OS Therapies Inc 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this annual report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview We are a clinical stage biopharmaceutical company focused on the identification, development and commercialization of treatments for Osteosarcoma (OS) and other solid tumors. Our mission is to address the significant need for new treatments in cancers of the bone in children and young adults. Osteosarcoma is an extremely challenging and often aggressive cancer that has particular treatment challenges due to its location, changing genotypes and high metastases rates. We are currently seeking to answer the call for new treatments that will prevent metastasis and the recurrence of metastases with our lead core product candidate OST-HER2 (also known as OST31-164), a cancer immunotherapy product candidate that produces a cellular immune response against the cancer antigen HER2. In 2021, we opened a clinical study to produce data for the FDA to evaluate the safety and efficacy of OST-HER2 in patients after resection of recurrent Osteosarcoma, which achieved full enrollment of 41 patients in October 2023. In the first quarter of 2025, we announced that our Phase IIb clinical trial achieved its primary endpoint with statistical significance. In October 2025, we announced final two-year overall survival data from the Phase IIb trial, in which 75% (27 of 36 evaluable patients) of OST-HER2-treated patients achieved two-year overall survival from the most recent pulmonary resection, compared with 40% in historical control patients (p < 0.0001). OST-HER2 was observed to be well-tolerated in the study. In January 2026, we announced positive immune biomarker data from the Phase IIb trial indicating that activation of immune blood biomarkers in the interferon gamma pathway correlated with, and was predictive of, overall survival, distinguishing long-term survivors (≥ two years) from short-term survivors (< one year). These biomarker findings are based on exploratory analyses and have not been validated as surrogate endpoints for clinical benefit. Based on the totality of the data generated to date, including the observed survival outcomes, safety profile and the significant unmet medical need in this patient population, we intend to engage with the FDA regarding potential regulatory pathways for OST-HER2. We have engaged in ongoing regulatory interactions with the FDA, the United Kingdom MHRA, and the EMA regarding the clinical and biomarker data for OST-HER2 in recurrent, fully resected pulmonary metastatic Osteosarcoma. Following submission of the Non-Clinical and CMC modules of our BLA to the FDA at the end of January 2026, we anticipate submitting the clinical BLA module following an expected Type B meeting with the FDA in the second quarter of 2026 and completing conditional MAA submissions to both the MHRA and the EMA in the second quarter of 2026. We also anticipate releasing additional biomarker data in the second quarter of 2026 to further characterize immune pathway activation and its relationship to clinical outcomes. We expect to initiate confirmatory clinical studies in the third quarter of 2026 in support of conditional approval pathways. If OST-HER2 receives approval under the FDA’s Accelerated Approval Program prior to September 30, 2029, we would become eligible to receive a Priority Review Voucher under the Rare Pediatric Disease Designation Program. 58 Upon success in gaining regulatory approval from the FDA with OST-HER2 in Osteosarcoma, we intend to evaluate OST-HER2’s potential use, both alone and in combination with HER2 targeting antibodies such as Herceptin®, in other solid tumors including breast, esophageal and lung cancers. OST-HER2 has potential uses in both the prevention of metastases in solid tumors, and therapeutically against HER2-expressing solid tumors treated with HER targeting antibodies. We also own rights to an OST-tADC platform, a next generation ADC silicone dioxide linker technology. “Tunable” is a term used in drug development that refers to the properties that can be influenced by chemical modifications, and “antibody-drug conjugate” or ADC is a term used to describe a drug made up of a monoclonal antibody attached to a cytotoxic payload, or a highly active and toxic pharmaceutical molecule, through chemical linkers. The ADC links an antibody that can home in on a targeted tumor to deploy the cytotoxic payload or toxic agent against the tumor. Furthering our founding mission, we intend to investigate clinical indications for OST-tADC in Osteosarcoma and other solid tumors. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are those that, in management’s view, are most important to the portrayal of a company’s financial condition and results of operations and most demanding on their calls on judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this annual report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements. Warrant Liability We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. 59 The Series A Warrants issued in connection with the PIPE Financing in December 2024 and January 2025 are recognized as a derivative liability in accordance with ASC 815. We recognize the warrant instruments as a liability at fair value and adjust the instruments to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date until exercised or reclassified, and any change in fair value is recognized in our consolidated statements of operations. The fair value of the Series A Warrants was measured using a Binomial simulation model. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available, and accordingly, the actual results could differ significantly. The derivative warrant liability is classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities in 2024. In April 2025, after stockholder approval was obtained, this warrant liability was closed to stockholders’ equity. The following assumptions were made as of April 9, 2025 based on stockholder approval in the model for the aggregate warrants: (1) a fixed exercise price of $1.12 per share, which automatically reset and resulted in a reclassification of the warrant liability on April 9, 2025 to equity per ASC 815; (2) then-current common stock price of $1.34 per share on April 9, 2025; (3) discount rate of 4.06%; and (4) expected stock price volatility of 23.26%. Components of Our Results of Operations Revenue. We did not recognize revenues for the years ended December 31, 2025 and 2024. Operating Expenses. Our operating expenses are comprised primarily of research and development expenses, general and administrative expenses and licensing costs. Research and Development Expenses. Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include: ● personnel-related costs, including salaries, benefits and stock-based compensation expense, for employees engaged in research and development functions; ● expenses incurred in connection with our research programs, including under agreements with third parties, such as consultants and contractors and CROs; ● the cost of developing and scaling our manufacturing process and manufacturing drug substance and drug product for use in our research and preclinical and clinical studies, including under agreements with third parties, such as consultants and contractors and contract development and manufacturing organizations (CDMOs); and ● the cost of laboratory supplies and research materials. We track our direct external research and development expenses on a program-by-program basis. These consist of costs that include fees, reimbursed materials, and other costs paid to consultants, contractors, CDMOs, and CROs in connection with our preclinical, clinical and manufacturing activities. We do not allocate employee costs, costs associated with our discovery efforts, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and, as such, are not separately classified. We expect that our research and development expenses will increase substantially as we advance OST-HER2 and OST-tADC into clinical development and expand our discovery, research and preclinical activities. General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include professional fees for legal, consulting, investor and public relations and accounting and audit services. 60 We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company. Licensing Costs. Costs incurred in obtaining technology licenses and asset purchases are charged to licensing costs if the technology licensed has not reached technological feasibility which includes manufacturing, clinical, intellectual property and/or regulatory success which has no alternative future use. The licenses purchased by us require substantial completion of research and development and regulatory and marketing approval efforts in order to reach technological feasibility. Interest Expense. We evaluated the convertible notes issued by us from July 2018 to April 2024 in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the convertible notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the convertible notes were recorded at the amortized cost. Cumulative Series A Preferred Stock Dividend. The Series A preferred stock dividend requirement represents the coupon dividends on our preferred stock that has since been converted and is identified as a separate component of our statement of operations to compute net income (loss) available to common stockholders. The coupon dividends are computed at 5% of the principal per annum and are recorded monthly. The cumulative accrued dividend as of December 31, 2025 and 2024 was $375,000 and $375,000, respectively. The Series A preferred stock was converted into common stock on a 1:1 basis in February 2024, and the last coupon dividend was issued in the quarter ended March 31, 2024. Income Taxes. Since our inception, we have not recognized income tax benefits for the net operating losses (“NOLs”) incurred or the research and development (“R&D”) tax credits generated each year due to uncertainty regarding the realization of these benefits. As of December 31, 2025 and 2024, we had federal NOLs of $33,561,091 and $22,236,580, respectively. Our 2019 NOL carryforward of $292,144 will expire in tax years through 2037. NOLs generated in tax years 2020 and later may carry forward indefinitely; however, the deductibility of such NOLs is subject to certain limitations under the Code. Accordingly, we have established a full valuation allowance to offset our deferred tax assets due to uncertainty regarding the realization of these benefits. Our issuances of common stock have resulted in ownership changes as defined by Section 382 of the Code. We have not yet performed a formal Section 382 study, and it is possible that a future analysis in 2026 could conclude that a substantial portion, or potentially all, of our NOL and R&D tax credit carryforwards may be limited or rendered unusable under Sections 382 and 383 of the Code. As a result, a portion of these carryforwards could expire unused. We are subject to U.S. federal tax examinations for the year 2021, given that NOL carryforwards from 2019 and subsequent years may be applied to current or future tax returns. Deferred Offering Costs. Deferred offering costs consisted of legal, accounting, printing and filing fees that we capitalized, which were offset against the gross proceeds from our initial public offering. 61 Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024: December 31, 2025 2024 Expenses: Research and development expenses $ 16,360,725 $ 2,839,060 General and administrative 12,344,976 3,974,786 Total operating expenses 28,705,701 6,813,846 Loss from operations (28,705,701 ) (6,813,846 ) Other income (expenses): Interest income 249 - Interest expense - (2,051,839 ) Non-operating income - 33,997 Non-operating expenses (1,472,995 ) (51,250 ) Change in fair value of warrant liability 1,424,603 - Total other income (expense) (48,143 ) (2,069,092 ) Net loss (28,753,844 ) (8,882,938 ) Research and Development Expenses. Research and development expenses were approximately $16.4 million for the year ended December 31, 2025, compared to approximately $2.8 million for the year ended December 31, 2024. The increase was primarily driven by higher vendor costs related to our ongoing efforts to pursue FDA approval for our Phase IIb clinical trial and the preparation of data for submission to various global regulatory authorities. This increase was partially offset by a reduction in vendor expenses associated with our OST-tADC platform technology. For the years ended December 31, 2025 and 2024, our direct research and development expenses related to OST-HER2 primarily consisted of laboratory fees, vendor costs, and staff payroll. In 2025, these expenses included approximately $1.6 million for laboratory fees and clinical support related to Phase IIb clinical trial preparation, $12.7 million for advisor fees, and $0.2 million for legal costs associated with the completion of IND-enabling studies. Direct research and development expenses related to our OST-tADC platform were approximately $0.0 million for both the years ended December 31, 2025 and 2024. General and Administrative Expenses. General and administrative expenses were approximately $12.3 million for the year ended December 31, 2025, compared to approximately $4.0 million for the year ended December 31, 2024. The increase was primarily due to higher marketing and investor relations costs of $2.4 million, as well as advisory fees of $3.3 million and legal fees of $1.6 million incurred in connection with the PIPE Financing and equity line of credit that was terminated. Interest Expense. Interest expense was approximately $0.0 million for the year ended December 31, 2025, compared to approximately $2.0 million for the year ended December 31, 2024. 62 Liquidity and Capital Resources Operating Losses Since our inception, we have incurred significant operating losses. Our ability to generate sufficient product revenue to achieve profitability will depend on the successful development and eventual commercialization of our product candidates. For the years ended December 31, 2025 and 2024, we reported net losses of approximately $28.7 million and $8.6 million, respectively, and had accumulated deficits of approximately $67.2 million and $38.0 million, respectively. We expect to continue incurring significant expenses and increasing operating losses for the foreseeable future. As of December 31, 2025 and 2024, we had cash of approximately $0.3 million and $5.5 million, respectively. To date, we have primarily funded our operations through the sale of our securities in public offerings and private placements and warrant exercise inducement and exchange transactions, generating total gross proceeds of approximately $41.1 million as of March 26, 2026. We believe that the net proceeds from these transactions, together with our existing cash, will be sufficient to fund our operating expenses and capital expenditures for at least the next twelve months. Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: December 31, (In thousands) 2025 2024 Cash used in operating activities $ (14,239 ) $ (7,283 ) Cash used in investing activities (466 ) - Cash provided by financing activities 9,442 12,777 Net (decrease) increase in cash $ (5,263 ) $ 5,494 Operating Activities For the years ended December 31, 2025 and 2024, net cash used in operating activities was approximately $14.2 million and $7.3 million, respectively. This primarily reflected net losses of approximately $28.8 million and $8.9 million, partially offset by non-cash charges of approximately $5.4 million and $1.7 million, respectively, and net cash provided by changes in operating assets and liabilities of approximately $9.1 million and $(0.1) million, respectively. The changes in operating assets and liabilities for the years ended December 31, 2025 and 2024 primarily consisted of: an increase (decrease) in accounts payable of approximately $8.3 million and $(1.1) million, respectively; an increase in accrued interest of approximately $0.0 million and $0.6 million, respectively; and changes in accrued expenses of approximately $0.9 million and $0.4 million, respectively. For the years ended December 31, 2025 and 2024, non-cash charges were primarily due to changes in the fair value of our warrant liability of $(1.4) million and $0.0 million, respectively, as well as common stock issued for services and stock-based compensation of approximately $4.87 million and $0.3 million, respectively, and amortization of non-cash prepaids of $1.0 million and $0.0 million, respectively. Changes in accounts payable, accrued expenses and other current liabilities, and prepaid expenses and other current assets in each period primarily reflected the growth of our business, the advancement of our research programs, and the timing of vendor invoicing and payments. Investing Activities For the years ended December 31, 2025 and 2024, net cash used in investing activities was approximately $0.5 million and $0.0 million, respectively. 63 Financing Activities For the years ended December 31, 2025 and 2024, net cash provided by financing activities was approximately $9.4 million and $12.8 million, respectively. During 2025, cash inflows included approximately $1.1 million from our PIPE Financing and approximately $8.4 million from our warrant exercise inducement and related exchange and sale of common stock. Convertible Notes. We completed seven separate private financing transactions from July 2018 to April 2024 in which we issued convertible notes and raised total gross proceeds of $19,426,449 from accredited investors. All of the convertible notes were automatically converted into shares of our common stock at the closing of our initial public offering. Demand Notes. On March 6, 2024 and June 28, 2024, we issued demand promissory notes to a lender who was an investor in one of our prior convertible notes rounds in a principal amount of $100,000 and $150,000, respectively. The demand notes bear interest at a rate of 8% per annum and the principal plus all accrued interest is payable upon demand by such lender. If such notes are not paid on demand by us, interest will accrue at a rate of the lesser of 16% per annum and the highest rate of interest allowable under Maryland law. As of August 14, 2024, we repaid the demand notes in full. BlinkBio. On August 19, 2020, we issued a convertible note with a principal amount of $2,400,000 (the “BlinkBio Convertible Note”) to BlinkBio, Inc., which was a related party because our former Chairman, Colin Goddard, Ph.D., is the Chairman and Chief Executive Officer of BlinkBio, in exchange for the entry into the license agreement. On March 15, 2021, the principal and unpaid accrued interest of $100,000 of the BlinkBio Convertible Note converted into 1,302,082 shares of our Series A preferred stock and then distributed to BlinkBio stockholders. The BlinkBio Convertible Note had a conversion capitalization ceiling of $19.2 million, which limited the price a noteholder must pay in a convertible note-to-common stock conversion occurrence. On February 9, 2024, the 1,302,082 shares of our Series A preferred stock were converted into 651,041 shares of common stock (on a post-split basis). TEDCO Grant. In May 2021, we received the first of two tranches from TEDCO’s Rural & Underserved Business Recovery from Impact of Covid-19 (RUBRIC) Grant in the amount of $50,000. In October 2021, we received the second tranche of $50,000, which brought the total reimbursable grant amount to $100,000. We are obligated to report on and pay to TEDCO 3% of their quarterly revenues for a five-year period following the reward date. Income from grants and investments are not considered revenues. Royalties due to TEDCO are capped at 150% of the amount of the award, or $150,000. We have the option to eliminate the quarterly royalty obligation by making an advance payment prior to the end of the five-year period, in which case, we will receive a 10% reduction of the royalty cap percentage for each year prior to the expiration of the five-year reimbursement period that the grant is repaid in full. If we cease to meet eligibility requirements at any time, the reimbursement obligation will become due to TEDCO immediately; however, the discount for meeting the obligation will still apply. PIPE Financing On December 24, 2024, we entered the PIPE Purchase Agreement with certain institutional and accredited investors, substantially all of whom were existing stockholders, pursuant to which we issued an aggregate of 1,775,750 shares of Series A Preferred Stock and Series A Warrants exercisable into 1,775,750 shares of common stock, generating gross proceeds of approximately $7.1 million before fees and expenses. In connection with the PIPE Financing, we paid Brookline cash fees totaling $159,685 and $79,723 to Brookline and Brookline’s selected dealer, respectively, plus Agent Warrants to purchase an aggregate of 59,848 shares of common stock. 64 ATM Equity Offering Program and Sales On August 8, 2025, we entered into the Sales Agreement with the Sales Agents relating to shares of our common stock. Pursuant to the Sales Agreement, we may offer and sell shares of our common stock from time to time having an aggregate offering price of up to $18,000,000 through or to the Sales Agents. We will pay each of the Sales Agents a total commission for its services in acting as agent in the sale of common stock up to 3.0% of the gross sales price per share of all shares sold through it as agent under the Sales Agreement. The amount of proceeds we will receive will depend upon the actual number of shares of our common stock sold and the market price at which such shares are sold. Because there is no minimum offering amount required as a condition to close a sale, the actual total public offering amount, commissions and proceeds to us are not determinable at this time. Sales of our common stock under the Sales Agreement are being made pursuant to a prospectus supplement filed with the SEC on August 25, 2025. As of March 26, 2026, we have sold an aggregate of 282,679 shares of our common stock for aggregate gross proceeds of $530,162 pursuant to the Sales Agreement. Warrant Exercise Inducement and Exchange Offers On July 11, 2025, we completed a final closing of the First Inducement Offering. On September 2, 2025, we closed on the Second Inducement Offering. On January 14, 2026, we closed on the Third Inducement Offering. In connection with the First Inducement Offerings and Second Inducement Offering, and pursuant to certain inducement offer letter agreements, holders of Series A Warrants exercised for cash their Series A Warrants to purchase an aggregate of 7,154,338 shares of our common stock at the then current exercise price of $1.12 per share and in exchange we issued to such holders New Warrants to purchase up to an aggregate of 7,154,338 shares of our common stock at an exercise price of $3.00 per share, subject to adjustment as provided therein. The New Warrants are immediately exercisable from the date of issuance and have a term of exercise of five years from such date. The Third Inducement Offering was made to less than 10 accredited investors that held New Warrants to purchase up to an aggregate of 5,382,148 shares of our common stock having a then current exercise price of $3.00 or $2.10 per share. Pursuant to certain inducement offer letter agreements, such holders of New Warrants exercised for cash their New Warrants to purchase 2,499,558 shares of our common stock at a reduced exercise price of $1.40 per share and in exchange we issued to such holders 2026 Warrants to purchase up to an aggregate of 2,499,558 shares of our common stock at an exercise price of $1.40 per share, subject to adjustment as provided therein. The 2026 Warrants are immediately exercisable from the date of issuance and have a term of exercise of five years from such date. We engaged the Solicitation Agent to act as our exclusive warrant solicitation