of a release of claims in our favor, in the event of the termination of Mr.

Bazemore’s employment by us without cause or by him for good reason, each as defined in his employment letter agreement, and such termination is not within the twenty-four month period following a change of control, as defined in his employment letter agreement, Mr.

Bazemore will be entitled to a lump sum payment in an amount equal to (i) twelve months of his then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) an amount equal to 100% of his target bonus for the year of termination.

Bazemore was entitled to a lump sum payment in an amount equal to (i) twelve months of his then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) an amount equal to 100% of his target bonus for the year of termination.

In addition, Mr.

Bazemore is entitled to twelve months of COBRA premiums for continued health benefit coverage on the same terms as were applicable to him prior to his termination and outplacement services for the twelve-month period.

Bazemore was entitled to twelve months of COBRA premiums for continued health benefit coverage on the same terms as were applicable to him prior to his termination and outplacement services for the twelve-month period.

Further, in the event of the termination of Mr.

Bazemore’s employment by us without cause or by him for good reason within the twenty-four month period following a change of control, Mr.

Bazemore will be entitled to a lump sum payment in an amount equal to (i) eighteen months of his then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) 150% of the greater of (A) the average bonus Mr.

Bazemore was entitled to a lump sum payment in an amount equal to (i) eighteen months of his then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) 150% of the greater of (A) the average bonus Mr.

Bazemore received during the two years prior to termination or resignation, or (B) the target bonus for the year of termination or resignation.

In addition, Mr.

Bazemore is entitled to eighteen months of COBRA premiums for continued health benefit coverage on the same terms as were applicable to him prior to his termination and outplacement services for the eighteen-month period.

Bazemore was entitled to eighteen months of COBRA premiums for continued health benefit coverage on the same terms as were applicable to him prior to his termination and outplacement services for the eighteen-month period.

In addition, in the event we terminate his employment without cause or he terminates his employment for good reason, Mr.

Bazemore is entitled to the automatic vesting and exercisability of any options and other equity awards granted to him that vest solely based on his continued employment that would have vested if his employment had continued for twelve months following such termination, and any performance-based grants with the performance period ending within one year after the termination shall be treated as having satisfied any service requirement with respect thereto and shall vest subject to, and only to the extent of, the satisfaction of the applicable performance goals at the end of the applicable performance period.

In the event we terminate his employment without cause or he terminates his employment for good reason in contemplation of a change of control, as defined in the letter agreement, or within the twenty-four-month period following a change of control, Mr.

Bazemore is entitled to the automatic vesting and exercisability of 100% of any options and other equity awards granted to him that vest solely based on his continued employment, and any performance based grants with a performance period ending within one year after the termination will be treated as

having satisfied any service requirement with respect such grant, and will vest subject to, and only to the extent of, the satisfaction of the applicable performance goals at the end of the applicable performance period.

Bazemore was entitled to the automatic vesting and exercisability of any options and other equity awards granted to him that vest solely based on his continued employment that would have vested if his employment had continued for twelve months following such termination, and any performance-based grants with the performance period ending within one year after the termination shall be treated as having satisfied any service requirement with respect thereto and shall vest subject to, and only to the extent of, the satisfaction of the applicable performance goals at the end of the applicable performance period.

following a change of control, Mr.

Bazemore was entitled to the automatic vesting and exercisability of 100% of any options and other equity awards granted to him that vest solely based on his continued employment, and any performance based grants with a performance period ending within one year after the termination was treated as having satisfied any service requirement with respect such grant, and will vest subject to, and only to the extent of, the satisfaction of the applicable performance goals at the end of the applicable performance period.

Letter Agreement with Dr.

Brazzell was appointed to serve on a full-time basis as our Chief Medical Officer pursuant to a letter agreement with us dated May 10, 2016, which amended and restated a prior letter agreement.

Brazzell is an at-will employee, and his employment with us can be terminated by him or us at any time and for any reason.

Brazzell’s base salary is subject to annual review and adjustment by our compensation committee.

Brazzell was an at-will employee, and his employment with us could be terminated by him or us at any time and for any reason.

Brazzell resigned as our Chief Medical Officer on October 27, 2025

Brazzell’s base salary was subject to annual review and adjustment by our compensation committee.

Brazzell’s annual base salary was $520,000, effective January 1, 2025.

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On March 11, 2019, Dr.

Brazzell’s employment letter agreement was amended to revise the severance benefits he is entitled to receive upon termination in connection with the following events.

Brazzell’s employment letter agreement was amended to revise the severance benefits he was entitled to receive upon termination in connection with the following events.

Subject to his execution and nonrevocation of a release of claims in our favor, in the event of the termination of Dr.

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Brazzell’s employment by us without cause or by him for good reason within the twenty-four month period following a change of control, Dr.

Brazzell will be entitled to a lump sum payment in an amount equal to (i) eighteen months of his then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) 150% of the greater of (A) the average bonus Dr.

Brazzell was entitled to a lump sum payment in an amount equal to (i) eighteen months of his then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) 150% of the greater of (A) the average bonus Dr.

Brazzell received during the two years prior to termination or resignation, or (B) the target bonus for the year of termination or resignation.

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In addition, in the event we terminate his employment without cause or he terminates his employment for good reason, Dr.

Brazzell is entitled to the automatic vesting and exercisability of any options and shares granted to him that vest solely based on his continued employment that would have vested if his employment had continued for twelve months following such termination.

Brazzell was entitled to the automatic vesting and exercisability of any options and shares granted to him that vest solely based on his continued employment that would have vested if his employment had continued for twelve months following such termination.

In the event of a change of control, as defined in his employment letter agreement, during his employment, Dr.

Brazzell is entitled to the automatic vesting and exercisability of 100% of any options and restricted shares granted to him that vest solely based on his continued employment, and certain options are exercisable for a period of up to six months following his termination date.

Brazzell was entitled to the automatic vesting and exercisability of 100% of any options and restricted shares granted to him that vest solely based on his continued employment, and certain options are exercisable for a period of up to six months following his termination date.

In addition, in the event we terminate his employment without cause or he terminates his employment for good reason within the twenty-four-month period following a change of control, Dr.

Brazzell is entitled to the automatic vesting and exercisability of any options and shares granted to him following a change of control that vest solely based on his continued employment and have not vested.

Brazzell was entitled to the automatic vesting and exercisability of any options and shares granted to him following a change of control that vest solely based on his continued employment and have not vested.

Letter Agreement with Ms.

Reumuth was appointed to serve on a full-time basis as our Senior Director, Finance and Corporate Controller pursuant to a letter agreement with us dated August 18, 2014.

Reumuth was appointed as Chief Financial Officer in July 2017.

Reumuth was an at-will employee, and her employment with us could be terminated by him or us at any time and for any reason.

Reumuth left the Company on November 21, 2025.

Reumuth base salary was subject to annual review and adjustment by our compensation committee.

Reumuth annual base salary was $510,000, effective January 1, 2025.

In addition, Ms.

Reumuth was eligible to receive a discretionary bonus in a target amount of 25% of her annual base salary, as determined by our compensation committee in its sole discretion.

On March 11, 2019, Ms.

Reumuth’s employment letter agreement was amended to revise the severance benefits she was entitled to receive upon termination in connection with the following events.

Subject to her execution and nonrevocation of a release of claims in our favor, in the event of the termination of Ms.

Reumuth’s employment by us without cause or by her for good reason, each as defined in her employment letter agreement, and such termination is not within the twenty-four month period following a change of control, as defined in her employment letter agreement, Ms.

Reumuth would be entitled to a lump sum payment in an amount equal to (i) twelve months of her then-current annual base salary, (ii) any bonus earned for the year prior to the year of termination that has not yet been paid, (iii) a pro-rated portion of any bonus attributable to the year of termination based upon performance against company but not individual objectives and (iv) an amount equal to 100% of her target bonus for the year of termination.

In addition, Ms.

Reumuth is entitled to twelve months of COBRA premiums for continued health benefit coverage on the same terms as were applicable to her prior to her termination and outplacement services for the twelve-month period.

Further, if Ms.

Reumuth's employment was terminated by the Company without Cause or by her for Good Reason within twelve (12) months following a Change of Control, she was entitled to receive:

(i) 18 months of her then‑current base salary;

(ii) any earned but unpaid bonus for the year prior to the year of termination;

(iii) an amount equal to 1.5 times the greater of (A) her target bonus for the year of termination or (B) the average of the bonuses she received during the two years prior to the year of termination;

(iv) a pro‑rated portion of any bonus attributable to the year of termination, payable when active employees are paid for that year (and in any event by March 15 of the following year) based on Company (but not individual) milestones;

(v) COBRA continuation medical benefits for the 18‑month severance period subsidized by the Company at active employee rates on the same terms as before termination;

and (vi) Company‑paid outplacement services for the 18‑month severance period.

All payments other than the pro‑rated bonus and the COBRA/outplacement benefits were payable in a lump sum on the Payment Date.

Retention Agreements

On April 10, 2025, we entered into a retention agreements with each of Mr.

Bazemore, Ms.

Reumuth, and Dr.

Brazzell pursuant to which each was eligible to receive a 30% increase in their 2024 base salary plus retention bonuses of $281,190, $234,000 and $260,000, respectively.

Under the retention agreement, the retention bonus was subject to repayment if, prior to the earlier of September 30, 2025 or the date of our public announcement of topline results from our Phase 2a clinical trial, (i) each of Mr.

Bazemore, Ms.

Reumuth, and Dr.

Brazzell’s employment is terminated by us for cause, or (ii) each of Mr.

Bazemore, Ms.

Reumuth, and Dr.

Brazzell voluntarily resigns other than for good reason.

On October 2, 2025, the Company entered into additional retention agreements with Mr.

Bazemore, Ms.

Reumuth, and Dr.

The second retention agreements entitled each of Mr.

Bazemore, Ms.

Reumuth and Dr.

Brazzell to receive retention payment of $183,750, $136,250, and $145,000, respectively.

Each of the retention agreements provided that if, prior to December 31, 2025, such executive’s employment is terminated voluntarily by such executive or by the Company for cause (as defined in the applicable executive’s employment agreement), then, pursuant to the terms of the Retention Agreement, such executive shall, upon request, repay the gross amount of the Retention Payment to the Company.

Bazemore, Ms.

Reumuth and Dr.

Brazzell entered into Settlement Agreement and General and Mutual Release agreements in the fourth quarter of 2025 upon their departure from the Company.

Employee Non-Competition, Non-Solicitation, Confidentiality, and Assignment of Inventions Agreements

Each of our named executive officers has entered into a standard form agreement with respect to non-competition, non-solicitation, confidential information and assignment of inventions.

Under this agreement, each executive officer has agreed not to compete with us during his or her employment and for a period of one year after the termination of his or her employment and to protect our confidential and proprietary information indefinitely.

Under this agreement, each

executive officer has agreed not to compete with us during his or her employment and for a period of one year after the termination of his or her employment and to protect our confidential and proprietary information indefinitely.

Under this agreement, each of Mr.

Iwicki and Dr.

Brazzell has agreed not to solicit our employees or consultants during his

employment and for a period of twelve months after the termination of his employment, and Mr.

Brazzell and Ms.

Reumuth has agreed not to solicit our employees or consultants during his employment and for a period of twelve months after the termination of his employment, and Mr.

Bazemore has agreed not to solicit our employees or consultants during his employment and for a period of eighteen months after the termination of his employment, and each executive officer has agreed to protect our confidential and proprietary information indefinitely.

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Effect of certain changes in capitalization

If our shares of common stock are subdivided or combined into a greater or smaller number of shares, if we issue shares of common stock as a stock dividend, or if we make any distribution of additional, new or different shares or securities of ours or any distribution of non-cash assets with respect to our shares of common stock, then, subject to the terms of the 2009 Plan, our board of directors shall proportionately and appropriately adjust:

securities of ours or any distribution of non-cash assets with respect to our shares of common stock, then, subject to the terms of the 2009 Plan, our board of directors shall proportionately and appropriately adjust:

● the number of shares of our Common Stock deliverable upon the exercise of an option or acceptance of a stock grant;

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Amended and Restated 2017 Equity Incentive Plan

adopted by our board of directors in April 2020 and approved by our stockholders at the 2020 annual meeting of stockholders.

Our 2017 Equity Incentive Plan, which became effective on July 19, 2017, was adopted by our board of directors and approved by our stockholders in July 2017, and an amendment to our 2017 Equity Incentive Plan was adopted by our board of directors in April 2020 and approved by our stockholders at the 2020 annual meeting of stockholders.

Our Amended and Restated 2017 Equity Incentive Plan, or the 2017 Plan, which became effective on June 22, 2023, was adopted by our board of directors in May 2023 and by our stockholders in June 2023, and amends and restates our 2017 Equity Incentive Plan, as amended.

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Effect of certain changes in capitalization

distribution to holders of our common stock other than an ordinary cash dividend, our board of directors shall equitably adjust:

Upon the occurrence of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of our Common Stock other than an ordinary cash dividend, our board of directors shall equitably adjust:

● the number and class of securities available under the 2017 Plan and the number of awards that may be granted as incentive stock options;

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Our board of directors may amend, suspend or terminate the 2017 Plan at any time, except that stockholder approval may be required to comply with applicable law or stock market requirements.

As of March 1, 2025, options to purchase 1,303,977 shares of common stock were outstanding under the 2017 Plan at a weighted average exercise price of $11.35 per share.

As of December 31, 2025, options to purchase 643,354 shares of common stock were exercisable under the 2017 Plan at a weighted average exercise price of $12.19 per share.

As of March 1, 2025, RSUs with respect to 186,463 shares of common stock were outstanding under the 2017 Plan.

As of March 1, 2025, 277,016 shares of common stock were available for future issuance under our 2017 Plan.

As of December 31, 2025, 527,508 shares of common stock were available for future issuance under our 2017 Plan.

Amended and Restated 2017 Employee Stock Purchase Plan

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Each offering will consist of a six-month offering period during which payroll deductions will be made and held for the purchase of our Common Stock at the end of the offering period.

Our board of directors or a committee appointed by our board, may, at its discretion, choose a different period of not more than 12 months for offerings.

Our board of directors or a committee appointed by our

board, may, at its discretion, choose a different period of not more than 12 months for offerings.

Offering periods under our 2017 ESPP commenced on each January 1 and July beginning with January 1, 2019.

On each offering commencement date, each participant will be granted the right to purchase, on the last business day of the offering period, up to 500 shares of our Common Stock.

No employee may be granted an option under

the 2017 ESPP that permits the employee’s rights to purchase shares under the 2017 ESPP and any other employee stock purchase plan of ours or of any of our subsidiaries to accrue at a rate that exceeds $25,000 of the fair market value of our common stock (determined as of the first day of each offering period) for each calendar year in which the option is outstanding.

No employee may be granted an option under the 2017 ESPP that permits the employee’s rights to purchase shares under the 2017 ESPP and any other employee stock purchase plan of ours or of any of our subsidiaries to accrue at a rate that exceeds $25,000 of the fair market value of our Common Stock (determined as of the first day of each offering period) for each calendar year in which the option is outstanding.

In addition, no employee may purchase shares of our Common Stock under the 2017 ESPP that would result in the employee owning 5% or more of the total combined voting power or value of our stock or the stock of any of our subsidiaries.

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● upon written notice to employees, provide that all outstanding options will be cancelled as of a date prior to the effective date of the reorganization event and that all accumulated payroll deductions will be returned to participating employees on such date;

● in the event of a reorganization event under the terms of which holders of our common stock will receive upon consummation thereof a cash payment for each share surrendered in the reorganization event, change the last day of the offering period to be the date of the consummation of the reorganization event and make or provide for a cash payment to each employee equal to (1) the cash payment for each share surrendered in the reorganization event times the number of shares of our common stock that the employee’s accumulated payroll deductions as of immediately prior to the reorganization event could purchase at the applicable purchase price, where the cash payment for each share surrendered in the reorganization event is treated as the fair market value of our common stock on the last day of the applicable offering period for purposes of determining the purchase

price and where the number of shares that could be purchased is subject to the applicable limitations under the 2017 ESPP minus (2) the result of multiplying such number of shares by the purchase price;

● in the event of a reorganization event under the terms of which holders of our Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the reorganization event, change the last day of the offering period to be the date of the consummation of the reorganization event and make or provide

for a cash payment to each employee equal to (1) the cash payment for each share surrendered in the reorganization event times the number of shares of our Common Stock that the employee’s accumulated payroll deductions as of immediately prior to the reorganization event could purchase at the applicable purchase price, where the cash payment for each share surrendered in the reorganization event is treated as the fair market value of our Common Stock on the last day of the applicable offering period for purposes of determining the purchase price and where the number of shares that could be purchased is subject to the applicable limitations under the 2017 ESPP minus (2) the result of multiplying such number of shares by the purchase price;

● provide that, in connection with our liquidation or dissolution, options shall convert into the right to receive liquidation proceeds (net of the purchase price thereof).

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Our 401(k) plan is intended to qualify as a tax-qualified plan under Section 401 of the Code so that contributions to our 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan.

Our 401(k) plan provides that each participant may contribute up to 90% of such employee’s pre-tax compensation, up to a statutory limit, which was $23,000 for 2024 and is $23,500 for 2025.

Our 401(k) plan provides that each participant may contribute up to 90% of such employee’s pre-tax compensation, up to a statutory limit, which was $23,500 for 2025.

Participants who are at least 50 years old can also make “catch-up” contributions, which in 2024 was up to an additional $7,500 above the statutory limit and in 2025 is up to an additional $7,500 above the statutory limit.

We also make discretionary matching contributions to our 401(k) plan equal to 50% of the employee contributions up to 4% of the employee’s salary, subject to the statutorily prescribed limit, which was equal to $23,000 in 2024 and $23,500 in 2025.

