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Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-11-06 · 109 added, 87 removed, 107 unchanged (65% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are subject to significant risks and uncertainties.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties.

There is no guarantee that our clinical development programs will be successful or result in the necessary regulatory approvals.

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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 Quarterly Report and in our 2025 Form 10-K.

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.

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.

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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.

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

These data are expected to be presented at a scientific meeting during the fourth quarter of 2025.

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 recently at a scientific meeting during the fourth quarter of 2025.

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, with and without added immunotherapy, for pancreatic cancer.

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

Currently, certepetide is 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.

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.

Development Programs

Targeted Solid Tumor Penetration via CendR Active Transport

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These factors, i.e., the combination of a dense stroma and an immunosuppressive TME, negatively impact the ability of many therapeutic agents to optimally treat these cancers.

To address the tumor stroma’s role as a key impediment to effective treatment, our approach is to activate the C-end rule (“CendR”), or CendR active transport mechanism, a naturally occurring transport system.

To address the tumor stroma’s role as a key impediment to effective treatment, we make use of the C-end rule (“CendR”) active transport mechanism, a naturally occurring transport system.

Our investigational drug, certepetide (a specific, proprietary internalizing R-G-D or iRGD peptide), activates this transport system in a tumor-specific manner (Sugahara, Science, 2010).

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Co-administration does not create a new chemical entity (“NCE”) with its attendant development and regulatory hurdles, thereby providing an anticipated faster-to-clinic and faster-to-market product opportunity for a range of combination therapies.

That said, an attractive life-cycle management strategy for certepetide would be to molecularly bind it to a variety of anti-cancer agents (as an alternative to co-administration), thereby creating new NCEs with the potential for distinct patent protection, compositionally or otherwise.

That said, an attractive life-cycle

management strategy for certepetide would be to molecularly bind it to a variety of anti-cancer agents (as an alternative to co-administration), thereby creating new NCEs with the potential for distinct patent protection, compositionally or otherwise.

Certepetide has demonstrated favorable safety, tolerability, and activity to date in clinical trials enhancing the selective delivery of standard-of-care chemotherapies for mPDAC.

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The ability of certepetide and iRGD peptides to modify the TME to enhance delivery and efficacy of co-administered drugs has been demonstrated in many preclinical models in a range of solid tumors.

Lisata, its collaborators, and research groups around the world have published nearly 400 scientific papers related to the benefits of internalizing RGD peptides and the CendR pathway.

We, our collaborators, and research groups around the world have published more than 400 scientific papers related to the benefits of iRGD peptides and the CendR pathway.

Clinically, certepetide has been the subject of multiple Phase 1 and Phase 2 trials.

These recent studies include a Phase 1b/2a study in first line mPDAC patients.

Study CEND1-201 was conducted in China by our development partner, Qilu Pharmaceutical.

These studies include a Phase 1b/2a study in first line mPDAC patients.

Study CEND1-201 was conducted in China by our former licensee, Qilu Pharmaceutical.

Two dose levels of certepetide (1.6 and 3.2 mg/kg) were combined with SoC chemotherapy (gemcitabine and nab-paclitaxel).

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The ORR was 41.5% for all doses.

The ORR was 44.0% and 39.3% in 1.6 mg/kg group and in 3.2 mg/kg group, respectively.

The ORR was 44.0% and 39.3% in the 1.6 mg/kg group and 3.2 mg/kg group, respectively.

The DCR was 86.8% for all doses.

The DCR in 1.6 and 3.2 mg/kg groups was 92.0% and 82.1%, respectively.

The DCR in the 1.6 mg/kg group and 3.2 mg/kg group was 92.0% and 82.1%, respectively.

The median PFS was 5.82 months for all doses combined.

The median PFS was 7.36 months and 5.75 months in 1.6 mg/kg group and in 3.2 mg/kg group, respectively.

The median PFS was 7.36 months and 5.75 months in the 1.6 mg/kg group and 3.2 mg/kg group, respectively.

