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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-02-27 · 57 added, 27 removed, 80 unchanged (51% of the section changed)

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The following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report.

We are a clinical-stage pharmaceutical company dedicated to the discovery, development, and commercialization of innovative therapies for the treatment of solid tumors and other major diseases.

Our investigational product, certepetide (formerly known as LSTA1 or CEND-1), is designed to activate a novel uptake pathway that allows co-administered or tethered (i.e., molecularly bound) anti-cancer drugs to target and penetrate solid tumors more effectively.

We are a clinical-stage pharmaceutical company dedicated to the discovery, development, and commercialization of innovative therapies for the treatment of solid tumors and other serious diseases.

Our investigational product, certepetide (formerly known as LSTA1 or CEND-1), is designed to activate a novel uptake pathway (the C-end rule active transport mechanism) that allows co-administered or tethered (i.e., molecularly bound) anti-cancer drugs to target and penetrate solid tumors more effectively.

Certepetide actuates this active transport system in a tumor-specific manner, resulting in systemically co-administered anti-cancer drugs more efficiently penetrating and accumulating in the tumor, while normal tissues are expected to remain unaffected.

Certepetide has also been shown to modify the tumor microenvironment (“TME”) by reducing T-regulatory cells and augmenting cytotoxic T cells, thereby making tumors more susceptible to immunotherapies while also inhibiting the metastatic cascade (i.e., the spread of cancer to other parts of the body).

We and our collaborators have amassed significant non-clinical data demonstrating enhanced delivery of a range of existing and emerging anti-cancer therapies, including chemotherapeutics, immunotherapies, and RNA-based therapeutics.

To date, certepetide has also demonstrated favorable safety, tolerability and activity in completed and ongoing clinical trials designed to enhance delivery of standard-of-care chemotherapy for pancreatic cancer.

We are exploring certepetide as a means to enable a variety of treatment modalities to treat a range of solid tumors more effectively.

Currently, certepetide is the subject of several Phase 2 clinical studies being conducted globally in a variety of solid tumor types, including metastatic pancreatic ductal adenocarcinoma (mPDAC), cholangiocarcinoma, appendiceal cancer, colon cancer and glioblastoma multiforme in combination with a variety of anti-cancer regimens.

Our leadership team has decades of collective biopharmaceutical and pharmaceutical product development experience across a variety of therapeutic categories and at all stages of development from preclinical through to product registration and launch.

We, our collaborators and other researchers have amassed and continue to amass significant non-clinical data demonstrating enhanced delivery of a range of existing and emerging anti-cancer therapies, including chemotherapeutics, immunotherapies, and RNA-based therapeutics.

In addition, certain preclinical data using certepetide in combination with antibody drug conjugates (ADCs) has been generated as part of our research collaboration with Catalent.

These data were presented at a scientific meeting during the fourth quarter of 2025.

Certepetide is or has been the subject of several Phase 2 clinical studies globally in a variety of solid tumor types, including metastatic pancreatic ductal adenocarcinoma (mPDAC), cholangiocarcinoma, appendiceal cancer, colon cancer and glioblastoma multiforme in combination with a variety of anti-cancer regimens.

Our leadership team has amassed many decades of collective biopharmaceutical and pharmaceutical product development experience across a variety of therapeutic categories and at all stages of development from preclinical through to product registration and launch.

Our goal is to develop and commercialize products that address important unmet medical needs.

Recent Developments

Proposed Acquisition by Kuva Labs Inc.

On March 6, 2026, we entered into the Merger Agreement, pursuant to which, and upon the terms and subject to the conditions thereof, Purchaser will commence a tender offer to purchase all of our issued and outstanding shares of common stock in exchange for (i) $5.00 per share, net to the seller in cash, without interest, but subject to any applicable withholding of taxes (the “Closing Amount”) plus (ii) one non-tradeable CVR, which represents the contractual right to receive a contingent cash payment of $1.00 per CVR if the Milestone is met as further described in the CVR Agreement.

If certain conditions are satisfied and the Offer is consummated, Kuva would acquire any remaining shares for the Offer Price by a merger of Purchaser with and into us.

Following completion of the transaction, we will become part of Kuva, a privately-held company, and our common stock will be delisted from Nasdaq.