The discretionary matching contributions were capped at $6,900 in 2024 and will be capped at $7,000 in 2025.

The discretionary matching contributions were capped at $7,000 in 2025.

Under our 401(k) plan, each employee is fully vested in their deferred salary contributions and our discretionary match.

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The policy provides that, in the event that we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under U.S.

federal securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, we will attempt to recover, reasonably promptly from each covered executive, any erroneously awarded incentive-based compensation received by our covered executives during the recovery period under the policy.

federal securities laws, including any required accounting restatement to correct an error in previously issued

financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, we will attempt to recover, reasonably promptly from each covered executive, any erroneously awarded incentive-based compensation received by our covered executives during the recovery period under the policy.

The policy is administered by our compensation committee.

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($) (1)(3)(4)

Blumenkranz (4)

(1) The aggregate amount of outstanding options and RSUs held by each non-employee director as of December 31, 2024 were as follows:

Blumenkranz (4)

Mark Iwicki (4)

(1) The aggregate number of outstanding options and RSUs held by each non-employee director as of December 31, 2025 were as follows:

Mark Iwicki (4)

(2) The amounts reported in the “Option Awards” column reflect the aggregate grant date fair value of options awarded during 2025 computed in accordance with the provisions of FASB ASC Topic 718.

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For additional information regarding the RSUs granted to our directors during 2025, see Narrative Disclosure to Director Compensation Table — Director Compensation Policy” below.

Blumenkranz resigned from our board of directors on September 23, 2024.

Iwicki, one of our directors who also served as our Chief Executive Officer during 2024, did not receive any additional compensation for his service as a director during 2024.

Iwicki resigned as our Chief Executive Officer on February 11, 2025.

The compensation that we paid to Mr.

Iwicki as our Chief Executive Officer during 2024 and 2023 is discussed under “-Summary Compensation Table” and “-Narrative Disclosure to Summary Compensation Table.”

Narrative Disclosure to Director Compensation Table

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● each non-employee director was entitled to receive an annual fee of $50,000;

● the Lead Independent Director was entitled to receive an additional annual fee of $23,750;

● each non-employee director who served as member of a committee of our board of directors was entitled to receive additional compensation as follows:

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Each member of our board of directors also is entitled to be reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of our board of directors and any committee of our board of directors on which he or she serves.

This non-employee director compensation policy remains in effect for the year ending December 31, 2025.

Effective June 2023, pursuant to the terms of the 2017 Plan, the maximum aggregate amount of cash and value of awards (calculated based on grant date fair value for financial reporting purposes) granted in any calendar year to any individual non-employee director for services as a director shall not exceed $750,000 in the case of an incumbent director;

individual non-employee director for services as a director shall not exceed $750,000 in the case of an incumbent director;

provided, however, that such maximum aggregate amount shall not exceed $1 million in any calendar year for any individual non-employee director for services as a director in such non-employee director’s initial year of election or appointment.

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● each of our current directors;

● our principal executive officer and two other most highly compensated executive officers who served during the year ended December 31, 2024, named in the Summary Compensation table above, whom, collectively, we refer to as our named executive officers;

● our principal executive officer and other most highly compensated executive officers who served during the year ended December 31, 2025, named in the Summary Compensation table above, whom, collectively, we refer to as our named executive officers;

● all of our executive officers and directors as a group.

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5% Stockholders:

Entities affiliated with Baker Bros.

Advisors LP(1)

Affiliates of SR One Capital Management, LP (2)

Cormorant Global Healthcare Master Fund, LP (3)

David Lazar (1)

Directors and Named Executive Officers:

Mark Iwicki(4)

Avi Minkowitz

Chaim (Dovi) Berger

Yonatan Colman

Brendan Purdy

Todd Bazemore

Kim Brazzell, Ph.D.

Marjan Farid, M.D.(7)

Daniel Myers(7)

All current executive officers and directors as a group (10 persons)(9)

* Less than one percent

(1) Based on a Schedule 13D/A filed with the SEC on December 31, 2024.

Consists of 1,083,398 shares of common stock held by Baker Brothers Life Sciences, L.P., or Life Sciences, and 118,496 shares of common stock held by 667, L.P., or 667.

We refer to Life Sciences and 667 collectively in this footnote as the Funds.

The Funds also hold 51,246 shares of Series E Preferred Stock, 2,928 shares of Series F Preferred Stock, 10,901 shares of Series G Preferred Stock, and 2,299 shares of Series H Preferred Stock each of which is convertible into 100 shares of common stock (subject to adjustment as provided in the Company’s Series E Certificate of

Designations, Series F Certificate of Designations, Series G Certificate of Designations and Series H Certificate of Designations, respectively) at any time at the option of the holder, provided that the holder is prohibited, subject to certain exceptions, from converting its Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock for shares of common stock to the extent that immediately prior to or following such conversion, the holder, together with its affiliates and other attribution parties, would own in excess of 9.99% of the total number of shares of common stock then issued and outstanding after giving effect to such conversion, which percentage may be changed at the holder’s election to a lower percentage at any time or to a higher percentage not to exceed 19.99% upon 61 days’ notice to us (collectively, the “Beneficial Ownership Limitation”).

Due to the Beneficial Ownership Limitation, as of March 1, 2025, the Funds cannot convert any shares of Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and/or Series H Preferred Stock into common stock.

The Schedule 13D/A was filed jointly by Baker Bros.

Advisors LP, Baker Bros.

Advisors (GP) LLC, Felix J.

Baker and Julian C.

Advisors LP, or Advisor, is the management company and investment adviser to the Funds and has sole voting and investment power with respect to the shares held by the Funds.

Advisors (GP) LLC, or Advisor GP, is the sole general partner of Advisor.

Baker and Felix J.

Baker are managing members of Advisor GP.

Advisor GP, Felix J.

Baker, Julian C.

Baker, and Advisor may be deemed to be beneficial owners of the securities directly held by the Funds.

Baker, Felix J.

Baker, Advisor GP and Advisor disclaim beneficial ownership of all shares held by the Baker Funds, except to the extent of their indirect pecuniary interest therein.

The address for each of the reporting persons is 860 Washington Street, 3rd Floor, New York, NY 10014.

(2) Based, in part, on a Schedule 13D filed with the SEC on July 8, 2024.

Consists of 598,940 shares of common stock and 50,700 shares of common stock issuable upon conversion of Series H Preferred Stock, each as directly held by SR One Capital Fund II Aggregator, LP, or SR One.

SR One holds a total of 4,110 shares of Series H Preferred Stock, each of which is convertible into 100 shares of common stock (subject to adjustment as provided in the Company’s Series H Certificate of Designations) at any time at the option of the holder subject to the Beneficial Ownership Limitation.

The percentage of common stock held by SR One is based on 6,452,398 shares of our common stock outstanding as of March 1, 2025, plus 50,700 shares of common stock issuable upon the conversion of the Series H Preferred Stock that are subject to the Beneficial Ownership Limitation.

As a result of the Beneficial Ownership Limitation, the shares reported in the table do not include 360,300 shares of common stock issuable upon conversion of shares of Series H Preferred Stock held by SR One.

SR One Capital Partners II, LP, is the general partner of SR One.

SR One Capital Management, LLC, is the general partner of SR One Capital Partners II, LP.

Simeon George, MD, is the Manager of SR One Capital Management, LLC.

SR One Capital Partners II, LP, SR One Capital Management, LLC and Simeon George, MD, share voting and investment power with respect to the shares directly held by SR One Capital Fund II Aggregator, LP.

All indirect holders of the above referenced shares disclaim beneficial ownership of all applicable shares except to the extent of their pecuniary interest therein.

The address for the above referenced entities and person is 985 Old Eagle School Road, Suite 511, Wayne, PA 19087.

(3) Based on a Schedule 13G filed with the SEC on February 14, 2025.

Consists of 603,027 shares of common stock and 46,100 shares of common stock issuable upon conversion of Series I Preferred Stock, each as directly held by Cormorant Global Healthcare Master Fund, LP, or Cormorant.

Cormorant holds a total of 3,286 shares of Series I Preferred Stock, each of which is convertible into 100 shares of common stock (subject to adjustment as provided in the Company’s Series I Certificate of Designations) at any time subject to the Beneficial Ownership Limitation.

The percentage of common stock held by Cormorant is based on 6,452,398 shares of our common stock outstanding as of March 1, 2025, plus 46,100 shares of common stock issuable upon the conversion of the Series I Preferred Stock that are subject to the Beneficial Ownership Limitation.

As a result of the Beneficial Ownership Limitation, the shares reported in the table do not include 282,500 shares of common stock issuable upon conversion of shares of Series I Preferred Stock held by Cormorant.

Cormorant Global Healthcare GP, LLC, or Global Healthcare GP, is the general partner of Cormorant.

Bihua Chen is the sole managing member of Global Healthcare GP and may be deemed to have voting and investment power over the securities held by Cormorant.

Chen disclaims beneficial ownership of such securities, except to the extent of any pecuniary interest therein.

The principal address for the Cormorant Asset Management LP entities is 200 Clarendon Street, 52nd Floor, Boston, MA 02116.

(4) Consists of (i) 85,337 shares of common stock beneficially owned by Mr.

Iwicki and (ii) 123,464 shares of common stock underlying options held by Mr.

Iwicki that are exercisable as of March 1, 2025 or will become exercisable within 60 days after such date.

(5) Consists of (i) 26,824 shares of common stock beneficially owned by Mr.

Bazemore and (ii) 41,741 shares of common stock underlying options held by Mr.

Bazemore that are exercisable as of March 1,2025 or will become exercisable within 60 days after such date.

(6) Consists of (i) 28,675 shares of common stock beneficially owned by Dr.

Brazzell and (ii) 42,143 shares of common stock underlying options held by Dr.

Brazzell that are exercisable as of March 1, 2025 or will become exercisable within 60 days after such date.

(7) Consists of shares of common stock underlying options held by the individual that are exercisable as of March 1, 2025 or will become exercisable within 60 days after such date.

(8) Consists of (i) 262 shares of common stock owned by the Rosen/Doherty Revocable Trust Dated June 11, 2001, of which Mr.

Rosen is a co-trustee, and (ii) 7,381 shares of common stock underlying options held by Mr.

Rosen that are exercisable as of March 1, 2025 or will become exercisable within 60 days after such date.

(9) Includes 301,186 shares of common stock underlying options that are exercisable as of March 1, 2025 or will become exercisable within 60 days after such date.

All current directors and officers as a group (5 persons)

(1) Represents (i) 12,000,010 of Common Stock and 218,182 of Series AA Preferred Stock convertible to 55 Common Stock for each Preferred Stock.

Securities Authorized for Issuance under Equity Compensation Plans

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We have also made inducement awards to certain new hires, which awards were not approved by our stockholders.

Equity Compensation Plan Information

available for

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(1) Includes shares of our Common Stock issuable upon exercise of options to purchase Common Stock awarded under our 2009 Plan and 2017 Plan and shares of our common subject to outstanding RSUs awarded under our 2017 Plan.

(2) The calculation does not take into account the 558,052 shares of common stock subject to outstanding RSUs under the 2017 Plan or the 6,271 shares of common stock subject to outstanding RSUs that were granted to employees outside of the 2017 Plan in accordance with Nasdaq Listing Rule 5635(c)(4).

Such shares will be issued at the time such awards vest (or upon the earlier of the director’s cessation of service or certain “change

in control events”, if a non-employee director elects to defer the receipt of such RSUs), without any cash consideration payable for those shares.

(2) The calculation does not take into account the 230,947 shares of Common Stock subject to outstanding RSUs under the 2017 Plan.

Such shares will be issued at the time such awards vest (or upon the earlier of the director’s cessation of service or certain “change in control events”, if a non-employee director elects to defer the receipt of such RSUs), without any cash consideration payable for those shares.

(3) Includes 527,508 shares of our Common Stock available for issuance under our 2017 Plan and 37,588 shares of common stock available for issuance under our 2017 ESPP.

(4) The number of shares of common stock reserved for issuance under the 2017 Plan will be increased on the first day of each fiscal year through January 1, 2033, in amount equal to the lowest of:

(i) 4% of the sum of the number of outstanding shares of common stock on the first day of the applicable fiscal year and the number of shares of common stock issuable upon conversion of any outstanding shares of convertible preferred stock (without giving effect to any restrictions or limitations on conversion) on such date and (ii) an amount determined by our board of directors.

On January 1, 2025, the shares under the 2017 Plan were increased by 554,663 shares pursuant to the annual increase described above.

(5) The number of shares of our common stock reserved for issuance under the 2017 ESPP will be increased on the first day of each fiscal year through January 1, 2029, in an amount equal to the lowest of:

(i) 17,868 shares of common stock, (ii) 1% of the total number of shares of our common stock outstanding on the first day of the applicable fiscal year or (iii) an amount determined by our board of directors.

On January 1, 2025, the shares under the 2017 ESPP were increased by 17,868 shares pursuant to the annual increase described above.

(6) Represents inducement option awards and inducement RSUs granted to employees in accordance with Nasdaq Listing Rule 5635(c)(4).

(4) Represents inducement option awards granted to employees in accordance with Nasdaq Listing Rule 5635(c)(4).

Each inducement option award has an exercise price equal to closing price of our Common Stock on the date of grant and vests over four years with 25% of the shares underlying each option vesting on the first anniversary of the applicable employee’s new hire date and 2.0833% vesting monthly thereafter.

Each inducement RSU vests over three years, with one-third of such RSUs vesting on the first anniversary of the applicable employee’s new hire date and the remainder vesting in equal yearly installments over the following two years.

Certain Relationships and Related Transactions, and Director Independence

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Policies and Procedures for Related Person Transactions

Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which our company is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest.

Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which our company is a participant, the amount involved exceeds $120,000 or 1% of the average of the Company’s total assets as of the end of the last two completed fiscal years, and one of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest.

If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our general counsel or, if none, to our chief financial officer, or individual performing a similar function.

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Related Person Transactions

In addition to the compensation arrangements with directors and executive officers described elsewhere in this Amendment, since January 1, 2023, we have engaged in the following transactions with our directors, executive officers and holders of more than 5% of our voting securities, and affiliates of our directors, executive officers and holders of more than 5% of our voting securities.

These transactions were approved in accordance with our Related Person Transaction Policy to the extent required, and we believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties.

Private Placements

Series E Private Placement

On November 28, 2022, we entered into a securities purchase agreement, or the Series E Purchase Agreement, with 667, L.P.

and Bakers Brothers Life Sciences, L.P., or the Baker Purchasers, pursuant to which we agreed to issue and sell, in a private placement priced at-the-market under Nasdaq rules, shares of our common stock and shares of our Series E Convertible Non-Redeemable Preferred Stock, or the Series E Preferred Stock, in two tranches for aggregate gross proceeds of up to $31.0 million, which we refer to collectively as the Series E Private Placement.

At the first closing of the Series E Private Placement on December 1, 2022, we issued and sold to the Purchasers (i) 76,813 shares of common stock, at a price per share equal to $5.75 and (ii) 9,666 shares of Series E Preferred Stock, at a price per share equal to $575.00, for aggregate gross proceeds of approximately $6.0 million.

On December 27, 2022, following the certification by our then-Chief Executive Officer that the U.S.

Food and Drug Administration accepted our investigational new drug application for KPI-012, we issued and sold to the Purchasers at a second closing of the Series E Private Placement a total of 43,478 shares of Series E Preferred Stock, at a price per share equal to $575.00, for aggregate gross proceeds of approximately $25.0 million.

The Baker Purchasers have certain participation rights under the Series E Purchase Agreement.

If at any time during the four-year period following the date of the first tranche closing of the Series E Private Placement, or the Participation Period, we propose to offer and sell new equity securities in an offering that is conducted pursuant to an exemption from registration under the Securities Act of 1933, as amended, or the Securities Act, or in an offering that is registered under the Securities Act that is not conducted as a firm-commitment underwritten offering, then, subject to compliance with securities laws and regulations, we have agreed to offer each Baker Purchaser the right to purchase its pro rata share of the total amount of the new equity securities, subject to certain conditions and limitations.

In addition, if during the Participation Period, we propose to offer and sell new equity securities in a firm-commitment underwritten offering registered under the Securities Act, then subject to compliance with securities laws and regulations, we have agreed to use our commercially reasonable efforts to cause the managing underwriters of such offering to contact the Baker Purchasers about potentially participating in such offering and to provide to each Baker Purchaser the opportunity to purchase its pro rata share of such new equity securities, subject to certain conditions and limitations.

The participation rights will terminate if the Baker Purchasers are offered the opportunity to participate in an offering pursuant to the participation rights and do not purchase at least 50% of their aggregate pro rata share of the new equity securities offered for sale in such offering.

Under the Series E Purchase Agreement, the Baker Purchasers also have the right to have up to two non-voting observers attend and participate in all Board and committee meetings and, subject to the Baker Purchasers owning directly specified minimum amounts of our common stock, the right to have the Board nominate and recommend for election by the stockholders up to three Baker Purchaser designees to the Board (one designee at 9.9%, two designees at 15.0% and three designees at 25.0%) designated by the Purchasers, provided that at such time as the Baker Purchasers have designated three Board designees, at least one such designee must qualify as an “independent” director under Nasdaq rules and be acceptable to the members of the Board who are not Baker Purchaser designees.

The Baker Purchasers’ participation rights, observer rights and Board designation rights also will terminate at such time as the Baker Purchasers and their affiliates cease to own, in the aggregate, specified minimum amounts of the shares purchased in the Series E Private Placement.

We also agreed that we will not without the prior approval of the requisite Baker Purchasers (i) issue or authorize the issuance of any equity security that is senior or pari passu to the Series E Preferred Stock with respect to liquidation preference, (ii) incur any additional indebtedness for borrowed money in excess of $1,000,000, in the aggregate, outside the ordinary course of business, subject to specified exceptions, including the refinancing of our existing indebtedness or (iii) pay or declare any dividend or make any distribution on, any shares of our capital stock, subject to specified exceptions.

Series F Private Placement

On December 21, 2023, we entered into a securities purchase agreement with the Baker Purchasers, pursuant to which we issued and sold to the Baker Purchasers, in a private placement priced at-the-market under Nasdaq rules, 2,928 shares of our Series F Convertible Non-Redeemable Preferred Stock, or the Series F Preferred Stock, at a price per share equal to $683.00 for aggregate gross proceeds of approximately $2.0 million, which we refer to collectively as the Series F Private Placement.

We agreed that we will not without the prior approval of the requisite Baker Purchasers (i) issue or authorize the issuance of any equity security that is senior or pari passu to the Series F Preferred Stock with respect to liquidation preference, (ii) incur any additional indebtedness for borrowed money in excess of $1,000,000, in the aggregate, outside the ordinary course of business, subject to specified exceptions, including the refinancing of our existing indebtedness or (iii) pay or declare any dividend or make any distribution on, any shares of our capital stock, subject to specified exceptions.

Series G Private Placement

On March 25, 2024, we entered into a securities purchase agreement with the Baker Purchasers, pursuant to which we issued and sold to the Baker Purchasers, in a private placement priced at-the-market under Nasdaq rules, 10,901 shares of our Series G Convertible Non-Redeemable Preferred Stock, or the Series G Preferred Stock, at a price per share equal to $788.90 for aggregate gross proceeds of approximately $8.6 million, which we refer to collectively as the Series G Private Placement.

We agreed that we will not without the prior approval of the requisite Baker Purchasers (i) issue or authorize the issuance of any equity security that is senior or pari passu to the Series G Preferred Stock with respect to liquidation preference, (ii) incur any additional indebtedness for borrowed money in excess of $1,000,000, in the aggregate, outside the ordinary course of business, subject to specified exceptions, including the refinancing of our existing indebtedness or (iii) pay or declare any dividend or make any distribution on, any shares of our capital stock, subject to specified exceptions.

Series H Private Placement

On June 26, 2024, we entered into a securities purchase agreement with certain purchasers, or the Series H Purchasers, pursuant to which we issued and sold to the Series H Purchasers (i) 1,197,314 shares of our common stock, at a price per share equal to $5.85 and (ii) 9,393 shares of our Series H Convertible Non-Redeemable Preferred Stock, or the Series H Preferred Stock, at a price per share equal to $585.00, for aggregate gross proceeds of approximately $12.5 million, which we refer to collectively as the Series H Private Placement.

The following table sets forth the number of shares of our common stock and Series H Preferred Stock purchased by holders of more than 5% of our voting securities at the time of the Series H Private Placement, and the aggregate purchase price paid for such shares.

Number of Shares of

Series H Preferred Stock

Aggregate Purchase Price

Baker Brothers Life Sciences, L.P.

$4,506,957.73

SR One Capital Fund II Aggregator, LP (2)

$4,999,766.85

ADAR1 Partners, LP (2)

$2,175,439.32

Spearhead Insurance Solutions IDF, LLC – Series ADAR1 (2)

(1) See Item 12, “Security Ownership of Certain Beneficial Owners and Management” for additional information about securities held by certain of these entities.

(2) Became a beneficial holder of more than 5% of our outstanding voting securities upon the closing of the Series H Private Placement.

We agreed that we will not without the prior approval of the requisite Series H Purchasers issue or authorize the issuance of any equity security that is senior or pari passu to the Series H Preferred Stock with respect to liquidation preference.

Series I Private Placement

SEC rules require us to disclose any transaction or currently proposed transaction in which we are a participant and in which any related person has or will have a direct or indirect material interest involving an amount that exceeds the lesser of $120,000 or 1% of the average of the Company’s total assets as of the end of the last two completed fiscal years.

A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any of those persons.

2024 Private Placement

On December 29, 2024, we entered into a securities purchase agreement with certain purchasers, or the Series I Purchasers, pursuant to which we issued and sold to the Series I Purchasers, (i) 1,340,603 shares of our Common Stock , at a price per share equal to $6.44 and (ii) 3,286 shares of our Series I Convertible Non-Redeemable Preferred Stock, or the Series I Preferred Stock, at a price per share equal to $644.00, for aggregate gross proceeds of approximately $10.75 million, which we refer to collectively as the Series I Private Placement.

The following table sets forth the number of shares of our common stock and Series I Preferred Stock purchased by holders of more than 5% of our voting securities and their affiliates at the time of the Series I Private Placement, and the aggregate purchase price paid for such shares.

Number of Shares of

Series I Preferred Stock

Aggregate Purchase Price

The following holders of more than 5% of our voting securities and their affiliates purchased securities in the Series I Private Placement and paid the aggregate purchase prices are set forth:

purchased 30,620 shares of common stock for an aggregate purchase price of $197,192.80;

Baker Brothers Life Sciences, L.P.

$1,802,807.16

SR One Capital Fund II Aggregator, LP

Cormorant Global Healthcare Master Fund, LP(2)

$5,999,677.88

(1) See Item 12, “Security Ownership of Certain Beneficial Owners and Management” for additional information about securities held by certain of these entities.

(2) Became a beneficial holder of more than 5% of our outstanding voting securities upon the closing of the Series I Private Placement.

purchased 279,939 shares of common stock for an aggregate purchase price of $1,802,807.16;

SR One Capital Fund II Aggregator, LP purchased 155,279 shares of common stock for an aggregate purchase price of $999,996.76;

and Cormorant Global Healthcare Master Fund, LP purchased 603,027 shares of common stock and 3,286 shares of Series I Preferred Stock for an aggregate purchase price of $5,999,677.88.

We agreed that we will not without the prior approval of the requisite Series I Purchasers issue or authorize the issuance of any equity security that is senior or pari passu to the Series I Preferred Stock with respect to liquidation preference.

Option Exchange Program

In May 2023, we commenced the 2023 Option Exchange Program, under which our eligible executive officers, other employees and non-employee directors exchanged outstanding options to purchase shares of our common stock held by them for an equal number of restricted stock units that are subject to vesting conditions.

The 2023 Option Exchange Program expired on May 30, 2023.

Pursuant to the terms of the Option Exchange Program, we accepted for exchange options to purchase a total of 182,251 shares of our common stock from 36 eligible holders, including our named executive officers.

All surrendered options were cancelled effective as of the expiration of the 2023 Option Exchange Program, and immediately thereafter on May 31, 2023, or the Option Exchange Date, in exchange therefor, we granted a total of 182,251 replacement RSUs pursuant to the terms of the Option Exchange Program and under the 2017 Plan.

For options that were vested when surrendered, the replacement RSUs vest over two years, with 50% of the replacement RSUs vesting on the first anniversary of the Option Exchange Date, and 50% vesting on the second anniversary of the Option Exchange Date.

Unvested options that were surrendered for replacement RSUs are subject to a revised vesting schedule whereby no such replacement RSUs will vest until the second anniversary of the Option Exchange Date, at which time (i) a number of replacement RSUs will vest that are equal to the surrendered unvested option that would have vested during such two-year period following the Option Exchange Date and (ii) the remaining replacement RSUs will vest on the original vesting schedule of the unvested option that was surrendered, provided that the applicable vesting schedule will vest in annual installments rather than monthly installments.

Our then-current executive officers surrendered all of their then-outstanding options in exchange for replacement RSUs in the 2023 Option Exchange Program, as follows:

RSUs Granted*

Mark Iwicki(1)

56,873 (Vested)

14,842 (Unvested)

Todd Bazemore

16,011 (Vested)

5,147 (Unvested)

13,130 (Vested)

4,786 (Unvested)

Darius Kharabi

1,182 (Vested)

1,466 (Unvested)

11,313 (Vested)

3,423 (Unvested)

(1) Resigned as our Chief Executive Officer on February 11, 2025.

The following non-employee directors surrendered all of their then-outstanding options for replacement RSUs in the 2023 Option Exchange Program, as follows:

RSUs Received

in Option Exchange

Blumenkranz(1)

1,221 (Unvested)

1,600 (Unvested)

1,197 (Vested)

1,000 (Unvested)

1,197 (Unvested)

800 (Unvested)

1,702 (Vested)

800 (Unvested)

(1) Resigned from our board of directors on September 23, 2024.

Modification of Equity Awards

Paull, our former director who did not stand for re-election in June 2023, did not participate in the Option Exchange Program.

In August 2023, our board of directors approved the extension of the exercise period of his vested options for 1,738 shares of common stock to June 22, 2025.

Combangio Acquisition

On November 15, 2021, we and our newly formed, direct wholly owned subsidiary, Ceres Merger Sub, Inc., or the Merger Subsidiary, entered into an Agreement and Plan of Merger, or the Merger Agreement, with Combangio and Fortis Advisors LLC, solely in its capacity as Combangio Equityholder Representative in connection with the Merger Agreement, pursuant to which on November 15, 2021, the Merger Subsidiary merged with and into Combangio with Combangio surviving such merger and becoming a direct wholly owned subsidiary of ours, or the Combangio Acquisition.

In connection with the closing of the Combangio Acquisition, we made an upfront payment of an aggregate of $5.0 million in cash to former Combangio equityholders, subject to customary adjustments, and agreed to issue an aggregate of 155,664 shares of our common stock to the Combangio equityholders with an aggregate value of approximately $16.1 million, consisting of (i) an aggregate of 136,314 shares of common stock which were issued on January 3, 2022, or the Initial Shares, and (ii) an aggregate of 19,350 shares of common stock that were held back as partial security for the satisfaction of indemnification obligations and other payment obligations of the former Combangio equityholders and that were issued on March 10, 2023, or the Holdback Shares.

The Combangio equityholders included Dr.

Blumenkranz, Mr.

Kharabi, Lagunita Biosciences, LLC, of which Dr.

Blumenkranz is a managing member and Mr.

Kharabi is the Chief Operating Officer, and Garland Investments, L.P., of which Dr.

Blumenkranz is a managing member.

In connection with the closing of the Combangio Acquisition, we appointed Dr.

Blumenkranz, a then-member of the board of directors of Combangio, to our board of directors, and we appointed Mr.

Kharabi, the then-President and Chief Executive Officer of Combangio, as our Chief Business Officer.

Blumenkranz resigned from our board of directors on September 23, 2024.

The following table sets forth the consideration paid by us to Dr.

Blumenkranz, Mr.

Kharabi, Lagunita Biosciences, LLC and Garland Investments, L.P.

pursuant to the Merger Agreement.

Holdback Shares

Consideration

Initial Shares Issued

on January 3, 2022

March 10, 2023

Darius Kharabi

Lagunita Biosciences, LLC (3)

Garland Investments, L.P.

(1) In exchange for 2,618,875 shares of Combangio’s common stock.

(2) In exchange for 323,415 shares of Combangio’s common stock and for an option to purchase 8,754,216 shares of Combangio’s common stock.

(3) Upon the issuance of the Initial Shares, Lagunita Biosciences, LLC became a holder of more than 5% of our outstanding voting securities.

(4) In exchange for 85,395,439 shares of Combangio’s common stock.

(5) In exchange for 646,830 shares of Combangio’s common stock.

In addition, as a result of the dosing of the first patient in our CHASE Phase 2b clinical trial of KPI-012 for the treatment of persistent corneal epithelial defect in the United States in February 2023, or the Dosing Milestone, we paid to the former Combangio equityholders on March 10, 2023 an aggregate of $2.5 million in cash and $2.4 million in shares of our common stock (representing an aggregate of 105,038 shares of our common stock).

We paid in cash the remaining amount of $0.1 million due in connection with the Dosing Milestone to the former Combangio equityholders in January 2024.

The following table sets forth the consideration paid by us as a result of the achievement of the Dosing Milestone to Dr.

Blumenkranz, Mr.

Kharabi, Lagunita Biosciences, LLC and Garland Investments, L.P.

pursuant to the Merger Agreement.

Consideration Paid

Shares Issued

Consideration Paid

in March 2023

In January 2024

Darius Kharabi

Lagunita Biosciences, LLC

Garland Investments, L.P.

In addition to the foregoing consideration, former equityholders of Combangio are entitled to receive from us contingent consideration in the form of cash upon the achievement of various milestones in the future.

Registration Rights

We are a party to a registration rights agreement with the Baker Purchasers, who are beneficial owners of more than 5% of our common stock.

This registration rights agreement provides the Baker Purchasers with certain resale registration rights with respect to the shares of common stock, shares of common stock issued or issuable upon conversion of their shares of Series E Preferred Stock, Series F Preferred Stock, the Series G Preferred Stock and Series H Preferred Stock, and any other shares of our common stock held by the Baker Purchasers.

We are also a party to a registration rights agreement with certain of the Series H Purchasers in our Series H Private Placement, certain of which are beneficial owners of more than 5% of our common stock, pursuant to which we agreed to file a registration statement with the SEC covering the resale of the shares of common stock and the shares of common stock issuable upon conversion of the shares of Series H Preferred Stock acquired by certain of the Series H Investors in the Series H Private Placement.

We are also a party to a registration rights agreement with certain of the Series I Purchasers in our Series I Private Placement, certain of which are beneficial owners of more than 5% of our common stock, pursuant to which we agreed to file a registration statement with the SEC covering the resale of the shares of common stock and the shares of common stock issuable upon conversion of the shares of Series I Preferred Stock acquired by certain of the Series I Investors in the Series I Private Placement.

We have filed resale registration statements on Form S-3 in accordance with the foregoing registration rights agreement.

Indemnification Agreements

Our certificate of incorporation provides that we will indemnify our directors and officers to the fullest extent permitted by Delaware law.

In addition, we have entered into indemnification agreements with all of our directors and officers.

November 2025 Securities Purchase Agreement

On November 23, 2025, we entered into a Securities Purchase Agreement with David Lazar, pursuant to which, in a private placement, we agreed to issue and sell (in two closings) shares of our preferred stock for aggregate gross proceeds of up to $6.0 million.

At the first closing on November 24, 2025, we issued and sold 900,000 shares of our Series AA Convertible Non-Redeemable Preferred Stock (“Series AA Preferred Stock”) at a price per share of $2.00, for aggregate gross proceeds of $1.8 million.

The second closing is expected to occur promptly following the receipt of stockholder approval and prior to 31 March 2026, subject to (i) the approval by our stockholders of (A) an increase in the number of authorized shares of our Common Stock to enable the issuance of the shares of common stock issuable

upon conversion of the preferred shares and (B) the conversion of the preferred shares into shares of common stock in accordance with Nasdaq listing rules, (ii) the filing of a charter amendment effecting such share increase, (iii) the filing of a Certificate of Designations for the Series AAA Convertible Non-Redeemable Preferred Stock, and (iv) other customary closing conditions.

At the second closing, we have agreed to issue and sell 2,100,000 shares of our Series AAA Convertible Non-Redeemable Preferred Stock (“Series AAA Preferred Stock”) at a price per share of $2.00, for aggregate gross proceeds of $4.2 million, $1.0 million of which was paid to Oxford as partial consideration for Oxford’s entry into the loan settlement described below.

In connection with the Securities Purchase Agreement, on November 21, 2025, our board appointed Mr.

Lazar as our Chief Executive Officer (effective immediately following the first closing) and principal financial officer (effective the business day following the first closing) and elected him as a Class II director (effective immediately prior to the execution and effectiveness of the Securities Purchase Agreement).

The Securities Purchase Agreement also grants Mr.

Lazar participation rights to purchase up to 25% of new equity securities in firm-commitment underwritten offerings during the participation period, and, subject to Nasdaq Listing Rule 5640 and stockholder approval, the right to recommend up to eight individuals to be nominated for election at the stockholder meeting.

On November 23, 2025, we entered into a Voting Agreement with David Lazar and Oxford in connection with the private placement and the settlement of our outstanding loan obligations with Oxford.

Convertible Loan Agreement

On November 9, 2025, we entered into a Convertible Loan Agreement with David Lazar for an aggregate principal amount of $375,000 with an annual interest rate of 15%.

A portion of the proceeds was permitted to be used to facilitate negotiation and finalization of the additional investment transaction with Mr.

Lazar and to prepare and file our Form 10-Q for the quarter ended September 30, 2025.

The loan was due on November 9, 2026, and subject to extension until November 9, 2027 under certain conditions.

The loan was repaid on December 18, 2025.

Oxford Loan Settlement

As a condition to the first closing, on November 23, 2025, we and our subsidiary Combangio, Inc.

entered into a loan settlement agreement with Oxford, pursuant to which Oxford agreed to settle all of our payment obligations under the Loan and Security Agreement in consideration for (i) a $2.0 million cash payment and (ii) our issuance to Oxford of 1,620,000 shares of our Common Stock.

On November 23, 2025, we also entered into a Voting Agreement with Oxford and Mr.

Lazar, pursuant to which, for four months following that date, Oxford agreed to vote 1,620,000 settlement shares (and any additional shares it acquired during the term) in favor of all proposals recommended by our board at the stockholder meeting.

On December 11, 2025, following Mr.

Lazar’s sale of his rights and obligations under the Securities Purchase Agreement solely with respect to the Series AAA Preferred Shares to AK Holdings Group Inc., a Panamanian company, we engaged Nissim Amram as a consultant to advise the Company on potential strategic alternatives.

Lazar retained his holdings of the Series AA Preferred Shares and the Convertible Loan Agreement which we repaid in full on December 18, 2025.

Board Determination of Independence

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and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.

In March 2025, our board of directors undertook a review of the composition of our board of directors and its committees and the independence of each then-sitting director.

Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors determined that each of our directors, with the exception of Mark Iwicki and Gregory D.

Perry, is an “independent director” as defined under applicable Nasdaq rules.

In April 2024, our board of directors also previously determined that Dr.