The median OS was 11.10 months for all doses combined.

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The adverse event profile at both dose levels was similar to that for SoC alone.

Qilu has completed Phase 2 enrollment (n=96) in first line mPDAC in combination with SoC gemcitabine and nab-paclitaxel.

Currently, certepetide is also the subject of a Phase 2b trial in first-line mPDAC patients, the ASCEND trial.

We are collaborating with the academic sponsor of the ASCEND trial, the Australasian Gastrointestinal Clinical Trials Group (AGITG) along with the University of Sydney to execute the study at 25 sites in Australia and New Zealand.

The Phase 2 double-blind, randomized (2:1), placebo-controlled, multi-center ASCEND trial is evaluating certepetide in combination with SoC chemotherapy (gemcitabine and nab-paclitaxel) for the treatment of mPDAC.

Qilu has informed us that they completed enrollment in the Phase 2 CEND1-202 study (n=96) in first line mPDAC in combination with SoC gemcitabine and nab-paclitaxel.

We have not received a final clinical study report from the trial nor do we expect to, given that rights to certepetide have reverted to Lisata based on a mutual license termination agreement with Qilu, and there is no obligation on Qilu’s part that such a report is to be received by Lisata.

Additionally, since Qilu was the sponsor of the aforementioned Phase 2 trial, Lisata does not own rights to any of the data.

Certepetide was also the subject of a Phase 2b trial in first-line mPDAC patients, the ASCEND trial.

We collaborated with the academic sponsor of the ASCEND trial, the Australasian Gastrointestinal Clinical Trials Group (AGITG) along with the University of Sydney to conduct the study at 25 sites in Australia and New Zealand.

The Phase 2 double-blind, randomized (2:1), placebo-controlled, multi-center ASCEND trial evaluated certepetide in combination with SoC chemotherapy (gemcitabine and nab-paclitaxel) for the treatment of mPDAC.

The original ASCEND protocol included one dosing scheme for certepetide.

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The amended protocol was designed to assess the efficacy of two different dosing regimens of certepetide in two separate cohorts:

Cohort A, with 95 patients receiving a single intravenous (IV) dose of certepetide 3.2 mg/kg or placebo in combination with SoC, and Cohort B, with 63 patients receiving two IV doses of certepetide 3.2 mg/kg or placebo administered 4 hours apart in combination with SoC.

Cohort A, where 95 patients received a single intravenous (IV) dose of certepetide 3.2 mg/kg or placebo in combination with SoC, and Cohort B, where 63 patients received two IV doses of certepetide 3.2 mg/kg or placebo administered 4 hours apart in combination with SoC.

The preliminary data from Cohort A were reported at the ASCO GI meeting on January 24, 2025, demonstrating a median overall survival (mOS) of 12.68 months for the certepetide treated group, compared to 9.72 months for the placebo treated group.

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The preliminary data from Cohort B were presented at the ESMO-GI meeting in July 2025, demonstrating a six-month progression-free survival (“6MPFS”) of 60.8% for the certepetide-treated group, whereas the 6MPFS in the placebo-treated group was 25%.

Median progression-free survival (“mPFS”) was 7.5 months for the certepetide-treated group and 4.7 months for the placebo-treated group.

Median progression-free survival

(“mPFS”) was 7.5 months for the certepetide-treated group and 4.7 months for the placebo-treated group.

Objective response rate (“ORR”) was 45.2% for the certepetide-treated group and 19% for the placebo-treated group.

Median overall survival (“mOS”) was 10.32 months for the certepetide-treated group compared to 9.23 months for the placebo-treated group.

A comparison of the preliminary data from Cohorts A and B indicates that the addition of two doses of certepetide (Cohort B regimen) to SoC chemotherapy resulted in a clinically meaningful improvement in both PFS and ORR for patients with mPDAC.

These clinically significant findings provide compelling support for the continued and expedited investigation of

certepetide as a novel therapeutic agent for the treatment of metastatic pancreatic cancer.