We will also apply to deregister our common stock and cease to be a reporting company under the United States Securities Exchange Act of 1934, as amended.

Under the Merger Agreement, the Offer and the Merger will be subject to customary closing conditions for a transaction of this nature.

Kuva will be required to close on the Offer so long as there shall be validly tendered a number of Shares that represents (and will represent immediately following the consummation of the Offer) at least a majority of the aggregate voting power of all Shares then outstanding.

We cannot predict whether and when the conditions to closing will be satisfied.

Until these conditions are satisfied and we and Kuva complete the proposed transaction, our business, operating results and financial condition are exposed to certain risks due to the effect of the pending proposed transaction.

Refer to Item 1A.

“Risk Factors” for a summary of risks related to the proposed transaction.

Termination of Qilu Exclusive License and Collaboration Agreement

On January 23, 2026, we and Qilu Pharmaceutical Co., Ltd.

(“Qilu”) entered into a Mutual Termination Agreement (the “Termination Agreement”) relating to the Exclusive License and Collaboration Agreement between us (formerly Cend Therapeutics, Inc.

(“Cend”)) and Qilu, relating to the research, development and commercialization of certepetide (formerly known as CEND-1), dated February 11, 2021, as amended on April 26, 2021, and further amended by the Side Letter Agreement, dated November 10, 2023 (collectively the “License and Collaboration Agreement”).

Previously, Cend (which was subsequently acquired by us) and Qilu entered into the License and Collaboration Agreement, pursuant to which we granted Qilu a royalty-bearing exclusive license for the research, development and commercialization of certepetide in the Greater China territory (including Mainland China, Hong Kong, Macau, and Taiwan).

Pursuant to the License and Collaboration Agreement, we were eligible to receive up to $200 million in development and commercial milestone payments and royalties ranging from 10% to 15% on licensed product sales.

In consideration for the license, Qilu made an upfront payment of $10.0 million to Cend, which was recognized as revenue by Cend prior to our acquisition of Cend on September 15, 2022 (the “Cend Merger”).

In addition, Cend received and recognized as revenue a $5.0 million development milestone prior to the Cend Merger.

We have not received any additional development and commercial milestone payments since the Cend Merger.

Pursuant to the Termination Agreement, the License and Collaboration Agreement is terminated, effective as of January 23, 2026, and is no longer in effect, except that the termination does not relieve the parties from obligations under the License and Collaboration Agreement that accrued prior to the termination and certain other provisions expressly indicated to survive the termination.

Results of Operations

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Overall, net losses were $16.6 million and $20.0 million for the years ended December 31, 2025 and 2024, respectively.

For the year ended December 31, 2024, revenue totaled $1.0 million in connection with an upfront license fee related to the Exclusive License and Collaboration Agreement with Kuva Labs, Inc.

We did not have any revenue for the year ended December 31, 2023.

Revenue totaled $0.2 million and $1.0 million for the years ended December 31, 2025 and 2024, in connection with certain upfront license fees in the current year and the Exclusive License and Collaboration Agreement with Kuva in the prior year.

Operating Expenses

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• Research and development expenses were approximately $7.9 million for the year ended December 31, 2025, compared to $11.3 million for the year ended December 31, 2024, representing a decrease of approximately $3.4 million, or 29.9%.

This was primarily due to a reduction in expenses associated with the Phase 2b ASCEND trial which completed enrollment in the prior year, lower spend on chemistry, manufacturing and controls (“CMC”) and lower equity expense.

This was primarily due to a reduction in Clinical department expenses as a result of the elimination of several positions during the year and reversal of the bonus accrual in the fourth quarter, lower spend on the ASCEND trial, a reduction in patient treatment costs and clinical research organization (“CRO”) expenses associated with our Phase 2a proof-of-concept BOLSTER trial and lower spend on chemistry, manufacturing and controls (“CMC”) partially offset by an increase in expenses associated with our Phase 2a glioblastoma multiforme (“GBM”) proof-of-concept study.

• General and administrative expenses were approximately $10.4 million for the year ended December 31, 2025, compared to $12.1 for the year ended December 31, 2024, representing a decrease of approximately $1.6 million or 13.6%.

This was primarily due to one-off related severance costs in the prior year associated with the elimination of the Chief Business Officer position on May 1, 2023, a reduction in equity expense, a decrease in directors and officers insurance premiums, and a reduction in spend on legal fees partially offset by one-off settlement related costs and an increase in consulting expenses.