Blumenkranz, a former director who resigned on September 23, 2024, was an “independent director” as defined under applicable Nasdaq rules.

In making such determinations, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining his or her independence, including the beneficial ownership of our capital stock by each non-employee director.

Iwicki is not an independent director under these rules because he was employed as our Chief Executive Officer within the last three years.

Perry ceased to be an independent director under applicable Nasdaq rules in June 2023, when he was appointed Chief Financial Officer of Merus.

Iwicki serves as a member of the board of directors of Merus and on its compensation committee.

Under Nasdaq rules, a director shall not be considered independent if they are employed as an executive officer of another entity where at any time during the past three years any of our then-current executive officers served on the compensation committee of such other entity.

Our Board has reviewed the independence of our directors based on the listing standards of Nasdaq.

Based on this review, the Board determined that Mr.

Colman and Mr.

Purdy are independent, as defined in Rule 5605(a)(2) of the Nasdaq rules, as well as the applicable independence standards for committee members under the Exchange Act.

In making this determination, our Board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our Board deemed relevant in determining their independence.

Principal Accountant Fees and Services

Audit Fees and Services

Deloitte & Touche LLP, or Deloitte, was our independent registered public accounting firm for the years ended December 31, 2024 and December 31, 2023.

The following table summarizes the fees Deloitte billed to us for the last two fiscal years.

HTL International, LLC (“HTL”), was our independent registered public accounting firm for the year ended December 31, 2025.

Deloitte & Touche LLP, or Deloitte, was our independent registered public accounting firm for the year ended December 31, 2024.

The following table summarizes the fees billed to us for the last two fiscal years.

All such services and fees were pre-approved by our audit committee in accordance with the “Pre-Approval Policies and Procedures” described below.

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Audit Fees(1)

Audit-Related Fees

All Other Fees(2)

(1) Audit fees consist of fees billed for professional services rendered by Deloitte for the audits of our annual consolidated financial statements, the reviews of our interim consolidated financial statements, and related services that are normally provided in connection with statutory and regulatory filings or engagements, including, our registration statements.

(2) Tax fees consist of fees for professional services with respect to tax compliance, tax advice and tax planning.

(1) Audit fees consist of fees billed for professional services rendered for the audits of our annual consolidated financial statements, the reviews of our interim consolidated financial statements, and related services that are normally provided in connection with statutory and regulatory filings or engagements, including, our registration statements.

(2) All other fees include fees and expenses for services which do not fall within the categories described above.

All other fees consisted of a subscription to Deloitte Accounting and Research Tool.

All other fees consisted of a subscription to Accounting and Research Tool.

Pre-approval Policies and Procedures

4 unchanged sentences

The audit committee does not delegate its responsibility to approve services performed by the independent auditor to any member of management.

The standard applied by the audit committee, or the chair of the audit committee, in determining whether to grant approval of any type of non-audit service, or of any specific engagement to perform a non-audit service, is whether the services to be performed, the compensation to be paid therefore and other related factors are consistent with the independent registered public accounting firm’s independence under guidelines of the SEC and applicable professional standards.

Relevant considerations include whether the work product is likely to be subject to, or implicated in, audit procedures during the audit of our financial statements, whether the independent registered public accounting firm would be functioning in the role of management or in an advocacy role, whether the independent registered public accounting firm’s performance of the service would enhance our ability to manage or control risk or improve audit quality, whether such performance would increase efficiency because of the independent registered public accounting firm’s familiarity with our business, personnel, culture, systems, risk profile and other factors, and whether the amount of fees involved, or the non-audit services portion of the total fees payable to the independent registered public accounting firm in the period would tend to reduce the independent registered public accounting firm’s ability to exercise independent judgment in performing the audit.

5 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2025 and 2024

15 unchanged sentences

001-38150) filed on May 23, 2022)

Description of Exhibit

Restated Certificate of Incorporation of the Registrant, as amended, including Certificate of Designation of the Series D Preferred Stock of the Registrant, Certificate of Elimination of Number of Shares of Preferred Stock Designated as Series D Preferred Stock of the Registrant, Certificate of Designations, Preferences and Rights of Series E Convertible Non-Redeemable Preferred Stock of the Registrant, Certificate of Designations, Preferences and Rights of Series F Convertible Non-Redeemable Preferred Stock of the Registrant, Certificate of Designations, Preferences and Rights of Series G Convertible Non-Redeemable Preferred Stock of the Registrant, Certificate of Designations, Preferences and Rights of Series H Convertible Non-Redeemable Preferred Stock of the Registrant and Certificate of Designations, Preferences and Rights of Series I Convertible Non-Redeemable Preferred Stock of the Registrant (incorporated by reference to Exhibit 4.1 to the Registrant’s registration statement on Form S-8 (File No.

333-284117) filed on January 3, 2025)

Certificate of Amendment to Restated Certificate of Incorporation, as amended, of KALA BIO, Inc.

(incorporated by reference to Exhibit 3.2 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on February 2, 2026)

Third Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on August 2, 2023 )

Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to the Registrant’s annual report on Form 10-K (File No.

001-38150) filed on March 3, 2023)

Description of Exhibit

Third Amended and Restated Registration Rights Agreement of the Registrant dated April 6, 2016, as amended by Amendment No.

1 dated December 13, 2017, of the Registrant (incorporated by reference to Exhibit 4.2 to the Registrant’s annual report on Form 10-K (File No.

001-38150) filed on February 25, 2021)

Description of the Registrant’s Securities Registered under Section 12 of the Exchange Act

Form of Series E Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K (File No.

Certificate of Designations, Preferences and Rights of Series AA Convertible Non-Redeemable Preferred Stock of KALA BIO, Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on November 25, 2025)

Form of Series F Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on December 22, 2023)

Form of Series G Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K (File No.

Certificate of Designations, Preferences and Rights of Series AA Convertible Non-Redeemable Preferred Stock of KALA BIO, Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on February 2, 2026)

Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to the Registrant’s annual report on Form 10-K (File No.

001-38150) filed on March 3, 2023)

Form of Series H Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38150) filed on June 27, 2024)

Form of Series I Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on December 30, 2024)

Registration Rights Agreement, dated March 2, 2023, by and among the Registrant and the persons party thereto (incorporated by reference to Exhibit 4.5 to the Registrant’s annual report on Form 10-K (File No.

001-38150) filed on March 3, 2023)

Description of the Registrant’s Securities Registered under Section 12 of the Exchange Act

Registration Rights Agreement, dated June 26, 2024, by and among the Registrant and the other parties thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on June 27, 2024)

Registration Rights Agreement, dated December 29, 2024, by and among the Registrant and the other parties thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K (File No.

Form of Series AA Preferred Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on November 25, 2025)

Form of Pre-Funded Warrant issued on December 5, 2025 (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on December 5, 2025)

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333-218936) filed on July 10, 2017)

Description of Exhibit

Forms of Non-Qualified Option Agreement under 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s registration statement on Form S-1/A (File No.

8 unchanged sentences

001-38150) filed on August 4, 2023)

Description of Exhibit

Forms of Non-Qualified Option Agreement under Amended and Restated 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s quarterly report on Form 10-Q (File No.

13 unchanged sentences

001-38150) filed on March 29, 2022)

Amended and Restated Letter Agreement, dated September 10, 2015, by and between the Registrant and Mark Iwicki, as amended by the First Amendment, dated September 28, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant’s quarterly report on Form 10-Q (File No.

001-38150) filed on November 7, 2017)

Letter Agreement, dated November 6, 2017, by and between the Registrant and Todd Bazemore (incorporated by reference to Exhibit 10.12 of the Registrant’s annual report on Form 10-K (File No.

001-38150) filed on April 2, 2018)

Amended and Restated Letter Agreement, dated May 10, 2016, by and between the Registrant and Kim Brazzell (incorporated by reference to Exhibit 10.13 to the Registrant’s registration statement on Form S-1 (File No.

333-218936) filed on June 23, 2017)

Second Amendment to Offer Letter, dated August 29, 2025, between the Company and Todd Bazemore (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on September 2, 2025)

Form of Amendment to Offer Letters (incorporated by reference to Exhibit 10.30 to the Registrant’s annual report on Form 10-K (File No.

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001-38150) filed on August 11, 2022)

Description of Exhibit

Second Amendment to Loan and Security Agreement, dated May 21, 2022, by and among the Registrant, Combangio, Inc.

7 unchanged sentences

001-38150) filed on August 4, 2023)

Description of Exhibit

Fifth Amendment to Loan and Security Agreement, dated August 2, 2023, by and among the Registrant, Combangio, Inc.

11 unchanged sentences

001-38150) filed on December 30, 2024)

Open Market Sale Agreement SM , dated as of January 19, 2023, by and between Registrant and Jefferies LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s current report on Form 8-K (File No.

Form of Retention Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on April 11, 2025)

Form of Retention Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on October 2, 2025)

Convertible Loan Agreement, dated November 9, 2025, by and between the Registrant and David Lazar (incorporated by reference to Exhibit 10.2 to the Registrant’s quarterly report on Form 10-Q (File No.

001-38150) filed on November 19, 2025)

Securities Purchase Agreement, dated November 23, 2025, by and among KALA BIO, Inc.

and David Lazar (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on November 25, 2025)

Loan Settlement Agreement, dated November 23, 2025, by and among KALA BIO, Inc., Combangio, Inc.

and Oxford Finance LLC, as collateral agent and lender (incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on November 25, 2025)

Voting Agreement, dated November 23, 2025, by and among KALA BIO, Inc., David Lazar and Oxford Finance LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on November 25, 2025)

Form of Officer Settlement Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on November 25, 2025)

Description of Exhibit

Securities Purchase Agreement, dated December 4, 2025, by and among KALA BIO, Inc.

and the investor named therein (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on December 5, 2025)

Settlement Agreement and Mutual Release, dated December 30, 2025, by and between KALA BIO Inc.

and Baker Bros.

Advisors LP (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on January 6, 2026)

Amended and Restated Insider Trading Policy

Subsidiaries of the Registrant

Voting Agreement, dated December 30, 2025, by and between KALA BIO Inc.

and Baker Bros.

Advisors LP (incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on January 6, 2026)

Settlement Agreement and Mutual Release, dated December 30, 2025, by and between KALA BIO Inc.

and LifeSci Capital LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on January 6, 2026)

Settlement Agreement, dated December 30, 2025, by and between KALA BIO Inc.

and Delaware IR LLC.

(incorporated by reference to Exhibit 10.4 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on January 6, 2026)

At the Market Offering Agreement, dated as of January 8, 2026, by and between the Company and H.C.

Wainwright & Co., LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on January 8, 2026)

Form of Securities Purchase Agreement, dated as of January 30, 2026, by and among the Company and each of the Series AAA Investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on February 2, 2026)

Platform Development and Exclusive License Agreement, dated March 3, 2026 (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on March 4, 2026).

Secured Promissory Note, dated as of February 9, 2026, by and between the Company and Minglemint Solutions LLC

Security Agreement, dated February 9, 2026, by and between the Company and Minglemint Solutions LLC

Letter from Deloitte & Touche LLP to the U.S.

Securities and Exchange Commission, dated December 16, 2025 (incorporated by reference to Exhibit 16.1 to the Registrant’s current report on Form 8-K (File No.

001-38150) filed on December 16, 2025).

Amended and Restated Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Registrant’s Annual Report on Form 10-K (001-38150) filed on March 31, 2025)

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K (001-38150) filed on March 31, 2025)

Consent of HTL International, LLC

Consent of Deloitte & Touche LLP

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KALA BIO, INC.

March 31, 2025

/s/ Todd Bazemore

Todd Bazemore

Interim Chief Executive Officer, President and Chief Operating Officer

( principal executive officer)

April 15, 2026

/s/ Avi Minkowitz

Avi Minkowitz

Chief Executive Officer, Chief Financial Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Todd Bazemore

Todd Bazemore

Interim Chief Executive Officer, President and Chief Operating Officer

(Principal Executive Officer)

March 31, 2025

/s/ Mary Reumuth

Chief Financial Officer (Principal Financial and Accounting Officer)

March 31, 2025

/s/ Mark Iwicki

March 31, 2025

/s/ Marjan Farid

Marjan Farid, M.D.

March 31, 2025

/s/ Andrew I.

March 31, 2025

/s/ Gregory Perry

Gregory Perry

March 31, 2025

/s/ Howard B.

March 31, 2025

/s/ Avi Minkowitz

Chief Executive Officer, Chief Financial Officer and Director

April 15, 2026

Avi Minkowitz

(Principal Executive Officer and Principal Financial Officer)

/s/ Hillel Posen

April 15, 2026

/s/ Chaim (Dovi) Berger

April 15, 2026

Chaim (Dovi) Berger

/s/ Yonatan Colman

April 15, 2026

Yonatan Colman

/s/ Brendan Purdy

April 15, 2026

Brendan Purdy

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of KALA BIO, Inc.

and subsidiaries (formerly Kala Pharmaceuticals, Inc.) (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

and its subsidiaries (collectively, the “Company”) as of December 31, 2025, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Grant Income - Refer to Notes 2 and 4 to the financial statements

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of Management’s Assessment of the Company’s Ability to Continue as a Going Concern

Critical Audit Matter Description

On August 2, 2023, Combangio, a wholly owned subsidiary of the Company, entered into an award agreement with the California Institute for Regenerative Medicine (“CIRM”) for a $15 million grant (the “CIRM Award”) to support Combangio’s KPI-012 program for the treatment of persistent corneal epithelial defects (“PCED”).

The award includes funding for the Company’s CHASE Phase 2b clinical trial of KPI-012 for PCED, as well as product and process characterization and analytical development for the program.

The CIRM Award is subject to a co-funding requirement

under which Combangio is obligated to spend a specified minimum amount on the development of KPI-012 to obtain the full award amount.

Since entering into the CIRM Award, Combangio has received disbursements from CIRM, and the balance of the award is payable to Combangio upon the achievement of additional specified milestones that are primarily related to Combangio’s progress in conducting the CHASE Phase 2b clinical trial.

We have identified the Company’s accounting for the CIRM Award as our critical audit matter given the increased extent of effort and high degree of auditor judgment.

As described in Note 2 to the consolidated financial statements, the Company has incurred recurring losses from operations and negative cash flows from operations since inception, had an accumulated deficit of $694.9 million as of December 31, 2025, and disclosed going concern uncertainty during the first, second and third quarters of 2025.

During the fourth quarter of 2025, the Company also experienced significant liquidity constraints in connection with its debt arrangement with Oxford Finance LLC.

Management concluded that, after considering its plans and recent developments,

substantial doubt about the Company’s ability to continue as a going concern was alleviated for the twelve months following the date the consolidated financial statements were issued.

We determined this matter to be a critical audit matter because evaluating management’s conclusion required especially challenging auditor judgment, particularly with respect to the impact of the Company’s historical losses and negative cash flows, the Oxford default and related liquidity constraints, the effect of the Company’s debt and other obligation settlements, the sufficiency of unrestricted cash and working capital at year end, and the reasonableness of management’s forecasted cash requirements.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting for the CIRM Award, including the recording of grant income, included the following, among others:

● We obtained and read the CIRM Award agreement and amendment, along with the Company’s accounting position paper, to evaluate the reasonableness of the accounting conclusions and methodology management used to record the transaction.

● We tested the expenses recorded by the Company relating to work performed under the CIRM Award agreement, which included corroboration of the work performed under the CIRM Award with those outside of finance.

● We tested the mathematical accuracy of management's calculations and the related recording of grant income.

● We evaluated the accuracy and completeness of management’s disclosure for the CIRM Award.

The primary procedures we performed to address this matter included evaluating the Company’s historical operating results and prior interim going concern disclosures;

inspecting the Oxford default, settlement, and release documentation;

testing the settlement of significant obligations;

testing year-end cash and working capital balances;

evaluating management’s forecasted cash requirements;

and evaluating the related disclosures in Note 2 to the consolidated financial statements.

/s/ HTL International, LLC

We have served as the Company’s auditor since December 2025.

Houston, Texas

April 15, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of KALA BIO, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of KALA BIO, Inc.

and subsidiaries (formerly Kala Pharmaceuticals, Inc.) (the "Company") as of December 31, 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

1 unchanged sentence

March 31, 2025

We have served as the Company's auditor since 2013.

We began serving as the Company's auditor in 2013.

In 2025 we became the predecessor auditor.

KALA BIO, INC.

27 unchanged sentences

5,000,000 shares authorized as of December 31, 2025 and 2024;

51,246 shares of Series E Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2024 and 2023 , 2,928 shares of Series F Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2024 and 2023 , 10,901 and 0 shares of Series G Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2024 and 2023, 9,393 and 0 shares of Series H Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2024 and 2023, and 3,286 and 0 shares of Series I Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2024 and 2023, respectively

9,278 and 51,246 shares of Series E Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2025 and 2024, 2,928 shares of Series F Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2025 and 2024, 10,901 shares of Series G Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2025 and 2024, 2,299 and 9,393 shares of Series H Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2025 and 2024, 0 and 3,286 shares of Series I Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2025 and 2024, 900,000 and 0 shares of Series AA Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2025 and 2024, respectively

Common stock, $ 0.001 par value;

120,000,000 shares authorized as of December 31, 2024 and 2023;

6,091,182 and 2,759,372 shares issued and outstanding as of December 31, 2024 and 2023 , respectively

120,000,000 shares authorized as of December 31, 2025 and December 31, 2024;

27,849,725 and 6,091,182 shares issued and outstanding as of December 31, 2025 and December 31, 2024 , respectively

Additional paid-in capital

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Research and development

Gain on fair value remeasurement of deferred purchase consideration

Loss on fair value remeasurement of contingent consideration

(Gain) loss on fair value remeasurement of contingent consideration

Impairment of right-of-use assets

Total costs and expenses

3 unchanged sentences

Interest expense

Other expense, net

Gain on extinguishment of debt

Other income (expense), net

Total other income (expense)

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Weighted average shares outstanding—basic and diluted

Other comprehensive income:

Other comprehensive loss:

Change in fair value of investments

Total other comprehensive income

Total other comprehensive loss

Total comprehensive loss

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(In thousands, except share amounts)

Year Ended December 31, 2025

Non-Redeemable

3 unchanged sentences

Non-Redeemable

Preferred Stock

3 unchanged sentences

Preferred Stock

$0.001 Par Value

4 unchanged sentences

$0.001 Par Value

Stockholders'

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At the market offering, net of offering costs of $ 69

Issuance of common stock for vested restricted stock units

Issuance of common stock under employee stock purchase plan

Issuance of common stock to satisfy deferred purchase consideration

Issuance of common stock to satisfy contingent consideration

Issuance of common stock upon conversion of Series E Preferred Stock

Issuance of convertible Series F preferred stock, net of issuance cost of $ 35

Stock-based compensation expense

Balance as of December 31, 2023

At the market offering, net of offering costs of $ 69

Exercise of stock options

2 unchanged sentences

Issuance of common stock to satisfy service contract

Issuance of common stock, net of issuance costs of $ 218

Common stock offering, net of offering costs of $ 218

Issuance of convertible Series G preferred stock, net of issuance cost of $ 62

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Balance as of December 31, 2024

Issuance of common stock for vested restricted stock units

Exercise of stock options

Issuance of common stock under employee stock purchase plan

Issuance of Preferred Stock

Conversion of Preferred Stock

Issuance of Common Stock, net of $ 866 issuance cost

Issuance of Common Stock _ Service Rendered

Issuance of Common Stock - Oxford Settlement Agreements

Issuance of Common Stock - Settlement Agreements

Stock-based compensation expense

Balance as of December 31, 2025

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

6 unchanged sentences

Non-cash operating lease cost

Gain on fair value remeasurement of deferred purchase consideration

Loss on fair value remeasurement of contingent consideration

Impairment of right-of-use assets

Gain on extinguishment of debt

(Gain) loss on fair value remeasurement of contingent consideration

Amortization of debt discount and other non-cash interest

Stock-based compensation

Other non-cash losses (gains)

Issuance of Common Stock for service rendered

Issuance of Common Stock for Settlement Agreements

Loss on sale or disposal of property and equipment

Other non-cash losses

Change in operating assets and liabilities:

Prepaid expenses and other current assets

Inventory and assets held for sale

Other long-term assets

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Purchases of property and equipment and other assets

Proceeds from sale of property and equipment

Purchases of short-term investments

Proceeds from sales or maturities of short-term investments

Net cash used in investing activities

Cash flows from financing activities:

Payment of principal, prepayment premium and payment fee on debt

Proceeds from issuance of Series F preferred stock, net of issuance costs of $ 35

Payment of principal and payment fee on debt

Payment of issuance costs from issuance of common stock and Series I preferred stock

Proceeds from issuance of Series AA preferred stock

Proceeds from issuance of Series G preferred stock, net of issuance costs of $ 62

Proceeds from issuance of common stock and Series H preferred stock, net of issuance costs of $ 218

Proceeds from common stock offerings, net of offering costs of $ 866

Proceeds from issuance of common stock and Series I preferred stock

Proceeds from common stock offerings, net of offering costs

Contingent consideration related to Combangio acquisition

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Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents:

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents:

Cash and cash equivalents at beginning of period

1 unchanged sentence

Non-cash investing and financing activities:

Issuance of common stock to satisfy deferred purchase consideration in additional paid-in capital

Issuance of common stock to satisfy contingent consideration in additional paid-in capital

Issuance of common stock to satisfy service contract in additional paid-in capital

2 unchanged sentences

Cash paid for interest

Right-of-use assets obtained in exchange of operating lease obligations

Right-of-use assets obtained in exchange of finance lease obligations

6 unchanged sentences

(the “Company”) was incorporated on July 7, 2009, and is a clinical-stage biopharmaceutical company dedicated to the research, development and commercialization of innovative therapies for rare and severe diseases of the front and back of the eye.

On August 2, 2023, the Company changed its name from Kala Pharmaceuticals, Inc.

to Kala Bio , Inc.

On September 29, 2025, the Company announced that the CHASE trial of KPI-012 for the treatment of PCED did not meet the primary endpoint of complete healing of PCED as measured by corneal fluorescein staining.

The CHASE trial also failed to achieve statistical significance for key secondary efficacy endpoints and did not show any meaningful difference between either KPI-012 treatment arm and the placebo arm.

Based on the CHASE trial results, the Company determined to cease development of KPI-012 and our MSC-S platform.

Following the discontinuation of KPI-012 development in September 2025 after the CHASE Phase 2b clinical trial failed to meet its primary endpoints, the Company strategically repositioned ourselves to capitalize on the substantial intellectual property and research data generated during its mesenchymal stem cell secretome (MSC-S) platform development.

the Company identified a significant market opportunity to transform our proprietary biological research assets into a next-generation artificial intelligence or AI platform specifically designed for biotechnology research applications.

This strategic pivot represents a fundamental transformation from a traditional clinical-stage biopharmaceutical company to an AI-powered biotechnology research intelligence platform provider, targeting the rapidly expanding artificial intelligence in the drug discovery market.

Strategic Initiative - On March 3, 2026, the Company and 2624465 Ontario Inc.

o/a Younet AI, an Ontario corporation (“Younet”) entered into a Platform Development and Exclusive License Agreement (the “Agreement”) pursuant to which the Company obtained a worldwide exclusive license (the “Exclusive License”) of Younet’s proprietary, custom biomedical artificial intelligence research platform (the “Researgency Platform”), together with associated trademarks and intellectual property.

See Note 16-Subsequent events for more details.

On November 15, 2021, the Company acquired Combangio, Inc.

(“Combangio”), including its mesenchymal stem cell secretomes platform and lead product candidate for the treatment of persistent corneal epithelial defects (“PCED”), which the Company refers to as KPI-012 (collectively, the “Combangio Acquisition”).

(“Combangio”), including its mesenchymal stem cell secretomes (“MSC-S”) platform and product candidate, which the Company refers to as KPI-012, for the treatment of persistent corneal epithelial defects (“PCED”)(collectively, the “Combangio Acquisition”).

For accounting purposes, the transaction was accounted for as an asset acquisition , as substantially all of the fair value of the gross assets acquired was concentrated in a single asset, KPI-012.

PCED is a rare disease of impaired corneal healing.

In February 2023, the Company dosed its first patient in the CHASE (“ C orneal H ealing A fter SE cretome therapy”) Phase 2b clinical trial of KPI-012 for PCED in the United States.

KPI-012 has received both Orphan Drug and Fast Track designations from the FDA for the treatment of PCED.

The Company expects to commercialize in the United States any of its product candidates that receive marketing approval.

The Company previously developed and commercialized two marketed products, EYSUVIS ® (loteprednol etabonate ophthalmic suspension) 0.25%, for the short-term (up to two weeks) treatment of the signs and symptoms of dry eye disease, and INVELTYS ® (loteprednol etabonate ophthalmic suspension) 1%, a topical twice-a-day ocular steroid for the treatment of post-operative inflammation and pain following ocular surgery.

Both products applied a proprietary mucus-penetrating particle drug delivery technology, which the Company referred to as the AMPPLIFY ® Drug Delivery Technology.

On July 8, 2022, the Company closed the transaction (the “Alcon Transaction”), contemplated by the asset purchase agreement, dated as of May 21, 2022 (the “Asset Purchase Agreement”), by and between the Company, Alcon Pharmaceuticals Ltd.

and Alcon Vision, LLC (together referred to as “Alcon”), pursuant to which Alcon purchased the rights to manufacture, sell, distribute, market and commercialize EYSUVIS and INVELTYS and to develop, manufacture, market and otherwise exploit the Company’s AMPPLIFY Drug Delivery Technology (collectively, the “Commercial Business”).

Alcon also assumed certain liabilities with respect to the Commercial Business at the closing of the Alcon Transaction.

Alcon paid to the Company an upfront cash payment of $ 60,000 upon the closing of the Alcon Transaction.

In addition, pursuant to the Asset Purchase Agreement, the Company is eligible to receive from Alcon up to four commercial-based sales milestone payments as follows:

(1) $ 25,000 upon the achievement of $ 50,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (2) $ 65,000 upon the achievement of $ 100,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (3) $ 75,000 upon the achievement of $ 175,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029 and (4) $ 160,000 upon the achievement of $ 250,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029.

Each milestone payment will only become payable once, if at all, upon the first time such milestone is achieved, and only one milestone payment will be paid with respect to a calendar year.

In the event that more than one milestone is achieved in a calendar year, the higher milestone payment will become payable and the lower milestone payment will become payable only if the corresponding milestone is achieved again in a subsequent calendar year.

The Company has not been entitled to any milestone payment to date.

The Company’s success is dependent upon its ability to develop, obtain regulatory approval for and commercialize KPI-012 and any other product candidate it may develop in the future, the success of its research and development efforts, its ability to raise additional capital when needed and, ultimately, attain profitable operations.

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Recent Equity Financings - Registered Offerings — On May 7, 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on May 19, 2020 (the “2020 Shelf Registration”).

Under the 2020 Shelf Registration, the Company may offer and sell up to $ 350,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities or units during the three-year period that commenced upon the 2020 Shelf Registration becoming effective.

In connection with the filing of the 2020 Shelf Registration, the Company entered into an amended and restated sales agreement (the “Amended and Restated Sales Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which the Company could issue and sell, from time to time, up to an aggregate of $ 75,000 of its common stock in an at-the-market equity offering through Jefferies, as a sales agent.

From January 1, 2023 to January 10, 2023, the Company sold 245,887 shares of its common stock pursuant to the terms of the Amended and Restated Sales Agreement, resulting in net proceeds of $ 9,994 .

On January 10, 2023, the Amended and Restated Sales Agreement terminated in accordance with its terms when the Company completed the sale of $ 75,000 of its shares of common stock thereunder.

As of the date of termination of the Amended and Restated Sales Agreement, the Company had sold an aggregate of 565,974 shares of its common stock under such agreement for aggregate gross proceeds of $ 75,000 .

On January 19, 2023, the Company entered into an Open Market Sale Agreement with Jefferies (the “Open Market Sale Agreement”), pursuant to which the Company may issue and sell, from time to time, shares its common stock under an at-the-market equity offering.

The Company filed a prospectus supplement relating to the Open Market Sale Agreement under its 2020 Shelf Registration (the “2020 Shelf ATM Prospectus Supplement”), pursuant to which the Company could offer and sell shares of common stock having an aggregate offering price of up to $ 40,000 under the Open Market Sale Agreement.

From January 19, 2023 to May 11, 2023, the Company sold 229,378 shares of its common stock under its at-the-market offering pursuant to the Open Market Sale Agreement under the 2020 Shelf ATM Prospectus Supplement, resulting in net proceeds of $ 4,899 .

On March 3, 2023, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on May 11, 2023 (the “2023 Shelf Registration”).

Under the 2023 Shelf Registration, the Company may offer and sell up to $ 350,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities, subscription rights or units after such time as the shelf registration statement is declared effective by the SEC.

In accordance with the terms of the Open Market Sale Agreement, the Company may issue and sell, from time to time, up to $ 40,000 of its common stock in an at-the-market equity offering through Jefferies, as sales agent.

Upon effectiveness of the 2023 Shelf Registration, the Company ceased any further offers or sales of its common stock pursuant to the 2020 Shelf ATM Prospectus Supplement and the 2020 Shelf Registration.

During the year ended December 31, 2023, the Company sold 256,256 shares of its common stock under its at-the-market offering pursuant to the 2023 Shelf Registration for total net proceeds of $ 3,642 .

During the year ended December 31, 2024, the Company sold an aggregate of 527,940 shares of its common stock under the Open Market Sale Agreement under the 2023 Shelf Registration for total net proceeds of $ 3,394 .

During the year ended December 31, 2023, the Company sold (1) an aggregate of 475,265 shares of its common stock pursuant to the Amended and Restated Sales Agreement and the Open Market Sale Agreement under the 2020 Shelf Registration, for total net proceeds of $ 14,894 and (2) an aggregate of 256,256 shares of its common stock pursuant to the Open Market Sale Agreement under the 2023 Shelf Registration, for total net proceeds of $ 3,642 .

LifeSci and Baker Settlement Agreements - On December 30, 2025, the Company entered into the Baker Settlement Agreement with Baker Bros.

Advisors LP, pursuant to which the Company agreed to issue the Baker Shares to resolve certain claims relating to participation rights under prior financing arrangements (the “Baker Settlement”).

In connection with the Baker Settlement, the Company and Baker Bros.

Advisors LP also entered into a voting agreement pursuant to which Baker Bros.

Advisors LP granted an irrevocable proxy in favor of us to vote the settlement shares and other specified shares in line with our Board of Directors’ recommendations for a period of six months .

On December 30, 2025, the Company also entered into the LifeSci Settlement Agreement pursuant to which we agreed to issue the LifeSci Shares to settle certain payment obligations for financial advisory services.

Recent Equity Financings - Private Placements — On March 25, 2024, the Company entered into a Securities Purchase Agreement (the “March 2024 Securities Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a private placement priced at-the-market under Nasdaq rules, shares of Series G Convertible Non-Redeemable Preferred Stock, par value $ 0.001 per share, of the Company (the “Series G Preferred Stock”), for aggregate gross proceeds of approximately $ 8,600 (the “March 2024 Private Placement”).

Pursuant to the March 2024 Securities Purchase Agreement, the Company issued and sold to the purchasers at the closing

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Recent Equity Financings - Private Placements —On December 21, 2023, the Company entered into a Securities Purchase Agreement (the “2023 Securities Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a private placement priced at-the-market under Nasdaq rules, shares of Series F Convertible Non-Redeemable Preferred Stock, par value $ 0.001 per share, of the Company (the “Series F Preferred Stock”), for aggregate gross proceeds of approximately $ 2,000 (the “2023 Private Placement”).

Pursuant to the 2023 Securities Purchase Agreement, the Company issued and sold to the purchasers at the closing of the 2023 Private Placement, 2,928 shares of Series F Preferred Stock, at a price per preferred share equal to $ 683.00 .

Costs incurred in connection with the 2023 Private Placement were $ 35 , which were recorded as a reduction to additional paid-in capital.

On March 25, 2024, the Company entered into a Securities Purchase Agreement (the “March 2024 Securities Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a private placement priced at-the-market under Nasdaq rules, shares of Series G Convertible Non-Redeemable Preferred Stock, par value $ 0.001 per share, of the Company (the “Series G Preferred Stock”), for aggregate gross proceeds of approximately $ 8,600 (the “March 2024 Private Placement”).

Pursuant to the March 2024 Securities Purchase Agreement, the Company issued and sold to the purchasers at the closing of the March 2024 Private Placement, 10,901 shares of Series G Preferred Stock, at a price per preferred share equal to $ 788.90 .

of the March 2024 Private Placement, 10,901 shares of Series G Preferred Stock, at a price per preferred share equal to $ 788.90 .

Costs incurred in connection with the March 2024 Private Placement were $ 62 , which were recorded as a reduction to additional paid-in capital.

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Costs incurred in connection with the December 2024 Private Placement were $ 120 , which were recorded as a reduction to additional paid-in capital.

Refer to Note 8, “Debt”, for a discussion of debt financing activity.

Summary of Significant Accounting Policies

Principles of Consolidation— The accompanying consolidated financial statements include the accounts of KALA BIO, Inc.

and its wholly owned subsidiaries, Kala Pharmaceuticals Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities, and Combangio, Inc .

All intercompany transactions and balances have been eliminated.

On November 23, 2025 (the “SPA Effective Date”), we entered into a Securities Purchase Agreement (the “November 2025 Purchase Agreement”) with David Lazar, pursuant to which we agreed to issue and sell, in a private placement, shares of our Series AA Preferred Convertible Preferred Stock, par value $ 0.001 per share (the “Series AA Preferred Stock”) and our Series AAA Preferred Stock in two closings for aggregate gross proceeds of up to $ 6,000 , subject to the terms and conditions set forth in the Securities Purchase Agreement (collectively, the “Private Placement”).

The first closing of the Private Placement occurred on November 24, 2025, pursuant to which we issued and sold to David Lazar an aggregate of 900,000 shares of Series AA Preferred Stock at a price per share equal to $ 2.00 , for aggregate gross proceeds of $ 1,800 .

Each share of Series AA Preferred Stock is convertible into 55 shares of Common Stock for an aggregate total of 49,500,000 shares of Common Stock issuable upon conversion of the Series AA Preferred Stock.

As of the date of this Annual Report on Form 10-K, there are 681,818 shares of Series AA Preferred Stock outstanding, which are convertible into 37,499,900 shares of Common Stock.

On December 11, 2025, David Lazar transferred his rights and obligations under the November 2025 Purchase Agreement solely with respect to the shares of Series AAA Preferred and the director nomination rights, to AK Holdings Group Inc., a Panamanian company (“AK Holdings”).

On January 29, 2026, pursuant to the terms of that certain Rights Purchase Agreement by and among AK Holdings and each signatory thereto (the “Series AAA Investors”), AK Holdings sold its rights to purchase the Series AAA Preferred Stock (but not its director nomination rights under the November 2025 Purchase Agreement) to the Series AAA Investors.

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On January 30, 2026, pursuant to the terms of a Securities Purchase Agreement (the “January 2026 Purchase Agreement” and together with the November 2025 Purchase Agreement, the “Purchase Agreements”), we issued and sold to the Series AAA Investors in a second closing of the Private Placement (the “Second Closing”), an aggregate of 2,100,000 shares of Series AAA Preferred Stock at a price per share of Series AAA Preferred Stock equal to $ 2.00 , for aggregate gross proceeds of $ 4,200 .

The Second Closing occurred on January 30, 2026.

The terms of the Series AAA Preferred Stock are substantially similar to the terms of the Series AA Preferred Stock.

Each share of Series AAA Preferred Stock was convertible into 420 shares of common stock for an aggregate total of 882,000,000 shares of Common Stock issuable upon conversion of the Series AAA Preferred Stock.

As of the date of this annual report, all of the shares of Series AAA Preferred Stock have been converted into common stock.

On January 8, 2026, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC (“Wainwright”) providing for the sale and issuance by the Company of shares of its Common Stock from time to time, through or to Wainwright as the Company’s sales agent or principal in an “at the market offering” program and as set forth in the ATM Agreement (the “ATM Offering”).

The aggregate market value of the shares of Common Stock eligible for sale under the prospectus supplement is currently $ 15,000 .

Summary of Significant Accounting Policies

Principles of Consolidation— The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Kala Pharmaceuticals Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities, and Combangio .

All intercompany transactions and balances have been eliminated.

Basis of Presentation —The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company generated only limited revenues from product sales of EYSUVIS and INVELTYS prior to the sale of the Commercial Business to Alcon in July 2022 and has incurred recurring losses and negative cash flows from operations, including a net loss of $ 26,980 and $ 38,511 , for the years ended December 31, 2025 and 2024, respectively, and used cash in operations of $ 31,991 and $ 29,382 , in the years ended December 31, 2025 and 2024, respectively.

The Company has financed its operations to date primarily through proceeds from the sale of the Commercial Business to Alcon, its initial public offering of common stock, follow-on public offerings of common stock and sales of its common stock under its at-the-market offering facility, private placements of common stock and preferred stock (including the Company’s most recent private placements in March 2024, June 2024 and December 2024), borrowings under credit facilities and the Loan and Security Agreement with Oxford Finance LLC (the “Loan Agreement”), disbursements under a grant from California Institute for Regenerative Medicine (“CIRM”) (including the Company’s most recent disbursements of $ 3,240 and $ 2,520 in August 2024 and December 2024, respectively, from CIRM upon achievement of specified milestones), convertible promissory notes and warrants.

S ee Note 4, “Grant Income” for further information about the CIRM Award.

The Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials, and, prior to the sale of the Commercial Business to Alcon in July 2022, engaging in activities to launch and commercialize EYSUVIS and INVELTYS.

The Company is devoting substantial financial resources to the research and development and potential commercialization of KPI-012 for PCED and any other indications the Company determines to pursue, including Limbal Stem Cell Deficiency.

The Company has no revenue-generating commercial products and, as a result of the Combangio Acquisition, may be required to pay certain milestones and royalty payments to former equityholders of Combangio.

Although the Company is eligible to receive up to $ 325,000 in payments from Alcon based upon the achievement of specified commercial sales-based milestones with respect to EYSUVIS and INVELTYS, there can be no assurance when the Company may receive such milestone payments or of the amount of milestone payments the Company may receive, if any.

Additionally, the Company cannot be certain that it will achieve the remaining milestones under the CIRM Award within the required timeframes, or at all, and as such the Company may never receive the remaining $ 3,340 under the award.

The Company expects to continue to incur significant expenses and operating losses for the foreseeable future, including in connection with its continued development, regulatory approval efforts and commercialization, if any, of KPI-012.

The Company has financed its operations to date primarily through proceeds from the sale of the Commercial Business to Alcon, its initial public offering of common stock, follow-on public offerings of common stock and sales of its common stock under its at-the-market offering facility, private placements of common stock and preferred stock, borrowings under credit facilities and the Loan and Security Agreement with Oxford Finance LLC (the “Loan Agreement”), disbursements under a grant from California Institute for Regenerative Medicine (“CIRM”) upon achievement of specified milestones, convertible promissory notes and warrants.

Liquidity and Ability to Continue as a Going Concern — Since inception, the Company has incurred significant losses from operations and negative cash flows from operations including a net loss of $ 26,980 and $ 38,511 for the years ended December 31, 2025 and 2024, respectively, and cash used in operating activities of $ 31,991 and $ 29,382 in the years ended December 31, 2025 and 2024, respectively .

As of December 31, 2025, the Company had an accumulated deficit of $ 694,900 .

Prior to the recent cessation of our research and development activities, the Company had devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials, and, prior to the sale of the Commercial Business to Alcon in July 2022, engaging in activities to launch and commercialize EYSUVIS and INVELTYS.

The Company devoted substantially all of its financial resources to the research and development of KPI-012 for PCED and any other indications the Company determined to pursue, including Limbal Stem Cell Deficiency.

The Company may never achieve or maintain profitability.

Net losses may fluctuate significantly from quarter-to-quarter and year-to-year.

The Company expects that its cash and cash equivalents as of December 31, 2024, will enable it to fund its operating expenses, lease and debt service obligations and capital expenditure requirements for at least twelve months from the date these consolidated financial statements were issued.

This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the consolidated financial statements are issued.

To the extent these conditions or events change, the Company could deplete its available capital resources sooner than it currently expects.

This evaluation also assumes that the Company remains in compliance with the covenants and no event of default occurs under its Loan Agreement with Oxford Finance.

If an event of default occurs under the Loan Agreement and Oxford Finance exercises its rights under the Loan Agreement to foreclose on the Company’s cash, the Company’s ability to fund its operations, lease and debt service obligations will be shorter than it currently expects.

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During the first, second and third quarters of 2025, the Company concluded there was substantial doubt regarding the Company’s ability to continue as a going concern.

However, on September 29, 2025, the Company announced that it was determined to cease development of KPI-012 and its MSC-S platform and to take steps to preserve cash as the Company explores its strategic options.

In connection with such decisions, the Company stopped all spending on the KPI-012 project and approved a major reduction in the Company’s workforce.

During the fourth quarter of 2025, the Company entered into purchase agreement with certain institutional investors, raised capital and changed management.

The Company also recently shifted its focus to develop an on-premises Artificial Intelligence (“AI”) infrastructure platform for the biotech industry.

Based on these recent developments and as a result, the Company has concluded that management’s plans do alleviate substantial doubt about the Company’s ability to continue as a going concern for the twelve months after the date these consolidated financial statements are issued.

Use of Estimates— The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

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Costs of grant income are recorded as a component of research and development expenses in the Company’s consolidated statements of operations and comprehensive loss.

Grant funds received in advance are recorded as deferred grant income on the consolidated balance sheets.

Management has determined that the Company is the principal participant under the Company’s CIRM Award, and accordingly, the Company records amounts earned under this arrangement as grant income on the consolidated statements of operations and comprehensive loss.

Grant funds received in advance were recorded as deferred grant income on the consolidated balance sheets.

Management had determined that the Company was the principal participant under the Company’s CIRM Award, and accordingly, the Company recorded amounts earned under this arrangement as grant income on the consolidated statements of operations and comprehensive loss.

Contingent Consideration— In addition to upfront consideration and Deferred Purchase Consideration (as defined below) (see Note 3), the Company’s asset acquisitions may also include contingent consideration payments to be made for future milestone events.

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Contingent consideration payments in an asset acquisition not required to be accounted for at fair value are recognized when the contingency is resolved, and the consideration is paid or becomes payable.

Changes to contingent consideration obligations can result from changes to discount rates, accretion of the liability due to the passage of time, changes in the Company’s estimates of the likelihood or timing of achieving certain milestones.

Changes to contingent consideration obligations can result from changes to discount rates, accretion of the liability due to the passage of time,

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changes in the Company’s estimates of the likelihood or timing of achieving certain milestones.

Any changes in the fair value of these contingent consideration liabilities are included in loss from operations in the consolidated statements of operations and comprehensive loss.

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The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives.

Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations and comprehensive income

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Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations and comprehensive income each period.

Bifurcated embedded derivatives are classified with the related host contract in the Company’s consolidated balance sheet.

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The Company deposits its cash, cash equivalents, short-term investments, if any, in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company’s accounts receivable balance as of December 31, 2024 and 2023 were de minimis .

The Company had no revenue during the years ended December 31, 2025 and 2024.

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The Company did not record any such impairments during the years ended December 31, 2025 or 2024.

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Leases —At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

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Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components.

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separation of lease and non-lease components is required, certain practical expedients are available to entities.

Although separation of lease and non-lease components is required, certain practical expedients are available to entities.

Entities electing the practical expedient would not separate lease and non-lease components.

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If the undiscounted cash flows are insufficient to recover the carrying value, the assets are recorded at the lesser of the carrying value or fair value.

The Company recorded no impairment charges for the years ended December 31, 2024 and 2023.

As a result of the recent decision to cease development of KPI-012 and our MSC-S platform, the Company recorded $ 549 impairment charges for the year ended December 31, 2025.

No impairment charges were recorded for the year ended December 31, 2024.

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Segment Information —Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance.

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The measure of segment assets is reported on the consolidated balance sheet as total assets.

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The table below provides information about the Company’s segment, including significant segment expenses, other segment items and a reconciliation to net loss:

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General and administrative

Other segment (income) expense, net (2)

Other segment expense (income), net (2)

(1) Includes facility related costs and depreciation.

(2) Includes Gain on fair value remeasurement of deferred purchase consideration, Loss on fair value remeasurement of contingent consideration, Interest income, Interest expense, Grant income and Other expense, net.

(2) Includes Impairment of right-of-use assets, (Gain) loss on fair value remeasurement of contingent consideration, Interest income, Interest expense, Grant income, gain on settlements, Gain on extinguishment of debt and Other income, net.

Research and Development Costs —Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, an allocation of facilities expenses, overhead expenses and other outside expenses.

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Payments under some of these contracts depend on clinical trial milestones.

There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of expenses.

There may be instances in which payments made to the Company’s vendors will exceed the level of services

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provided and result in a prepayment of expenses.

In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period.

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Forfeitures are recorded as they occur.

Stock-based compensation is classified in the

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accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided, or until related expense is recognized.

Stock-based compensation is classified in the accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided, or until related expense is recognized.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

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The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

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The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock have no contractual obligation to share in losses.

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Diluted net loss per share attributable to common stockholders is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants, the issuance of unvested RSUs and convertible preferred stock using the if-converted method.

The weighted average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, warrants, unvested RSUs and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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convertible preferred stock using the if-converted method.

Common stock equivalent shares are excluded from the computation of diluted net loss per share attributable to common stockholders if their effect is antidilutive.

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See Note 12, “Loss Per Share”, for further information.

Reclassifications — Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Pronouncement

Recently Issued and adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

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Other than additional disclosure, the adoption of ASU 2023-07 had no impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which focuses on the rate reconciliation and income taxes paid.

ASU 2023-09 requires public business entities to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

In addition, ASU 2023-09 requires companies to disclose further information about income taxes paid.

The standard is effective for annual periods beginning after December 15, 2024, and may be applied prospectively or retrospectively.

The Company adopted ASU 2023-09 prospectively for the year ended December 31, 2025, and it affects only the Company's disclosures and does not impact its results of operations or financial condition.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disaggregated expense information in the notes to the financial statements related to purchases of inventory, employee compensation, depreciation, intangible asset amortization and selling expenses for each statement of earnings line item that contains those expenses.

2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

The guidance is to be applied on a prospective basis with the option to apply the standard retrospectively and early adoption is permitted.

During the year ended December 31, 2025, the Company retrospectively adopted this ASU and it did not have a material impact on the Company’s consolidated financial statements and related disclosures.

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Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements.

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Cash equivalents and contingent consideration are reported at their respective fair values on the Company’s consolidated balance sheets.

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consisting of (i) an aggregate of 136,314 shares of common stock issued on January 3, 2022 and (ii) an aggregate of 19,350 shares of common stock that were held back as partial security for the satisfaction of indemnification obligations and other payment obligations of the Combangio Equityholders and were issued on March 10, 2023 (the “Holdback Shares”).

T he Company acquired Combangio in November 2021 and in connection with the closing of the Combangio Acquisition, the Company agreed to issue an aggregate of 155,664 shares (the “Deferred Purchase Consideration”) of the Company’s common stock to former Combangio stockholders and other equityholders (the “Combangio Equityholders”) consisting of (i) an aggregate of 136,314 shares of common stock issued on January 3, 2022 and (ii) an aggregate of 19,350 shares of common stock that were held back as partial security for the satisfaction of indemnification obligations and other payment obligations of the Combangio Equityholders and were issued on March 10, 2023 (the “Holdback Shares”).

The Company established liabilities for these considerations.

T he Deferred Purchase Consideration related to the Combangio Acquisition was measured at fair value each reporting period using Level 3 unobservable inputs.

The fair value of the Deferred Purchase Consideration was based on the fair value of the underlying stock and a discount for lack of marketability.

Any change in the fair value of the Deferred Purchase Consideration was included in loss from operations in the consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2023, the Company settled the remaining liability of $ 365 upon the issuance of the Holdback Shares and therefore there was no change in the fair value of the Deferred Purchase Consideration during the year ended December 31, 2024.

During the years ended December 31, 2023, the change in the fair value of the Deferred Purchase Consideration was a gain of $ 230 , primarily due to the change in the fair value of the underlying stock price and was recognized as the gain on fair value remeasurement of deferred purchase consideration in the consolidated statement of operations and comprehensive loss.

Additionally, the purchase price in connection with the Combangio Acquisition included potential future payments of up to $ 105,000 that are contingent upon the achievement of specified development, regulatory and commercialization milestones and are required to be recorded at fair value.

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Any changes in the fair value of these contingent consideration liabilities are included in loss from operations in the consolidated statements of operations and comprehensive loss.

During the years ended December 31, 2024 and 2023, the change in the fair value of the contingent consideration liabilities was a loss of $ 549 and $ 740 , respectively, primarily due to changes in discount rates, the passage of time and changes in the expected timing and probability of payment, and were recognized as a loss on fair value remeasurement of contingent consideration in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023.

The CHASE trial also failed to achieve statistical significance for key secondary efficacy endpoints and did not show any

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meaningful difference between either KPI-012 treatment arm and the placebo arm.

Based on the CHASE trial results, we determined to cease development of KPI-012 and our MSC-S platform.

Therefore, the contingent consideration was fully remeasured to zero with no potential possibilities for any milestone payments.

During the years ended December 31, 2025 and 2024, the change in the fair value of the contingent consideration liabilities was a gain of $ 4,659 and a loss of $ 549 , respectively, primarily due to changes in discount rates, the passage of time and changes in the expected timing and probability of payment, and were recognized as a (gain)/loss on fair value remeasurement of contingent consideration in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024.

The following tables set forth the fair value of the Company’s financial instruments by level within the fair value hierarchy as of December 31, 2025 and 2024:

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Cash equivalents

Contingent consideration

Total Liabilities

December 31, 2024

Cash equivalents

Contingent consideration

Contingent consideration - Non-Current

Total Liabilities

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Fair value adjustments

Reclassification to accrued expenses and other current liabilities

Balance at January 1, 2024

Fair value adjustments

Balance at December 31, 2024

Deferred purchase consideration

Balance at January 1, 2023

Fair value adjustments

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During the years ended December 31, 2025 and 2024, there were no transfers between Level 1, Level 2, and Level 3.

The carrying value reported on the accompanying consolidated balance sheets of cash, accounts receivable, accounts payable and accrued expenses approximate their fair value due to their short-term nature.

Management believes that the Company’s long-term debt (see Note 8, “Debt”) bears interest at the prevailing market rate for instruments with similar characteristics and, accordingly, the carrying value of long-term debt, also approximates its fair value.

The carrying value reported on the accompanying consolidated balance sheets of cash, accounts payable and accrued expenses approximate their fair value due to their short-term nature.

On August 2, 2023, Combangio, a wholly owned subsidiary of the Company, entered into an award agreement with CIRM for a $ 15,000 grant (as amended from time to time, the “CIRM Award”) to support Combangio’s KPI-012 program for the treatment of PCED.

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Under the terms of the CIRM Award, Combangio is obligated to pay a royalty on net sales of any product, service or approved drug resulting in whole or in part from the CIRM Award in the amount of 0.1 % per $ 1,000 of funds utilized by the Company until the earlier of ten years from the date of first commercial sale of such product, service or approved drug and such time as nine times the amount of funds awarded by CIRM has been paid in royalties (the “Base Royalty”).

In addition, following the satisfaction of the Base Royalty,

In addition, following the satisfaction of the Base Royalty, Combangio is obligated to pay a 1.0 % royalty on net sales of any CIRM-funded invention in excess of $ 500,000 per year until the last to expire patent covering such invention expires.

Based on the CHASE trial results, we determined to cease development of KPI-012 and our MSC-S platform.

During the years ended December 31, 2025 and 2024, the Company recognized $ 3,377 and $ 6,199 , respectively, of grant income related to the CIRM Award on its consolidated statement of operations.

As of December 31, 2025, the Company had $ 0 deferred grant income on its consolidated balance sheet.

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(In thousands, except share and per share amounts)

Combangio is obligated to pay a 1.0 % royalty on net sales of any CIRM-funded invention in excess of $ 500,000 per year until the last to expire patent covering such invention expires.

During the years ended December 31, 2024 and 2023, the Company recognized $ 6,199 and $ 4,825 , respectively, of grant income related to the CIRM Award on its consolidated statement of operations.

As of December 31, 2024, the Company had deferred grant income of $ 637 on its consolidated balance sheet.

Property and Equipment, Net

1 unchanged sentence

Computer hardware and software

Construction in progress

Property and equipment — at cost

4 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

Compensation and benefits

Development costs

Contract manufacturing

Professional services

Development costs

Compensation and benefits

Accrued revenue reserves (1)

Contract manufacturing

Accrued expenses and other current liabilities

4 unchanged sentences

Menlo Park, California Office Lease

In April 2023, Combangio entered into a lease agreement with Menlo Prepi I, LLC, pursuant to which Combangio leases approximately 6,135 square feet of office, laboratory and research and development space in Menlo

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Park, California.

The Company entered into a guaranty of lease agreement guarantying the obligations of Combangio under the lease agreement.

3 unchanged sentences

Upon the lease commencement, the Company recorded a right-of-use asset of $ 2,154 and corresponding $ 2,133 of lease liability.

As of December 31, 2024, the Company recognized $ 1,691 of right-of-use asset and a corresponding $ 1,814 of lease liability (current and non-current) by calculating the present value of lease payments, discounted at 13.1 % , the Company’s estimated incremental borrowing rate, over the expected term of the lease.

As of December 31, 2024, the remaining lease term on the lease was 3.7 years.

Variable lease expense for the lease, includes real estate taxes, common area maintenance, and management fees.

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

As a result of the CHASE trial of KPI-012 decision to cease development, o n November 21, 2025, the Company terminated the lease with the landlord and signed a settlement to return the space and release the Company from its obligations and liabilities.

The settlement was paid prior to December 31, 2025.

The components of lease expense and related cash flows were as follows:

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Weighted average discount rate

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

As of December 31, 2024, the Company’s future minimum lease payments will become due and payable as follows:

Years Ending December 31,

Loan and Security Agreement

7 unchanged sentences

The Company paid a facility fee of $ 400 on the closing date of the Loan Agreement and agreed to pay a facility fee of $ 100 upon closing of the tranche B term loan and a $ 125 facility fee upon the closing of the tranche C term loan.

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

The Company will be required to make a final payment fee of 7.00 % of the original principal amount of any funded term loan payable on the earlier of (i) the prepayment of the term loan in full or (ii) the Maturity Date.

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Certain of the customary negative covenants limit the ability of the Company and certain of its subsidiaries, among other things, to incur future debt, grant liens, make investments, make acquisitions, distribute dividends, make certain restricted payments and sell assets, subject in each case to certain exceptions.

Certain of the affirmative covenants include, but are not limited to, a

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

failure to pay principal or interest on its due date or any other obligations within three business days of such obligations’ due date, and a delisting from the Nasdaq Stock Market because of failure to comply with the continued listing standards of the listing tier of the Nasdaq Stock Market on which the Company’s common stock is listed.

Certain of the affirmative covenants include, but are not limited to, a failure to pay principal or interest on its due date or any other obligations within three business days of such obligations’ due date, and a delisting from the Nasdaq Stock Market because of failure to comply with the continued listing standards of the listing tier of the Nasdaq Stock Market on which the Company’s common stock is listed.

Events of default under the Loan Agreement include:

(i) a material impairment in the perfection or priority of lien in the collateral or in the value of such collateral;

(ii) a material adverse change in the business, operations or condition (financial or otherwise) of the Company;

or (iii) a material impairment of the prospect of repayment of any portion of the obligations under the Loan Agreement (each, a “Material Adverse Change”).

The Loan Agreement includes features requiring (i) additional interest rate upon an event of default accrued at an additional 5 % , and (ii) the Lender’s right to declare all outstanding principal and interest immediately payable upon an event of default.

These two features were analyzed and determined to be embedded derivatives to be valued as separate financial instruments.

These embedded derivatives were bundled and valued as one compound derivative in accordance with the applicable accounting guidance for derivatives and hedging transactions.

The Company determined that, due to the unlikely event of default, the value of the embedded derivatives have a de minimis value as of December 31, 2024.

The derivative liability will be remeasured at fair value at each reporting date, with changes in fair value being recorded as other income (expense) in the consolidated statements of operations and comprehensive loss.

On May 21, 2022, in connection with its entry into the Asset Purchase Agreement with Alcon, the Company entered into an amendment to the Loan Agreement (the “Second Loan Amendment”).

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The transaction resulted in a loss on extinguishment of debt of $ 2,583 for the year ended December 31, 2022, consisting of the prepayment premium, a pro-rata portion of the unamortized debt discount and issuance costs and the unaccreted exit fee due upon the Second Amendment Prepayment.

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

On December 27, 2022, the Company entered into an amendment to the Loan Agreement (the “Third Loan Amendment”).

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The principal loan balance under the Loan Agreement following the Third Amendment Prepayments was $ 33,957 .

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Pursuant to the Third Loan Amendment, in addition to the Third Amendment Prepayments, if the Company made an additional prepayment under the Loan Agreement equal to $ 5,000 (inclusive of the final payment fee) on or prior to December 31, 2024 (the “First Extension Prepayment”), the Amortization Date would be automatically changed to July 1, 2025, and the maturity date of the Loan Agreement would be automatically changed from May 1, 2026 to November 1, 2026.

On December 26, 2024, the Company paid the First Extension Prepayment of $ 5,000 (inclusive of the final payment fee), and as a result, the Amortization Data was changed to July 1, 2025 and the maturity date was changed to November 1, 2026 .

If the Company makes an additional prepayment under the Loan Agreement equal to $ 2,500 (inclusive of the final payment fee) on or prior to June 30, 2025 (the “Second Extension Prepayment”), the Amortization Date will be automatically changed to January 1, 2026, and the maturity date of the Loan Agreement will be automatically changed to May 1, 2027.

If the Company made an additional prepayment under the Loan Agreement equal to $ 2,500 (inclusive of the final payment fee) on or prior to June 30, 2025 (the “Second Extension Prepayment”), the Amortization Date would be automatically changed to January 1, 2026, and the maturity date of the Loan Agreement would be automatically changed to May 1, 2027.

On June 26, 2025, the Company paid the Second Extension Prepayment, and as a result, the Amortization Data was automatically changed to January 1, 2026 and the maturity date was automatically changed to May 1, 2027.

Under the Third Loan Amendment, the Lender and Agent also agreed to waive the prepayment fees for the Third Amendment Prepayments, the First Extension Prepayment, the Second Extension Prepayment and any other prepayments under the Loan Agreement.

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Pursuant to the Fifth Loan Amendment, Oxford Finance consented to the Company’s entry into the CIRM Award and certain provisions of the Loan Agreement were amended in connection therewith.

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

In addition, in connection with the Loan Agreement, the Company paid certain fees to the Lender and other third-party service providers.

1 unchanged sentence

These costs are being amortized using the effective interest method over the term of the Loan Agreement.

The amortization of debt discount and debt issuance cost is included in interest expense within the consolidated statements of operations and comprehensive loss.

As of December 31, 2024, the effective interest rate was 15.18 %, which takes into consideration the non-cash accretion of the exit fee and the amortization of the debt discount and issuance costs.

The amortization of debt discount and debt issuance cost is included in interest expense within the condensed consolidated statements of operations and comprehensive loss.

As of September 30, 2025, the effective interest rate was 19.0 %, which takes into consideration the additional 5.0 % interest rate as a result of the Event of Default, the non-cash accretion of the exit fee and the amortization of the debt discount and issuance costs.

On September 29, 2025, the Company received the Default Notice from Oxford Finance under the Loan Agreement, which asserted that an Event of Default had occurred and was continuing under Section 8.3 (Material Adverse Change) of the Loan Agreement and alleged that other events of default under the Loan Agreement may exist.

In the Default Notice, Oxford Finance declared, by reason of the Event of Default, that all obligations of the Company under the Loan Agreement were immediately due and payable.

In addition, the Default Notice indicated that the Company’s obligations under the Loan Agreement began accruing interest at the Default Rate (as defined in the Loan Agreement) effective immediately upon occurrence of the Event of Default.

The total amount of the Company’s obligations under the Loan Agreement as of September 29, 2025 that were accelerated and declared payable by Oxford was $ 29.1 million plus any additional interest due upon final payment and any expenses that become payable by the Company under the Loan Agreement.

On October 18, 2025, pursuant to the terms of the Loan Agreement, Oxford Finance informed the Company that it intended to foreclose on all of the Company’s remaining assets and that Oxford Finance would not consent to the Company’s use of cash for any reason other than for minimal payroll expenses pending Oxford Finance’s foreclosure of the Company’s assets.

In addition, Oxford swept substantially all of the Company’s cash resources from its bank accounts.

As a result, on October 19, 2025, the board of directors of the Company terminated all remaining employees not deemed necessary by Oxford to execute a foreclosure of the Company’s assets.

On November 3, 2025, Oxford Finance informed the Company that it intended to pause its foreclosure of the Company’s assets and permitted the Company to use $ 125.0 of cash it previously swept to fund the negotiation execution of the Convertible Loan Agreement (as defined below) and to fund essential work only.

On November 9, 2025, the Company entered into a Convertible Loan Agreement (the “Convertible Loan Agreement”) with David Lazar (the “Individual Lender”), pursuant to which the Individual Lender agreed to provide the Company a convertible loan in the aggregate amount of up to $ 375.0 (the “Loan Principal”), which was received in November 2025 and repaid in December 2025.

During the year ended December 31, 2025, the Company recognized interest expense of $ 3,276 for the Loan Agreement.

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(In thousands, except share and per share amounts)

On November 25, 2025, the Company entered into a Loan Settlement Agreement (the “Settlement Agreement”) with Oxford pursuant to which the Company owed Oxford $ 2,000 to be paid pursuant to the terms of the Settlement Agreement.

The Settlement Agreement was entered into in connection with events of default by the Company, under the Loan and Security Agreement dated May 4, 2021 (the “Loan Agreement”).

On December 26, 2025, the Company paid Oxford the settlement agreement amount of $ 2,000 .

As a result of such payment, all of its obligations under the Settlement Agreement and the Loan Agreement have been satisfied and the aggregate liability due Oxford of approximately $ 10,600 has been settled and released.

The components of the carrying value of the debt as of December 31, 2025 and 2024 are detailed below:

4 unchanged sentences

Long-term debt, net

The annual principal payments due under the Loan Agreement as of December 31, 2024 were as follows:

Years Ending December 31,

The Company has issued warrants in connection with debt transactions that were completed in 2018 and prior.

2 unchanged sentences

Price Per Share

November 2024

September 2017

2 unchanged sentences

The Company was authorized to issue up to 5,000,000 shares of preferred stock as of December 31, 2025 and 2024.

As of December 31, 2024, the Company designated 54,000 shares of preferred stock as Series E Preferred Stock, of which 51,246 shares were outstanding as of December 31, 2024.

As of December 31, 2024, the Company designated 2,928 , 10,901 , 9,393 and 3,286 shares of preferred stock as Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock, respectively, all of which were outstanding as of December 31, 2024.

Series E, Series F, Series G, Series H and Series I Convertible Non-Redeemable Preferred Stock

Pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series E Convertible Non-Redeemable Preferred Stock, filed with the Secretary of State of the State of Delaware, the Company designated 54,000 shares of its authorized and unissued preferred stock as Series E Preferred Stock and established the rights, preferences and privileges of the Series E Preferred Stock.

Pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series F Convertible Non-Redeemable Preferred Stock, filed with the Secretary of State of the State of

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Delaware, the Company designated 2,928 shares of its authorized and unissued preferred stock as Series F Preferred Stock and established the rights, preferences and privileges of the Series F Preferred Stock.

Pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series G Convertible Non-Redeemable Preferred Stock, filed with the Secretary of State of the State of Delaware, the Company designated 10,901 shares of its authorized and unissued preferred stock as Series G Preferred Stock and established the rights, preferences and privileges of the Series G Preferred Stock.

Pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series H Convertible Non-Redeemable Preferred Stock, filed with the Secretary of State of the State of Delaware, the Company designated 9,393 shares of its authorized and unissued preferred stock as Series H Preferred Stock and established the rights, preferences and privileges of the Series H Preferred Stock.

Pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series I Convertible Non-Redeemable Preferred Stock, filed with the Secretary of State of the State of Delaware, the Company designated 3,286 shares of its authorized and unissued preferred stock as Series I Preferred Stock and established the rights, preferences and privileges of the Series I Preferred Stock.

As discussed more fully in Note 1, “Nature of Business,” in December 2024, the Company entered into the December 2024 Securities Purchase Agreement pursuant to which it issued 3,286 shares of Series I Preferred Stock at a price per share of $ 644.00 .

In June 2024, the Company entered into the June 2024 Securities Purchase Agreement pursuant to which it issued 9,393 shares of Series H Preferred Stock at a price per share of $ 585.00 .

In March 2024, the Company entered into the March 2024 Securities Purchase Agreement pursuant to which it issued 10,901 shares of Series G Preferred Stock at a price per share of $ 788.90 .

In December 2023, t he Company entered into the 2023 Securities Purchase Agreement pursuant to which it issued 2,928 shares of Series F Preferred Stock at a per share price of $ 683.00 .

In December 2022, the Company entered into the 2022 Securities Purchase Agreement pursuant to which it issued 53,144 shares of Series E Preferred Stock at a per share price of $ 575.00 .

Each share of Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock has a par value of $ 0.001 .

Series E, Series F, Series G, Series H and Series I Preferred Stock

Each outstanding share of Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock is initially convertible into 100 shares of the Company’s common stock (subject to adjustment as provided in the applicable Certificate of Designations) at any time at the option of the holder, provided that the holder will be prohibited, subject to certain exceptions, from converting such shares of preferred stock for shares of common stock to the extent that immediately prior to or following such conversion if the holder, together with its affiliates and other attribution parties, would own in excess of 9.99 % of the total number of shares of the Company’s common stock then issued and outstanding after giving effect to such conversion.

Such percentage may be changed at the holder’s election to a lower percentage at any time or to a higher percentage not to exceed 19.99 % upon 61 days ’ notice to the Company (collectively, the “Beneficial Ownership Limitation”).

Shares of Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock will generally have no voting rights, except to the extent provided by applicable law, and except that (i) the consent of the holders of a majority of the outstanding Series E Preferred Stock will be required to waive any provisions of the Series E Certificate of Designations, (ii) the consent of the holders of a majority of the outstanding Series F Preferred Stock will be required to waive any provisions of the Series F Certificate of Designations, (iii) the consent of the holders of a majority of the outstanding Series G Preferred Stock will be required to waive any provisions of the Series G Certificate of Designations, (iv) the consent of the holders of at least two-thirds of the outstanding Series H Preferred Stock will be required to waive any provisions of the Series H Certificate of Designations

As of December 31, 2025, the Company had designated 54,000 shares of preferred stock as Series E Preferred Stock, 2,928 shares of preferred stock as Series F Preferred Stock, 10,901 shares of preferred stock as Series G Preferred Stock, 9,393 shares of preferred stock as Series H Preferred Stock, 3,286 shares of preferred stock as Series I Preferred Stock, and 900,000 shares of preferred stock as Series AA Preferred Stock, of which 9,278 shares of Series E Preferred Stock, 2,928 shares of Series F Preferred Stock, 10,901 shares of Series G Preferred Stock, 2,299 shares of Series H Preferred Stock, 0 shares of Series I Preferred Stock and 900,000 shares of Series AA Preferred Stock were outstanding as of December 31, 2025.

On January 20, 2026, all of the Series E Preferred Stock, Series F Preferred Stock, Series H Preferred Stock were converted to common stock.

On January 30, 2026, the Company designated 2,100,000 shares of preferred stock as Series AAA Preferred Stock.

All of the shares of Series AAA Preferred Stock have been converted to common stock.

KALA BIO, INC.

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(In thousands, except share and per share amounts)

and (v) the consent of the holders of at least two-thirds of the outstanding Series I Preferred Stock will be required to waive any provisions of the Series I Certificate of Designations.

Shares of Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock will be entitled to receive dividends equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends actually paid on shares of common stock.

Series AA Private Placement

On November 23, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with David Lazar (“Investor”), pursuant to which the Company agreed to issue and sell, in a private placement, shares of Series AA Convertible Non-Redeemable Preferred stock (the “Series AA Preferred Shares”), par value $ 0.001 per share, of the Company and shares of Series AAA Convertible Non-Redeemable Preferred Stock (the “Series AAA Preferred Shares”, and together with the Series AA Preferred Shares, the “Placement Shares”), par value $ 0.001 per share, of the Company, in two closings for aggregate gross proceeds of up to $ 6.0 million.

Pursuant to the Securities Purchase Agreement, Company agreed to issue and sell to the Investor at a first closing 900,000 Series AA Preferred Shares, at a price per Series AA Preferred Share equal to $ 2.00 , for aggregate gross proceeds of $ 1.8 million.

The closing for the Series AA Preferred Shares occurred on November 24, 2025 (the “Series AA Preferred Share Closing”).

The closing for the Series AAA Preferred Shares occurred on January 30, 2026 (the “Series AA Preferred Share Closing”).

Series AA Preferred Stock

Each outstanding share of Series AA Preferred Stock is initially convertible into 55 shares of the Company’s common stock, subject to adjustment as provided in the applicable Certificate of Designations, at any time at the option of the holder.

Shares of Series AA Preferred Stock generally have no voting rights, except to the extent provided by applicable law, and except that the consent of the holders of Series AA Preferred Stock will be required to alter, repeal or change the powers, preferences or rights of the Series AA Preferred Stock.

Shares of Series AA Preferred Stock are entitled to receive dividends equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends actually paid on shares of common stock.

Liquidation Rights

Upon any dissolution, liquidation or winding up of the Company, whether voluntary or involuntary (“Dissolution”), subject to any superior rights of holders of senior securities, if any, holders of Series E Preferred Stock, holders of Series F Preferred Stock, holders of Series G Preferred Stock, holders of Series H Preferred Stock and holders of Series I Preferred Stock will be entitled to receive, on a pari passu basis as applicable (A) an amount per share of Series E Preferred Stock equal to the greater of (i) $ 575.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of Series E Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution, (B) an amount per share of Series F Preferred Stock equal to the greater of (i) $ 683.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of Series F Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution, (C) an amount per share of Series G Preferred Stock equal to the greater of (i) $ 788.90 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of Series G Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution, (D) an amount per share of Series H Preferred Stock equal to the greater of (i) $ 585.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of Series H Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution, and (E) an amount per share of Series I Preferred Stock equal to the greater of (i) $ 644.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series I Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution, in each case, before any distributions shall be made to holders of common stock.

If, upon any such Dissolution, the assets of the Company are insufficient to pay the holders of shares of the Series E Preferred Stock, the holders of shares of Series F Preferred Stock, the holders of Series G Preferred Stock, the holders of Series H Preferred Stock and the holders of Series I Preferred Stock the full amount required under the preceding sentence, the holders of shares of Series E Preferred Stock, the holders of shares of Series F Preferred Stock, the holders of Series G Preferred Stock, the holders of Series H Preferred Stock and the holders of Series I Preferred Stock will share in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares of were paid in full.

The Series AA Preferred Stock ranks on parity with the Series AAA Preferred Stock.

Upon any dissolution, liquidation or winding up of the Company, whether voluntary or involuntary (“Dissolution”), subject to any superior rights of holders of senior securities, if any, holders of Series AA Preferred Stock will be entitled to receive, on a pari passu basis as applicable (A) an amount per share of Series AA Preferred Stock equal to the greater of (i) $ 2.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of the Series AA Preferred Stock or Series AAA Preferred Stock, as applicable, been converted into common stock immediately prior to such Dissolution, before any distributions shall be made to holders of common stock.

If, upon any such Dissolution, the assets of the Company are insufficient to pay the holders of shares of the Series AA Preferred Stock, the holders of shares of Series AA Preferred Stock will share in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series AA Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares of were paid in full.

KALA BIO, INC.

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Holders of common stock are entitled to receive proportionately any dividends as may be declared by the Company’s Board of Directors, subject to any preferential dividend rights of any preferred stock that the Company may issue in the future.

In the event of the Company’s Dissolution, whether voluntary or involuntary, the holders of its common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of the Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock, and any preferred stock that the Company may issue in the future.

In the event of the Company’s dissolution, whether voluntary or involuntary, the holders of its common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of the Series AA Preferred Stock, and any preferred stock that the Company may issue in the future.

Holders of the Company’s common stock have no preemptive, subscription, redemption or conversion rights.

The rights, preferences and privileges of holders of the Company’s common stock are subject to and may be adversely affected by the rights of the holders of the Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock and shares of any series of its preferred stock that the Company may designate and issue in the future.

The rights, preferences and privileges of holders of the Company’s common stock are subject to and may be adversely affected by the rights of the holders of the Series AA Preferred Stock and shares of any series of its preferred stock that the Company may designate and issue in the future.

Reserved Shares

As of December 31, 2024 and 2023, the Company has reserved the following shares of common stock for issuance upon exercise of rights under warrants, under the Amended and Restated 2017 Employee Stock Purchase Plan (the “ESPP”), upon the exercise of stock options, upon the vesting of RSUs, and upon conversion of the Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock:

As of December 31, 2025 and 2024, the Company has reserved the following shares of common stock for issuance upon exercise of rights under warrants, under the Amended and Restated 2017 Employee Stock Purchase Plan (the “ESPP”), upon the exercise of stock options, upon the vesting of RSUs, and upon conversion of the Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series AA Preferred Stock:

Warrant rights to acquire common stock

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ASC 480 - Distinguishing Liabilities from Equity determination

The Series F Preferred Stock issued pursuant to the 2023 Securities Purchase Agreement, the Series G Preferred Stock issued pursuant to the March 2024 Securities Purchase Agreement, the Series H Preferred Stock issued pursuant to the June 2024 Securities Purchase Agreement and the Series I Preferred Stock issued pursuant to the December 2024 Securities Purchase Agreement were not within the scope of ASC 480.

These instruments did not contain any embedded derivatives required to be bifurcated from the Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock and Series I Preferred Stock and these instruments were equity classified within permanent equity.

The Series F Preferred Stock issued pursuant to the 2023 Securities Purchase Agreement, the Series G Preferred Stock issued pursuant to the March 2024 Securities Purchase Agreement, the Series H Preferred Stock issued pursuant to the June 2024 Securities Purchase Agreement, the Series I Preferred Stock issued pursuant to the December 2024 Securities Purchase Agreement, and the Series AA Preferred Stock issued pursuant to the Series A Securities Purchase Agreement were not within the scope of ASC 480.

These instruments did not contain any embedded derivatives required to be bifurcated from the Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and Series AA Preferred Stock and these instruments were equity classified within permanent equity.

KALA BIO, INC.

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As of December 31, 2025, there were 527,508 shares of common stock available for grant under the 2017 Plan.

On January 1, 2025, 554,663 shares of common stock were added and were available for grant under the 2017 Plan.

Under the p lans, the Board or the compensation committee determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards.

Under the plans, the Board or the compensation committee determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards.

The exercise price of incentive stock options cannot be less than the fair value of the common stock on the date of grant.

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Stock Option Awards

On May 1, 2023, the Company commenced a one-time stock option exchange program (the “Option Exchange Program”), under which the Company’s eligible executive officers, other employees and non-employee directors (collectively, “Eligible Holders”) were given the opportunity to exchange outstanding options to purchase shares of the Company’s common stock held by them for an equal number of RSUs that are subject to vesting conditions.

The Option Exchange Program expired on May 30, 2023.

A total of 36 Eligible Holders participated in the Option Exchange Program.

Pursuant to the terms and conditions of the Option Exchange Program, the Company accepted for exchange options to purchase a total of 182,251 shares of the Company’s common stock.

All surrendered options were cancelled effective as of the expiration of the Option Exchange Program, and immediately thereafter, in exchange therefor, the Company granted a total of 182,251 RSUs pursuant to the terms of the Option Exchange Program and the 2017 Plan.

A de minimis number of eligible options were not surrendered for exchange and remain outstanding.

Based upon the modification guidance under ASC 718, the Company is required to record an incremental compensation expense of $ 1,210 , which will be recorded, along with the unrecognized compensation cost as of the date of the modification, over the remaining service period of the modified awards.

During the year ended December 31, 2024, the Company granted options for the purchase of 317,139 shares of common stock, including options to directors and inducement grant options to purchase 3,125 shares of common stock to a new employee made outside of the 2017 Plan in accordance with Nasdaq Listing Rule 5635(c)(4) .

During the year ended December 31, 2023, the Company granted options for the purchase of 666,962 shares of common stock, including options to directors and inducement grant options to purchase 13,920 shares of common stock to new employees made outside of the 2017 Plan in accordance with Nasdaq Listing Rule 5635(c)(4) .

During the years ended December 31, 2025 and 2024, the Company granted options for the purchase of 689,525 and 317,139 shares, respectively, of common stock.

KALA BIO, INC.

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The assumptions used in determining fair value of the stock options granted during the years ended December 31, 2025 and 2024 are as follows:

Year Ended December 31,

Expected volatility

11 unchanged sentences

The fair value is being expensed over the vesting period of the options on a straight-line basis as the services are being provided.

As of December 31, 2024, there was $ 5,828 of unrecognized compensation cost related to the stock options granted, which is expected to be expensed over a weighted-average period of 2.57 years.

Stock-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows:

1 unchanged sentence

General and administrative

During the year ended December 31, 2024, 1,281 options were exercised.

There were no stock options exercised during the year ended December 31, 2023.

During the years ended December 31, 2025 and 2024, 885 and 1,281 options, respectively, were exercised.

KALA BIO, INC.

1 unchanged sentence

(In thousands, except share and per share amounts)

Restricted Stock Units —During the years ended December 31, 2024 and 2023, the Company issued 71,830 RSUs and 824,190 RSUs (which includes the RSUs issued in connection with the Option Exchange Program in 2023), respectively, to certain executives and other employees which will vest no sooner than one-third per year over three years on the anniversary of the date of grant.

Restricted Stock Units —During the years ended December 31, 2025 and 2024, the Company issued 106,725 and 71,830 RSUs, respectively, to certain executives and other employees which will vest no sooner than one-third per year over three years on the anniversary of the date of grant.

As of December 31, 2025, a total of 230,947 RSUs were outstanding, consisting of 186,463 unvested shares and 44,484 vested and deferred shares by directors.

This results in unrecognized stock-based compensation of $ 6,284 to be recognized as stock-based compensation expense over the remaining weighted-average vesting period of 1.28 years.

A summary of activity for RSUs for the year ended December 31, 2025 is as follows:

37 unchanged sentences

(In thousands, except share and per share amounts)

Beginning in 2025 annual reporting, the Company has adopted ASU 2023-09 prospectively.

The difference between the Company's effective income tax rate and the U.S.

federal statutory rate of 21 % was primarily driven by the change in the valuation allowance.

A reconciliation of the federal statutory income tax rate to the Company's effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:

Year Ended December 31, 2025

Federal statutory income tax rate

State income taxes, net of federal benefit

Change in Valuation Allowance

Nontaxable or Nondeductible Items:

Stock Based Compensation Permanent

Mark to Market

Other Nontaxable or Nondeductible Items

Federal R&D and Orphan Drug Credits

A reconciliation of the U.S.

federal statutory income tax rate to the Company’s effective income tax rate is as follows:

federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2024 is as follows:

Year Ended December 31, 2024

Federal statutory income tax rate

4 unchanged sentences

Effective income tax rate

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Net deferred tax assets as of December 31, 2025 and 2024 consisted of the following:

18 unchanged sentences

Management reevaluates the positive and negative evidence at each reporting period.

As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the "change in valuation allowance" line of the rate reconciliation.

The following table presents a reconciliation of the total change in the valuation allowance:

Beginning Balance

Change charged to income tax expense

Changes charged to OCI

Changed charged to goodwill

Ending Balance

As of December 31, 2025 and 2024, the Company had federal net operating loss carryforwards of $ 561,353 and $ 405,544 , respectively, which may be available to offset future federal tax liabilities and expire at various dates beginning in 2030.

8 unchanged sentences

As a result, the utilization of the Company’s net operating loss carryforwards is subject to an annual limitation of $ 222 , which is reflected in the numbers presented above.

The Tax Cuts and Jobs Act resulted in significant changes to the treatment of research and developmental expenditures under Section 174 of the Internal Revenue Code.

For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all research and development expenditures that are paid or incurred in connection with their trade or business.

Per the One Big Beautiful Bill Act, effective July 4, 2025, taxpayers are still required to capitalize foreign research and development expenditures over 15 years, but now have the opportunity to deduct domestic research and development expenditures under IRC 174A.

The Company has elected to continue to amortize prior year domestic capitalized costs until the amortization of such costs is complete.

The Company files its corporate income tax returns in the United States and various states.

8 unchanged sentences

Stanford is also entitled to receive tiered royalties in a low single digit percentage range on net sales of licensed products that are covered by a valid claim of a licensed patent.

During the year ended December 31, 2023, the Company paid Stanford a $ 175 milestone payment which was triggered by the commencement of the CHASE Phase 2b clinical trial of KPI-012 for PCED in the United States .

Additional amounts paid to Stanford in the years ended December 31, 2024 and 2023 were de minimis .

The Company’s minimum obligations due under the Stanford License Agreement as of December 31, 2024, are as follows:

Years Ending December 31,

Total minimum license payments

During the years ended December 31, 2025 and 2024, amounts paid to Stanford were de minimis .

Based on the CHASE trial results, we determined to cease development of KPI-012 and our MSC-S platform.

KALA BIO, INC.

19 unchanged sentences

The Company made discretionary matching contributions of $ 134 and $ 160 to the 401(k) Plan during the years ended December 31, 2025 and 2024, respectively.

Subsequent Events

Series AAA Private Placement

As disclosed in Note 10, on November 25, 2025, the Company entered into a Securities Purchase Agreement, with the Series AA Investor, pursuant to which the Company agreed to issue and sell, in a private placement, shares of the Series AA Preferred Stock and the Series AAA Preferred Stock of the Company in two closings for aggregate gross proceeds of up to $ 6.0 million.

On December 11, 2025, the Series AA Investor transferred his rights and obligations under the Securities Purchase Agreement solely with respect to the shares of Series AAA Preferred and the director nomination right to AK Holdings Group Inc., a Panamanian company (“AK Holdings”).

On January 29, 2026, pursuant to the terms of that certain Rights Purchase Agreement by and among AK Holdings and each signatory thereto (the “Series AAA

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Investors”), AK Holdings sold its rights to purchase the Series AAA Preferred Stock (but not its director nomination rights under the November 2025 Purchase Agreement) to the Series AAA Investors.

On January 30, 2026, the Company entered into that certain Securities Purchase Agreement (the “Series AAA Purchase Agreement”) with each of the Series AAA Investors pursuant to which the Company agreed to issue and sell to the Series AAA Investors at second closing of the Private Placement, an aggregate of 2,100,000 shares of Series AAA Preferred Stock at a price per share of Series AAA Preferred Stock equal to $ 2.00 , for aggregate gross proceeds of $ 4,200 .

The Closing occurred on January 30, 2026, following (A) the approval at the Annual Meeting of the Issuance Proposal and the Share Increase Proposal (each as defined herein), (B) the filing with the Secretary of State of the State of Delaware of the (i) Certificate of Amendment (as defined herein) and (ii) Certificate of Designations, Preferences and Rights of Series AAA Convertible Non-Redeemable Preferred Stock (the “Certificate of Designations”), and (C) the satisfaction of other customary closing conditions.

The terms of the Series AAA Preferred Stock are substantially similar to the terms of the Series AA Preferred Stock.

Each share of Series AAA Preferred Stock was convertible into 420 shares of Common Stock for an aggregate total of 882,000,000 shares of Common Stock issuable upon conversion of the Series AAA Preferred Stock.

The Purchase Agreement contains customary representations, warranties and agreements by the Company and customary closing conditions.

The representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties thereto and as of specific dates and may be subject to limitations agreed upon by the contracting parties.

All of the shares of Series AAA Preferred Stock have been converted to common stock.

License Agreement

On March 3, 2026 (the “Effective Date”), the Company and 2624465 Ontario Inc.

The term of the Agreement is for 12 months following the Effective Date (the “Initial Term”), with the option by the Company to renew the agreement for successive 12 months terms (each, a “Renewal Term”), in each case by providing notice to Younet pursuant to the terms of the Agreement (the “Extension Notice”).

Pursuant to the Agreement, Younet shall also provide to the Company certain deliverables and services related to the Researgency Platform, with certain additional deliverables to be provided by Younet in the event of a Renewal Term, in each case with all operating costs relating to the Researgency Platform to be paid by the Company.

In consideration of the services to be performed by Younet under the Agreement, the Company has agreed to pay to Younet for the Initial Term a cash fee of up to $ 530 consisting of (i) $ 80 in cash, which was paid by the Company on the Effective Date, and (ii) in the event the Company delivers to Younet a written notice electing to engage Younet for the continued development of Researgency, $ 450 in cash, payable in 9 monthly installments of $ 50 , pursuant to the terms of the Agreement.

Such notice may be provided at any time on or after the first business day of the third month following the Effective Date and such continued development may be terminated upon 30 days notice by the Company.

In addition, the Company has agreed to issue to Younet 5,000,000 shares of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”), within 10 business days of the Effective Date.

In addition, each time the Agreement is extended for a Renewal Term, the Company shall (i) pay to Younet $ 250 in cash and (ii) issue to Younet 5,000,000 shares of Common Stock within 10 business days of the Extension Notice.

Any shares of Common Stock issuable to Younet pursuant to the Agreement shall herein be referred to as the “Younet Shares.” Except for certain block trades, during the Term (as defined in the Agreement) and for the twelve months thereafter, Younet shall not sell any Younet Shares on any Trading Day (as defined in the Agreement) in an amount that exceeds 3 % of the Daily Trading Volume (as defined in the Agreement) for such Trading Day.

In addition, Younet has granted to the Company an irrevocable option, exercisable at any time during the Initial Term or any Renewal Terms, to acquire all of the issued and outstanding equity interests of Younet, or, at the Company’s election, substantially all of the assets of Younet, for a total purchase price of $ 55,000 , subject to the terms of the Agreement.

KALA BIO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

If the Company does not deliver an Extension Notice prior to the expiration of the Initial Term or any Renewal Term, the Agreement shall expire automatically at the end of the applicable term.

In addition, the Agreement may be terminated by either party (i) for uncured material breach or (ii) due to the insolvency of the other party.

Upon termination or expiration, (a) the Exclusive License will terminated, (b) all licenses granted to Younet with respect to KALA Data (as defined in the Agreement) will immediately terminate, (c) all licenses granted to the Company with respect to Younet Background IP (as defined in the Agreement) will survive in accordance with their terms, and (d) all Work Product (as defined in the Agreement) completed as of the date of termination shall be delivered to and owned by the Company.

The License Agreement additionally includes customary representations and warranties, covenants, and indemnification obligations for a transaction of this nature.

Loan and Security Agreement

On February 9, 2026, the Company made a loan (the “Loan”) in the principal amount of $ 7,000 , evidenced by a secured promissory note (the “Note”) to Minglemint Solutions LLC (“Borrower”) in connection with the Company’s determination that a portion of its cash on hand was in excess of its near-term working capital requirements and operational needs.

The Loan bears interest at a rate of 8.0 % per annum, and is due and payable on February 9, 2027.

The Note includes customary event of default provisions, including, but not limited to, for a breach of any representations and warranties or covenants, any bankruptcy or insolvency proceedings of the Borrower, and the failure of the Borrower to pay, upon 15 days ’ written notice of default, any principal amount of the Loan or interest due.

The Note provides for a default interest rate of 13.0 %.

Additionally, the Note is secured by a continuing first priority lien and security interest in all fixtures and personal property of the Borrower (the “Collateral”), pursuant to the security agreement with the Borrower dated February 9, 2026 (the “Security Agreement”).

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 9A. Controls and Procedures