The adverse event profile of Cohorts A and B has been similar in subjects treated with certepetide compared to placebo, confirming previous observations of certepetide’s benign safety profile.

Additional data from Cohorts A and B was presented at the ESMO annual meeting in October 2025 with final data and conclusions of the ASCEND study anticipated to be available in the first quarter of 2026.

Additionally, certepetide is currently the subject of ongoing clinical trials being conducted globally in a variety of solid tumor types and in combination with several chemotherapy and immunotherapy anti-cancer regimens.

The following diagram summarizes these studies.

Additional Out-licensing Opportunities

Our intellectual property portfolio comprises notable programs and inventions available for out-licensing and/or partnering in order to augment or continue their clinical development.

Our current long-term strategy focuses on advancing our therapies through development, with the ultimate objective of obtaining market authorizations in major markets and commercializing them, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions.

We believe that we are well-positioned to realize potentially meaningful value increases within our own proprietary pipeline if we are successful in advancing our product candidates to their next significant development milestones.

A comparison of the preliminary data from Cohorts A and B indicated that the addition of two doses of certepetide (Cohort B regimen) to SoC chemotherapy resulted in a clinically meaningful improvement in both PFS and ORR for patients with mPDAC.

We believe that these clinically significant findings provide compelling support for the continued and expedited investigation of certepetide as a novel therapeutic agent for the treatment of metastatic pancreatic cancer.

The adverse event profile of Cohorts A and B remain similar in subjects treated with certepetide compared to placebo, confirming previous observations of certepetide’s benign safety profile.

Additional data from Cohorts A and B was presented at the ESMO annual meeting in October 2025 with a final study report of the ASCEND study anticipated to be made available later this year.

Additionally, certepetide remains the subject of ongoing clinical trials being conducted globally in a variety of solid tumor types and in combination with several chemotherapy and immunotherapy anti-cancer regimens.

These include three investigator-initiated trials:

a Phase 2a trial in glioblastoma multiforme (GBM) in patients with newly diagnosed GBM, a Phase 1b/2a trial (iLSTA) in locally advanced non-resectable pancreatic ductal adenocarcinoma, and a Phase 1b/2a trial (CENDIFOX) in pancreatic, colon, and appendiceal cancers.

Data announcements and final study reports from these investigator-initiated trials are entirely within the purview of the academic sponsors.

Lisata’s Phase 2a BOLSTER trial, evaluating a single 3.2 mg/kg dose of certepetide in combination with standards of care in first and second-line cholangiocarcinoma completed and demonstrated no evidence of benefit or increase in adverse events when a single 3.2 mg/kg dose of certepetide was added to standard of care.

Recent Developments

Proposed Acquisition by Kuva Labs Inc.

On March 6, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Kuva Labs Inc., and Kuva Acquisition Corp., a wholly owned subsidiary of Kuva (“Purchaser”).

Pursuant to the Merger Agreement and upon the terms and subject to the conditions thereof, Purchaser agreed to commence a tender offer (the “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” in our 2025 Form 10-K for a summary of risks related to the proposed transaction.

On April 2, 2026, we agreed to extend the date by which Kuva was obligated to commence the tender offer for all of the outstanding shares of common stock of the Company pursuant to the Merger Agreement from April 3, 2026, to April 13, 2026, or such other date as may be agreed to between us and Kuva.

On May 3, 2026, we, Kuva and Purchaser entered into an amendment and waiver (the “Amendment and Waiver”) to the Merger Agreement pursuant to which we agreed to extend the date by which Purchaser is obligated to commence the Offer from April 13, 2026 to May 29, 2026, or such other date as may be agreed to between us and Kuva.

Under the Amendment and Waiver, Kuva has also agreed to pay certain of our expenses, up to $1.1 million in the aggregate, until commencement of the Offer.

From the date of the Amendment and Waiver until May 29, 2026, we have agreed not to pursue any claim against Kuva, Purchaser or their affiliates arising from or relating to the Merger Agreement or the transactions contemplated thereby.