agent in connection with the Inducement Offerings and paid the Solicitation Agent a cash fee equal to 5.0%, 1.5% and 8.0% of the total gross cash proceeds received from the exercise by the holders of their respective warrants in connection with the First Inducement Offering, Second Inducement Offering and Third Inducement Offering, respectively. We also paid the Solicitation Agent $15,000 and $25,000 for its reasonable legal and other expenses in connection with the First Inducement Offering and Third Inducement Offering, respectively. The gross proceeds to us from the Inducement Offerings, before deducting transaction fees and other offering expenses, were approximately $11.5 million. We are using the net proceeds from the Inducement Offerings to support U.S. and international regulatory and pre-commercial efforts aimed at securing marketing authorizations for OST-HER2 in the prevention or delay of recurrent, fully resected, pulmonary metastatic Osteosarcoma, provide funding for our wholly owned subsidiary OS Animal Health’s proposed spin-off transaction preparations, and for general corporate purposes. 65 Privately Negotiated Warrant Exercise Inducement and Exchange Agreements From January 10, 2026 through February 2026, we entered into privately negotiated inducement offer letters, pursuant to which certain remaining holders of our New Warrants exercised for cash their New Warrants to purchase an aggregate of 123,216 shares of our common stock at a reduced exercise price of $1.40 per share and in exchange we issued new warrants to purchase up to an aggregate of 123,216 shares of our common stock at an exercise price of $1.40 per share, subject to adjustment as provided therein. Such new warrants are immediately exercisable from the date of issuance and have a term of exercise of five years from such date. We received gross proceeds of approximately $172,502 from the exercise of these New Warrants. 2026 Bridge Financing On March 4, 2026, pursuant to the Bridge SPA, we issued to certain accredited investors in the Bridge Financing (i) Bridge Notes in an aggregate principal amount of $2,200,000 and (ii) Bridge Warrants to purchase up to an aggregate of 1,666,667 shares of our common stock, for aggregate gross proceeds of $2,000,000, before deducting placement agent fees and other Bridge Financing expenses. The Bridge Notes mature on March 4, 2027 and accrue interest at a rate of 4.0% per annum. The Bridge Warrants were immediately exercisable upon issuance, expire five years from the date of issuance and have an exercise price of $1.40 per share, subject to adjustment as provided therein. The Bridge Notes were sold at a 10% original issue discount, such that for each $100,000 invested by a purchaser, such purchaser received a Bridge Note in the principal amount of $110,000. The Bridge Notes are convertible into shares of our common stock under certain circumstances. If we complete a “Qualified Offering,” defined as a registered public offering or registered direct offering resulting in at least $2.5 million in gross proceeds from new money investments, the outstanding principal, together with all accrued and unpaid interest, will automatically convert into the securities sold in such offering at the offering price. Additionally, prior to any such Qualified Offering or repayment of the Bridge Notes, holders may elect to convert the Bridge Notes, in whole or in part, into shares of our common stock at a conversion price equal to 90% of the average daily volume-weighted average price of our common stock during the 10 trading days immediately preceding the holder’s conversion notice, subject to adjustment. We intend to use the net proceeds of the Bridge Financing to fund clinical development activities, including ongoing and planned clinical trials, and advance our research and development programs, as well as for working capital and general corporate purposes. We engaged a SEC-registered broker dealer and FINRA member to act as the exclusive placement agent for the Bridge Financing. In connection with the Bridge Financing, we paid to the placement agent (a) a cash fee equal to 7.0% of the aggregate gross cash proceeds received by us in connection with the Bridge Financing and (b) a one-time expense reimbursement of $25,000 for its legal and other expenses incurred in connection with the Bridge Financing. Contractual Obligations and Other Commitments We enter into contracts in the normal course of business with our CDMOs, CROs and other third parties to support preclinical research studies and testing and other development activities. These contracts are generally cancellable by us. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation. License Obligations BlinkBio. In August 2020, we entered into a licensing agreement with BlinkBio, Inc., a privately held developer of drug conjugate therapies designed to facilitate the treatment of cancer. Pursuant to this agreement, BlinkBio granted a license to us that allows us to utilize BlinkBio’s proprietary technology to develop, manufacture and commercialize certain of our products. BlinkBio granted us an exclusive license for tunable drug conjugates that are directed towards, binds to or modifies the folate receptor alpha and a co-exclusive license for tunable drug conjugates that are directed towards, binds to or modifies any target other than the folate receptor alpha, such as HER2. 66 Under the terms of the agreement, we are required to pay to BlinkBio (i) an upfront, non-refundable, non-creditable license fee of $300,000 (the “Up-Front Fee”), (ii) a royalty of 6% of net sales of our products that were made using BlinkBio’s proprietary technology, subject to potential reductions on such royalty, and (iii) certain amounts based on the achievement of the milestones described in the payment schedule below. As of December 31, 2025, we had paid the Up-Front Fee. The payment schedule for milestones and corresponding payment amounts is set forth below. Milestone Bearing Event Milestone Payment 1. License Fee to utilize proprietary technology (paid) Up-front fee + $2.4 million Convertible Note 2. Commencement of a toxicology study commented pursuant to Good Laboratory Practices (under 21 CFR Part 58), such that any resulting positive data would be admissible to applicable Regulatory Authorities to support an IND (commonly referred to as “GLP-Tox”) $ 375,000 3. Completion of a Phase I Clinical Trial $ 1,500,000 4. Completion of a Phase IIb Clinical Trial $ 2,500,000 5. Filing of an NDA, BLA or MAA registration (or the equivalent in any other territory around the world) $ 6,000,000 6. Regulatory Approval in the first of the United States, within the European Union or within the United Kingdom $ 12,000,000 We are required to make the above cash payments to BlinkBio within 30 days of the achievement of each milestone with respect to the first product to attain each such milestone, except that the first milestone only applies to our first product candidate. The aggregate amount of payments relating to milestones 2 through 6 payable thereunder cannot exceed $22,375,000. In connection with the license agreement, we also agreed to issue the BlinkBio Convertible Note. See “ Financing Activities — BlinkBio ” above for more information on the BlinkBio Convertible Note. Biolacuna Ltd. We have contracted with Biolacuna Ltd, a global life sciences advisory firm, to assist with the following agencies requirements to register OST-HER2 and gain approval of its use in the respective regions: ● European Medicines Agency (EMA, Europe); ● Medicines Evaluation Board (MEB, Netherlands); ● Medicines and Healthcare products Regulatory Agency (MHRA, United Kingdom); and ● U.S. Food and Drug Administration (FDA, United States). 67 For the year ended December 31, 2025, we paid $11,629,063 in consulting fees, which includes refundable value-added tax (“VAT”) expenses. As of December 31, 2025, accounts payable related to consulting fees and VAT totaled $6,468,216. University of Pennsylvania. On April 9, 2025, we acquired from Ayala the HER2 Assets. Pursuant to the terms of the HER2 Purchase Agreement, the amended and restated development, license and supply agreement with Advaxis terminated. In connection with the acquisition of the HER2 Assets, we were assigned by Ayala a license agreement with the Trustees of the University of Pennsylvania covering the use of HER2 construct patents. Under the terms of the license agreement, we are required to pay an annual license fee to the Trustees of the University of Pennsylvania. In April 2025, we paid a fee of $266,317 for the year ended December 31, 2025. In addition, we are obligated to pay a royalty equal to 1.5% of net sales related to: ● OST-HER2-related sales; ● ADXS-503-related sales; ● ADXS-504-related sales; and ● Sales related to any new immunotherapy drug candidates created from the Lm platform during the term of such licensing agreement. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Recent Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to Notes to the consolidated financial statements appearing elsewhere in this annual report. The JOBS Act The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to avail ourselves of the extended transition period for complying with new or revised financial accounting standards. We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding equity securities held by non-affiliates; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years; or (iv) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering. Item 7A. Quantitative and Qualitative Disclosures about Market Risks. Not applicable. 68