This was primarily due to a reversal of the bonus accrual in the fourth quarter, one-off settlement costs in the prior year in addition to lower spending on consulting in the current year partially offset by a credit loss allowance, and impairment of a non-financial asset.

Historically, to minimize our use of cash, we have used a variety of equity instruments as compensation to employees, consultants, directors and other service providers.

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Total other income was $0.7 million for the year ended December 31, 2025, compared to $1.6 million for the year ended December 31, 2024, representing a decrease of approximately $1.0 million or 59.3%.

This was primarily due to a reduction in investment income from cash, cash equivalents and marketable securities in the current year as a result of lower investment balances, partially offset by higher investment returns.

This was primarily due to a reduction in investment income from cash, cash equivalents and marketable securities in the current year as a result of lower investment balances.

Income Tax Benefit

In March 2024, we received final approval from the New Jersey Economic Development Authority (“NJEDA”) under the Technology Business Tax Certificate Transfer Program (the “Program”) to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $0.7 million.

In January 2025, we received final approval from the New Jersey Economic Development Authority (“NJEDA”) under the Technology Business Tax Certificate Transfer Program (the “Program”) to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $0.9 million.

The $1.0 million of our NJ NOL tax benefits have been recorded as a benefit from income taxes and the loss on sale of $0.1 million recorded in other income (expense).

In April 2023, we received final approval from the NJEDA under the Program to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $2.2 million.

The $2.3 million of NJ NOLs related tax benefits have been recorded as a benefit from income taxes and the loss on sale of $0.1 million recorded in other income (expense).

In March 2024, we received final approval from the NJEDA under the Program to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $0.7 million.

The $0.8 million of our NJ NOL tax benefits have been recorded as a benefit from income taxes and the loss on sale of $0.1 million recorded in other income (expense).

Analysis of Liquidity and Capital Resources

At December 31, 2024, we had cash, cash equivalents, and marketable securities of approximately $31.2 million, working capital of approximately $29.0 million, and stockholders’ equity of approximately $29.6 million.

At December 31, 2025, we had cash and cash equivalents of approximately $16.0 million, working capital of approximately $14.6 million, and stockholders’ equity of approximately $14.9 million.

During the year ended December 31, 2025, we met our immediate cash requirements through existing cash balances.

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Net cash provided by investing activities 15,086 13,233

Net cash (used in) provided by financing activities (206) 385

Net cash provided by (used in) financing activities 599 (206)

Operating Activities

Our cash used in operating activities during the year ended December 31, 2024 totaled approximately $19.4 million, comprising (i) our net loss of $20.0 million, as adjusted for non-cash income and expenses totaling $1.5 million (which includes adjustments for equity-based compensation, depreciation and amortization, loss from equity method investment and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities of approximately $0.9 million.

Our cash used in operating activities during the year ended December 31, 2023 totaled approximately $20.0 million, comprising (i) our net loss of $20.8 million, as adjusted for non-cash income and expenses totaling $1.3 million (which includes adjustments for equity-based compensation, depreciation and amortization, a loss on disposal of fixed assets, and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities of approximately $0.5 million.

Our cash used in operating activities during the year ended December 31, 2025 totaled approximately $15.9 million, comprising (i) our net loss of $16.6 million, as adjusted for non-cash income and expenses totaling $1.9 million (which includes adjustments for equity-based compensation, depreciation and amortization, impairment of a non-financial asset, amortization/accretion of marketable securities and credit loss allowance), and (ii) changes in operating assets and liabilities using approximately $1.3 million.

Our cash used in operating activities during the year ended December 31, 2024 totaled approximately $19.4 million, comprising (i) our net loss of $20.0 million, as adjusted for non-cash income and expenses totaling $1.5 million (which includes adjustments for equity-based compensation, depreciation and amortization, loss from equity method investment, and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities using approximately $0.9 million.

Investing Activities

Our cash provided by investing activities during the year ended December 31, 2024 totaled approximately $13.2 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities) partially offset by an investment of $0.1 million in Impilo.

Our cash provided by investing activities during the year ended December 31, 2025 totaled approximately $15.1 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities).