Upon commencement of the Offer and payment by Kuva of all amounts then due under the Amendment and Waiver, we shall irrevocably waive any claims to the extent arising from or relating to the Purchaser’s failure to commence the Offer by April 13, 2026.

Our agreements not to pursue certain claims and to waive certain claims as described above are subject to termination by us if (i) Kuva fails to make any payment under the Amendment and Waiver when due or (ii) Kuva commits a material breach of the Amendment and Waiver (other than a payment default) that materially adversely affects the transactions contemplated by the Merger Agreement and fails to cure such breach within two business days after written notice thereof from us.

Purchaser has not yet commenced the Offer.

On May 4, 2026, Kuva announced its intention to commence the Offer by May 29, 2026.

There can be no assurance as to when the Offer will commence, if at all.

The foregoing description of the Merger Agreement is only a summary of certain material provisions thereof, and does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to our 2025 Form 10-K.

In addition, the foregoing description of the Amendment and Waiver does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment and Waiver, which is filed as Exhibit 2.1 to our Current Report on Form 8-K filed on May 4, 2026.

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

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and September 30, 2024 (in thousands):

Three Months Ended September 30,

2025 2024 Change

Revenue $ — $ — $ —

Operating Expenses:

Research and development 1,959 2,542 (583)

General and administrative 2,455 2,794 (339)

Total operating expenses 4,414 5,336 (922)

Loss from operations (4,414) (5,336) 922

Total other income 165 406 (241)

Benefit from income taxes — — —

Net loss $ (4,249) $ (4,930) $ 681

Overall, net losses were $4.2 million for the three months ended September 30, 2025, compared to $4.9 million for the three months ended September 30, 2024.

We did not have any revenue for the three months ended September 30, 2025 and September 30, 2024.

Operating Expenses

For the three months ended September 30, 2025, operating expenses totaled $4.4 million, compared to $5.3 million for the three months ended September 30, 2024, representing a decrease of $0.9 million or 17.3%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $2.0 million for the three months ended September 30, 2025, compared to $2.5 million for the three months ended September 30, 2024, representing a decrease of $0.6 million or 22.9%.

This was primarily due to lower spend on chemistry, manufacturing and controls (“CMC”) and a reduction in Clinical department expenses partially offset by an increase in our Phase 2a proof-of-concept BOLSTER trial costs.

• General and administrative expenses were approximately $2.5 million for the three months ended September 30, 2025, compared to $2.8 million for the three months ended September 30, 2024, representing a decrease of $0.3 million or 12.1%.

This was primarily due to lower spend on consulting and savings resulting from elimination of an employee position.

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

The use of these instruments has resulted in charges to the results of operations, which have been significant in the past.

Other Income (Expense)

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities for the three months ended September 30, 2025 and 2024.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and September 30, 2024 (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table summarizes our results of operations for the three months ended March 31, 2026 and March 31, 2025 (in thousands):

Three Months Ended March 31,

2026 2025 Change

Revenue $ 70 $ — $ 70

Operating Expenses:

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Net loss $ (4,489) $ (4,724) $ 235

Overall, net losses were $13.6 million for the nine months ended September 30, 2025, compared to $15.4 million for the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, revenue totaled $70 thousand in connection with an upfront license fee related to a research license agreement.

We did not have revenue for the nine months ended September 30, 2024.

Overall, net losses were $4.5 million for the three months ended March 31, 2026, compared to $4.7 million for the three months ended March 31, 2025.

Operating Expenses

For the nine months ended September 30, 2025, operating expenses totaled $15.2 million, compared to $17.5 million for the nine months ended September 30, 2024, representing a decrease of $2.3 million or 12.9%.

For the three months ended March 31, 2026, operating expenses totaled $4.9 million, compared to $5.8 million for the three months ended March 31, 2025, representing a decrease of $0.9 million or 15.5%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $6.8 million for the nine months ended September 30, 2025, compared to $8.4 million for the nine months ended September 30, 2024, representing a decrease of $1.6 million or 18.7%.

This was primarily due to lower spend on chemistry, manufacturing and controls (“CMC”), a reduction in clinical research organization (“CRO”) expenses, patient treatment costs and site expenses associated with our Phase 2a proof-of-concept BOLSTER trial and a reduction in Clinical department expenses 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 $8.4 million for the nine months ended September 30, 2025, compared to $9.1 million for the nine months ended September 30, 2024, representing a decrease of $0.7 million or 7.6%.

This was primarily due to one-off settlement costs in the prior year in addition to lower spending on consulting in the current year partially offset by severance costs in the current year.

• Research and development expenses were approximately $1.2 million for the three months ended March 31, 2026, compared to $2.6 million for the three months ended March 31, 2025, representing a decrease of $1.4 million or 53.7%.

This was primarily due to a reduction in expenses associated with our Phase 2a proof-of-concept Bolster trial which completed in the prior year and a reduction in Clinical department expenses as a result of the elimination of several positions during the prior year.

• General and administrative expenses were approximately $3.7 million for the three months ended March 31, 2026, compared to $3.2 million for the three months ended March 31, 2025, representing an increase of $0.5 million or 15.2%.

This was primarily due to an increase in legal fees and consulting expenses in connection with the proposed acquisition by Kuva Labs Inc.

partially offset by severance costs in the prior year and lower equity expense in the current year.

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

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Other Income (Expense)

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities and losses on sales of our New Jersey net operating losses for the nine months ended September 30, 2025 and 2024 and investments in Impilo which were fully expensed under the equity method of accounting within the prior year period.

Income Tax Benefit

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.

In February 2026, 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 $0.3 million.

The $0.4 million of our NJ NOL tax benefits have been recorded as a benefit from income taxes and the loss on sale of $38 thousand recorded in other income (expense).

In January 2025, 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 $0.9 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 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 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).

Analysis of Liquidity and Capital Resources

As of September 30, 2025, we had cash and cash equivalents of approximately $19.0 million, working capital of approximately $17.0 million, and stockholders’ equity of approximately $17.4 million.

During the nine months ended September 30, 2025, we met our immediate cash requirements through existing cash balances.

As of March 31, 2026, we had cash and cash equivalents of approximately $13.1 million, working capital of approximately $10.7 million, and stockholders’ equity of approximately $10.9 million.

During the three months ended March 31, 2026, we met our immediate cash requirements through existing cash balances.

Additionally, we used equity and equity-linked instruments to pay for services and compensation.

Net cash (used in) or provided by, operating, investing and financing activities were as follows (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities $ (3,083) $ (5,402)

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Operating Activities

Our cash used in operating activities during the nine months ended September 30, 2025 was $12.7 million, which is comprised of (i) our net loss of $13.6 million, adjusted for non-cash expenses totaling $1.1 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $0.1 million.

Our cash used in operating activities during the nine months ended September 30, 2024 was $14.8 million, which is comprised of (i) our net loss of $15.4 million, adjusted for non-cash expenses totaling $0.9 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 $0.4 million.

Our cash used in operating activities during the three months ended March 31, 2026 was $3.1 million, which is comprised of (i) our net loss of $4.5 million, adjusted for non-cash expenses totaling $0.4 million (which includes adjustments for equity-based compensation and depreciation), and (ii) changes in operating assets and liabilities providing approximately $1.0 million.

Our cash used in operating activities during the three months ended March 31, 2025 was $5.4 million, which is comprised of (i) our net loss of $4.7 million, adjusted for non-cash expenses totaling $0.5 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $1.2 million.

Investing Activities

Our cash provided by investing activities during the nine months ended September 30, 2025 totaled $15.1 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities).

Our cash provided by investing activities during the nine months ended September 30, 2024 totaled $11.8 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 Therapeutics.

Our cash provided by investing activities during the three months ended March 31, 2026 totaled $0.

Our cash provided by investing activities during the three months ended March 31, 2025 totaled $9.4 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 nine months ended September 30, 2025 totaled $0.4 million and consisted of $0.6 million in proceeds primarily from the issuance of shares 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 nine months ended September 30, 2024 totaled $0.1 million and consisted primarily of tax withholding-related payments on net share settlement equity awards to employees.

Our cash provided by financing activities during the three months ended March 31, 2026 totaled $0.2 million and consisted primarily of warrant exercise proceeds of $0.2 million, option exercise proceeds of $0.1 million partially offset by tax withholding-related payments on net share settlement equity awards to employees of $0.2 million.

Our cash used in financing activities during the three months ended March 31, 2025 totaled $23.0 thousand and consisted primarily of tax withholding-related payments on net share settlement equity awards to employees of $0.2 million partially offset by $0.2 million in proceeds from the issuance of shares through our ATM Agreement (as defined below).

Liquidity and Capital Requirements Outlook

As of March 31, 2026, we had cash and cash equivalents of approximately $13.1 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.

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The demand for the equity and debt of pharmaceutical companies like ours is dependent upon many factors, including the general state of the financial markets.

During times of extreme market volatility, capital may not be available on favorable terms, if at all.

During times of

extreme market volatility, capital may not be available on favorable terms, if at all.

Our inability to obtain such additional capital could materially and adversely affect our business operations.

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 will enable us to fund current operating expenses for at least the next 12 months following the issuance of our financial statements.

As discussed above under recent developments, on March 6, 2026, we entered into the Merger Agreement with Kuva.

Pursuant to the Merger Agreement, Kuva agreed to commence the Offer to purchase all of the issued and outstanding shares of common stock of the Company in exchange for (i) $5.00 per share, net to the seller in cash, without interest, but subject to any applicable withholding of taxes plus (ii) one non-tradeable CVR, which represents the contractual right to receive a contingent cash payment of $1.00 per CVR if a New Drug Application or similar registration is filed or formally accepted for review by the FDA or any governmental authority in any jurisdiction with respect to any pharmaceutical product that contains or incorporates the product candidate referred to as of the date of the Merger Agreement as certepetide, alone or in combination with one or more other therapeutically active ingredients, including all formulations, dosages, or modes of delivery, for any indication or patient population.

On April 2, 2026, we agreed to extend the date by which Kuva was obligated to commence the Offer from April 3, 2026 to April 13, 2026.

On May 3, 2026, we, Kuva and Purchaser entered the Amendment and Waiver to the Merger Agreement pursuant to which we agreed to extend the date by which Purchaser is obligated to commence the Offer from April 13, 2026 to May 29, 2026, or such other date as may be agreed to between us and Kuva.

Under the Amendment and Waiver, Kuva has also agreed to pay certain of our expenses, up to $1.1 million in the aggregate, until commencement of the Offer.

Purchaser has not yet commenced the Offer.

On May 4, 2026, Kuva announced its intention to commence the Offer by May 29, 2026.

There can be no assurance as to when the Offer will commence, if at all.

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 any other strategic transactions that we undertake;

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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.

During the nine months ended September 30, 2025, we issued 197,980 shares of common stock under the ATM Agreement for net proceeds of $600,663.

Since inception through September 30, 2025, we have issued 266,153 shares of common stock under the ATM Agreement for net proceeds of $881,510.

During the three months ended March 31, 2026, we did not issue any shares of common stock under the ATM Agreement.

Since inception, we have issued 330,938 shares of common stock under the ATM Agreement for net proceeds of $1,065,608.

While we continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital generating efforts may worsen as existing resources are used.

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Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates during the nine months ended September 30, 2025, compared to those reported in our 2024 Form 10-K.

There have been no material changes in our critical accounting policies and estimates during the three months ended March 31, 2026, compared to those reported in our 2025 Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-Q

Item 2. Management’s Discussion and Analysis