Financing Activities

Our cash provided by financing activities during the year ended December 31, 2025 totaled $0.6 million in proceeds primarily from the issuance of shares of $0.8 million through our ATM Agreement (as defined below) partially offset by tax withholding-related payments on net share settlement equity awards to employees of $0.3 million.

Our cash used in financing activities during the year ended December 31, 2024 totaled $0.2 million, consisting primarily of tax withholding-related payments on net share settlement equity awards to employees.

Our cash provided by financing activities during the year ended December 31, 2023 totaled $0.4 million, consisting of proceeds from the issuance of shares through our ATM Agreement (as defined below) of $0.3 million, option exercise proceeds of $0.2 million partially offset by tax withholding-related payments of $0.1 million on net share settlement equity awards to employees.

Liquidity and Capital Requirements Outlook

To meet our short and long-term liquidity needs, we expect to use existing cash balances, marketable securities and a variety of other means.

As of December 31, 2025, we had cash and cash equivalents of approximately $16.0 million.

We will need to raise additional capital to fund our planned future operations.

However, we cannot guarantee that we will be able to obtain sufficient additional funding or that if we do obtain additional funding, that such funding will be obtainable on terms satisfactory to us.

Based on our current business plan and existing capital resources, management has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of twelve months from the date of issuance of the accompanying consolidated financial statements.

The accompanying financial statements have been prepared on a going concern basis and do not include any adjustments to the carrying amounts and classification of assets and liabilities that may be necessary if we were unable to continue as a going concern.

To meet our short and long-term liquidity needs, we expect to use existing cash balances and a variety of other means.

Other sources of liquidity could include additional potential issuances of debt or equity securities in public or private financings, partnerships and/or collaborations and/or sale of assets.

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We will also continue to seek, as appropriate, grants for scientific and clinical studies from various governmental agencies and foundations, and other sources of non-dilutive funding.

We believe that our cash on hand and marketable securities will enable us to fund operating expenses for at least the next 12 months following the issuance of our financial statements.

Our future capital requirements are difficult to forecast and will depend on many factors, including the timing and nature of any other strategic transactions that we undertake and our ability to establish and maintain collaboration partnerships, in-license/out-license or other similar arrangements and the financial terms of such agreements.

As discussed above under recent developments, in January 2026, we entered into the Term Sheet with Kuva for the proposed acquisition of us by Kuva.

However, there can be no assurance that the Purchase Agreement will be entered into and the Offer and the Merger will be consummated.

Refer to Item 1A.

“Risk Factors” for a summary of risks related to the proposed transaction.

If the proposed acquisition does not occur, we may pursue other strategic alternatives.

Our future capital requirements are difficult to forecast and will depend on many factors, including the timing and nature of the proposed acquisition by Kuva, any other strategic transactions that we undertake and our ability to establish and maintain collaboration partnerships, in-license/out-license or other similar arrangements and the financial terms of such agreements.

On June 4, 2021, we entered into the ATM Agreement with H.C.

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As of the date of this filing and so long as our public float remains below $75.0 million, we are subject to limitations pursuant to General Instruction I.B.6 of Form S-3 (the “Baby Shelf Limitation”), which limits the amount we can offer to up to one-third of our public float during any trailing 12-month period.

Subsequent to the

filing of a prospectus supplement to our Registration Statement on Form S-3 (File No.

Subsequent to the filing of a prospectus supplement to our Registration Statement on Form S-3 (File No.

333-279034) relating to the at the market offering on August 21, 2024, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $29.6 million.

Pursuant to the Baby Shelf Limitation, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of such prospectus supplement filing, the aggregate amount of securities that we are permitted to offer and sell as of the date of this Annual Report on Form 10-K, is $9,855,890, which amount is equal to one-third of the aggregate market value of our common stock held by non-affiliates as of August 20, 2024.

Pursuant to the Baby Shelf Limitation, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of such prospectus supplement filing, the aggregate amount of securities that we are permitted to offer and sell pursuant to the ATM Agreement as of the date of this Annual Report on Form 10-K, is $9,855,890, which amount is equal to one-third of the aggregate market value of our common stock held by non-affiliates as of August 20, 2024.

If our public float exceeds $75.0 million on a future measurement date, the Company will no longer be subject to the Baby Shelf Limitation.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis