PRECIGEN, INC. 10-Q

Item 2. 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" should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, or Quarterly Report, and our Annual Report on Form 10-K for the year ended December 31, 2025, or Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates, expectations, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements and you are cautioned not to place undue reliance on forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, particularly in "Special Note Regarding Forward-Looking Statements" and "Risk Factors." The forward-looking statements included in this Quarterly Report are made only as of the date hereof. Overview We are a commercial-stage biopharmaceutical company specializing in the advancement of innovative precision medicines to improve the lives of patients. We are leveraging our proprietary technology platforms to develop product candidates designed to target urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases. We believe that our array of technology platforms uniquely positions us among other biotechnology companies to advance precision medicine. Our proprietary and complementary technology platforms provide a strong foundation to realize the core promise of precision medicine by supporting our efforts to construct powerful gene programs to drive efficacy, deliver these programs through viral, non-viral, and microbe-based approaches to drive lower costs, and control gene expression to drive safety. Our therapeutic platforms, including AdenoVerse immunotherapy, UltraCAR-T, and ActoBiotics, are designed to allow us to precisely control the level and physiological location of gene expression and modify biological molecules to control the function and output of living cells to treat underlying disease conditions. We have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies. Our commercial product, Papzimeos™ (zopapogene imadenovec-drba, PRGN-2012), is the first and only US Food and Drug Administration (“FDA”) approved therapy for the treatment of adults with recurrent respiratory papillomatosis (“RRP”). RRP is a rare, debilitating, and potentially life-threatening disease caused by chronic human papillomavirus (HPV) 6 or HPV 11 infection, which results in recurrent benign tumors in the respiratory tract. Papzimeos is a non-replicating adenoviral vector-based immunotherapy designed to express a fusion antigen comprising selected regions of HPV types 6 and 11 proteins. Papzimeos is designed to generate an immune response directed against HPV 6 and HPV 11 proteins in patients with RRP. Our clinical pipeline includes PRGN-2009, which is based on our AdenoVerse immunotherapy platform; and PRGN-3005, PRGN-3006 and PRGN-3007, which are built on our UltraCAR-T platform. We have completed enrollment in the Phase 1b clinical trial of PRGN-3006. As part of the strategic prioritization of our pipeline announced in August 2024, we paused enrollment in the PRGN-3005 and PRGN-3007 clinical trials. Precigen We are developing therapies built on our AdenoVerse immunotherapy platform and our UltraCAR-T therapeutics platform. Our AdenoVerse immunotherapy platform utilizes a library of proprietary adenovectors for the efficient gene delivery of therapeutic effectors, immunomodulators, and vaccine antigens. We have established proprietary manufacturing cell lines and production methodologies from our AdenoVerse immunotherapy platform, which we believe are scalable for commercial supply. We believe that our proprietary gorilla adenovectors, part of the AdenoVerse technology, have superior performance characteristics as compared to current competition, including standard human adenovirus serotype 5, rare human adenovirus types and other non-human primate adenovirus types. In August 2025, the FDA granted full approval to Papzimeos for the treatment of adults with RRP. The Papzimeos approval marked a historic milestone for the RRP patient community as the first FDA-approved therapy for the treatment of adults with RRP. We completed submission of the rolling Biologics License Application (BLA) in December 2024 under an accelerated approval pathway; however, the FDA has granted Papzimeos full approval. As a result of Papzimeos receiving full FDA approval, a confirmatory clinical trial is no longer required. Papzimeos is a non-replicating adenoviral vector-based immunotherapy designed to express a fusion antigen comprising selected regions of HPV types 6 and 11 proteins. Papzimeos is delivered via four subcutaneous injections over a 12-week 29 Table of Contents interval. Papzimeos approval is supported by safety and efficacy data from the pivotal Phase 1/2 clinical trial published in the Lancet Respiratory Medicine. The pivotal study successfully met its primary safety and pre-specified primary efficacy endpoints. Papzimeos was well-tolerated with no dose-limiting toxicities and no treatment-related adverse events greater than Grade 2. 51% (18 out of 35) of study patients achieved Complete Response, requiring no surgeries in the 12 months after treatment with Papzimeos. These Complete Responses remained durable for over 12 months. Complete responses have been durable after Papzimeos treatment with median follow-up of 36 months as of a September 19, 2025 data cutoff. Following the FDA-approval, we launched Papzimeos in the United States as the first and only FDA approved treatment for adults with RRP. We estimate that there are approximately 27,000 adult patients in the United States living with RRP. Papzimeos had been granted Breakthrough Therapy Designation and Orphan Drug designation for the treatment of RRP by the FDA. In addition, zopapogene imadenovec-drba has received Orphan Drug Designation for the Treatment of RRP from the European Commission as well. We submitted a Marketing Authorization Application (“MAA”) for zopapogene imadenovec-drba for the treatment of adults with RRP to the European Medicines Agency (“EMA”). The MAA has been validated by the EMA and is currently under review. PRGN-2009, an investigational non-replicating adenoviral vector-based immunotherapy, based on our AdenoVerse platform, is designed to activate the immune system to recognize and target human papillomavirus-positive, or HPV+, solid tumors. PRGN-2009 leverages our UltraVector and AdenoVerse platforms to optimize HPV type 16 ("HPV 16") and HPV type 18 ("HPV 18"), antigen designed for delivery via a proprietary gorilla adenovector with a large genetic payload capacity and the ability for repeat administrations. Guided by our bioinformatics analysis and in silico protein engineering, PRGN-2009 encodes for a novel, multi-epitope antigen design to target HPV16 and HPV18 infected cells and potentially differentiates from the competition. PRGN-2009 is being evaluated in two Phase 2 clinical trials for patients with newly-diagnosed HPV-associated oropharyngeal cancer in collaboration with NCI pursuant to a CRADA. The first Phase 2 clinical trial is designed to evaluate PRGN-2009 in combination with anti-PD1 antibody, pembrolizumab, in adult patients with newly-diagnosed HPV-associated oropharyngeal cancer. The second Phase 2 clinical trial is designed to evaluate PRGN-2009 in combination with neoadjuvant chemotherapy in adult patients with newly-diagnosed HPV-associated oropharyngeal cancer. PRGN-2009 is also being evaluated in a multicenter Phase 2 clinical trial to evaluate efficacy and safety of PRGN-2009 in combination with pembrolizumab in patients with recurrent or metastatic cervical cancer. Through our UltraCAR-T therapeutics platform, we are able to precision-engineer UltraCAR-T cells to produce a homogeneous cell product that simultaneously expresses antigen-specific chimeric antigen receptor, or CAR, kill switch, and our proprietary membrane-bound interleukin-15, or mbIL15, genes in any genetically modified UltraCAR-T cell. Our decentralized and rapid proprietary manufacturing process allows us to manufacture UltraCAR-T cells overnight at a medical center's current good manufacturing practices facility ("cGMP") and reinfuse the patient the following day after gene transfer. This process improves upon current approaches to CAR-T manufacturing, which require extensive ex vivo expansion following viral vector transduction to achieve clinically relevant cell numbers that we believe can result in the exhaustion of CAR-T cells prior to their administration, limiting their potential for persistence in patients. We have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies. The UltraPorator system includes proprietary hardware and software solutions and potentially represents a major advancement over current electroporation devices by significantly reducing the processing time and contamination risk. UltraPorator is intended to be a viable scale-up and commercialization solution for decentralized UltraCAR-T manufacturing. PRGN-3006 is an investigational autologous CAR-T therapy that utilizes our UltraCAR-T platform to express a CAR to target CD33 (Siglec-3), mbIL15 and a kill switch gene. PRGN-3006 is in a Phase 1/1b clinical trial for the treatment of relapsed or refractory, or r/r, acute myeloid leukemia, or AML, and high-risk myelodysplastic syndromes, or MDS. PRGN-3006 has been granted Fast Track designation in patients with r/r AML by the FDA. Previously PRGN-3006 was granted Orphan Drug Designation in patients with AML by the FDA. We have completed the Phase 1 dose escalation trial. We have completed enrollment of the Phase 1b trial for PRGN-3006 in AML. We plan to focus on strategic partnership opportunities to advance PRGN-3006 UltraCAR-T program in AML. PRGN-3005 is an investigational autologous CAR-T therapy that utilizes our UltraCAR-T platform to simultaneously express a CAR targeting the unshed portion of the Mucin 16 antigen, mbIL15, and kill switch genes. PRGN-3005 is in a Phase 1/1b clinical trial for the treatment of advanced, recurrent platinum-resistant ovarian, fallopian tube, or primary peritoneal cancer. We have completed the Phase 1 dose escalation portion of the PRGN-3005 Phase 1/1b study. As part of the strategic 30 Table of Contents prioritization of our pipeline announced in August 2024, we have paused enrollment in the Phase 1b clinical trial of PRGN-3005. PRGN-3007 is an investigational autologous CAR-T therapy that utilizes the next generation UltraCAR-T platform to express a CAR which targets ROR1, mbIL15, a kill switch, and a novel mechanism for the intrinsic blockade of the programmed death 1, or PD-1, gene expression. PRGN-3007 is in a Phase 1/1b clinical trial for patients with advanced receptor tyrosine kinase-like orphan receptor 1-positive, or ROR1 + , hematological (Arm 1) and solid tumors (Arm 2). The target patient population for Arm 1 includes relapsed or refractory CLL, relapsed or refractory MCL, relapsed or refractory B-ALL, and relapsed or refractory DLBCL. The target patient population for Arm 2 includes locally advanced unresectable or metastatic histologically confirmed TNBC. As part of the strategic prioritization of our pipeline announced in August 2024, we have paused enrollment in the Phase 1 clinical trial of PRGN-3007. Precigen ActoBio, Inc. ActoBio developed a proprietary class of microbe-based biopharmaceuticals designed to enable expression and local delivery of disease-modifying therapeutics. We refer to these microbe-based biopharmaceuticals as ActoBiotics. In 2024, the Company completed the shutdown of ActoBio's operations. ActoBio’s lead asset, AG019, is a disease modifying antigen-specific, investigational immunotherapy for the prevention, delay, or reversal of type 1 diabetes mellitus, or T1D. We have completed a Phase 1b/2a clinical trial of AG019 in patients with early-onset T1D. In connection with the shutdown of ActioBio's operations, ActoBio's portfolio of intellectual property is now available for prospective transactions. Precigen Exemplar Exemplar is committed to enabling the study of life-threatening human diseases through the development of MiniSwine Yucatan miniature pig research models and services. Historically, researchers have lacked animal models that faithfully represent human diseases. As a result, a sizeable barrier has blocked progress in the discovery of human disease mechanisms; novel diagnostics, procedures, devices, prevention strategies and therapeutics; and the ability to predict in humans the efficacy of those next-generation procedures, devices, and therapeutics. Exemplar's MiniSwine models are genetically engineered to exhibit a wide variety of human disease states, which provides a more accurate platform to test the efficacy of new medications and devices. Financial overview We have incurred significant losses since our inception. We may continue to incur losses in the foreseeable future, and we may never achieve or maintain profitability. Our historical collaboration and licensing revenues were generated under a business model from which we have transitioned. We may enter into strategic transactions for individual platforms or programs in the future from which we may generate new collaboration and licensing revenues. We continue to generate product and service revenues through our Exemplar subsidiary and from commercial sales of Papzimeos, our FDA‑approved immunotherapy for RRP (for which we began to recognize revenue in the fourth quarter of 2025). Products currently in our clinical pipeline will require regulatory approval and/or commercial scale-up before they may commence significant product sales and operating profits. As we continue our efforts to focus our business and generate additional capital, we may be willing to enter into transactions involving one or both of our reporting units for which we have goodwill and/or intangible assets. These efforts could result in us identifying impairment indicators or recording impairment charges in future periods. In addition, market changes and changes in judgments, assumptions, and estimates that we have made in assessing the fair value of goodwill could cause us to consider some portion or all of certain assets to become impaired. Sources of revenue During the fourth quarter of 2025, we commenced commercial sales of Papzimeos, our FDA-approved immunotherapy for RRP. Revenues generated from Papzimeos during 2025 were limited, primarily due to the timing of the product’s commercial 31 Table of Contents launch late in the year. Looking ahead, we expect that the majority of our future revenues will be derived from sales of Papzimeos as we continue to expand our commercial activities and market presence. As we transition to a commercial‑stage company, our future revenues will increasingly depend on our ability to successfully commercialize Papzimeos, advance our proprietary programs, and bring additional products enabled by our technology platforms to market. In addition, Exemplar generates product and service revenues through the development and sale of genetically engineered miniature swine models. We recognize revenue when control of the promised product or service is transferred to the customer. In 2025, revenues generated by Exemplar became less significant to the Company, and we expect this significance to greatly diminish into the future. We do not anticipate that we will be recognizing material collaboration revenue in the near term, except in cases of future strategic transactions involving our platforms or programs. Should new collaboration agreements or strategic transactions be executed, revenue could be positively impacted. Accordingly, there can be no assurance as to the timing, magnitude, and predictability of revenues, if any, to which we might be entitled. Cost of products and services Cost of products and services consists of manufacturing costs, transportation and freight-in, and indirect overhead costs (including salary and benefits related and stock-based compensation expenses) associated with the commercial manufacturing and distribution of Papzimeos, and costs related to our Exemplar business, which includes primarily labor, supplies, feed used in production, and facility charges. Approximately $1.0 of our cost of products and services for the three months ended March 31, 2026 relates to our Exemplar business. For the three months ended March 31, 2026, the cost of products and services includes the costs of Papzimeos sales. Prior to August 14, 2025, regulatory approval and subsequent commercialization of Papzimeos and thus the possibility of future economic benefits from Papzimeos sales were not considered probable and inventory-related costs were expensed as incurred. As such, the inventory recognized on the condensed consolidated balance sheet s as of March 31, 2026 does not include any costs incurred prior to August 14, 2025, which is referred to as pre-launch inventory. In addition, the cost of products related to Papzimeos on the condensed consolidated statements of operations for the three months ended March 31, 2026 is comprised of the sale of pre-launch inventory, which only includes costs incurred subsequent to August 14, 2025, and includes certain period costs incurred during the three months ended March 31, 2026 that were not absorbed into inventory. As of March 31, 2026, the amount of future estimated net revenues represented by existing physical pre-launch inventories is approximately $63 million based on our current pricing assumptions and projected demand for our recently approved commercial product. Due to the fact that commercialization began in late 2025, these estimates are inherently subject to significant uncertainty. The Company expects that it will finish selling all of the pre-launch inventories in 2026. Projected sales derived from pre-launch inventories depend on several factors that could materially impact actual realized results, including the timing and scale of product adoption within our target patient population, and payer coverage. As a result, the cost of products sold related to Papzimeos will initially reflect a lower average per unit cost of materials (excluding period costs that are expensed as incurred), as pre-launch inventory is utilized for commercial production and sold to customers. As pre-launch inventory continues to absorb costs through the manufacturing process, we expect the current gross margins (exclusive of period costs expensed as incurred) will gradually decrease as pre-launch inventory is sold and will stabilize between high 80 percentages and low 90 percentages when pre-launch inventories are expected to be completely sold based on current forecasts, which include significant risks given that Papzimeos is the first therapy available to patients with RRP. Research and development expenses We recognize research and development expenses as they are incurred. Our research and development ("R&D") expenses consist primarily of: • salaries and benefits, including stock-based compensation expense, as well as severance costs related to personnel in research and development functions, if such costs exist; • fees paid to consultants and contract research organizations who perform research on our behalf and under our direction; 32 Table of Contents • costs related to laboratory supplies used in our research and development efforts and acquiring, developing, and manufacturing preclinical study and clinical trial materials; • costs related to certain in-licensed technology rights or reacquired in-process research and development; • amortization of patents and related technologies acquired in mergers and acquisitions; • facility-related expenses, which include direct depreciation costs and unallocated expenses for rent and maintenance of facilities and other operating costs; and • other manufacturing costs related to the manufacture of drug products that have not yet been approved by the FDA. Our research and development expenses primarily relate to either costs incurred to expand or otherwise improve our technologies or the costs incurred to develop our own products and services, including regulatory costs. Prior to August 2024, the Company was progressing preclinical and clinical programs that targeted urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases, including PRGN-3005, PRGN-3006, PRGN-3007, PRGN-2009, PRGN-2012 (now Papzimeos) and AG019. As noted above in the Overview section, as part of the strategic prioritization of our pipeline announced in August 2024, we paused enrollment in the PRGN-3005 and PRGN-3007 clinical trials, and ceased further development of AG019. We continue to advance PRGN-2009, and we have completed enrollment in the Phase 1b clinical trial of PRGN-3006 in AML. Following the FDA approval of Papzimeos in August 2025, we no longer expect to record research and development expenses related to PRGN-2012 for adults. Future costs associated with this product for adults are expected to be classified as costs of products or capitalized as inventory. We have initiated an open-label clinical trial to evaluate safety, vector shedding, and retreatment efficacy of zopapogene imadenovec-drba in adults with RRP. Additionally, we plan to initiate a clinical trial to evaluate safety and efficacy of zopapogene imadenovec-drba in pediatric RRP patients. Costs incurred with respect to both of these trials will be recorded as research and development expenses in the period for which they are incurred. Exemplar's research and development activities relate to new and improved pig research models, and those costs are not significant. We currently track external R&D expenses by platform, and we do not accumulate or track R&D expenses by individual product candidate or program. Preparing such information solely for external reporting would not reflect management’s view of the business or how R&D activities are managed. A significant portion of our R&D spending supports the development, optimization, and operation of our core therapeutic platforms and shared technologies rather than any single drug candidate. Management evaluates R&D activities and makes resource allocation decisions based on the nature of the underlying expenses, which align with how our R&D operations are structured and managed.The table below presents R&D expenses by nature of cost for the periods presented. Three Months Ended March 31, 2026 2025 External development expense: AdenoVerse immunotherapy platform $ 698 $ 3,500 UltraCAR-T therapeutics platform 74 268 Other 111 233 Total external research and development expense 883 4,001 R&D personnel expense 3,037 5,149 R&D facility and depreciation expense 1,681 1,210 Other R&D expense 37 118 Total research and development expense $ 5,638 $ 10,478 In addition to the strategic prioritization in 2024, the amount of research and development expenses may be impacted by, among other things, the number and nature of our own proprietary programs. Research and development expenses may also 33 Table of Contents increase as a result of in-licensing of technologies or ongoing research and development operations that we might assume through mergers and acquisitions. Selling, general and administrative expenses Selling, general and administrative, or SG&A, expenses consist primarily of salaries and related costs, including stock-based compensation expense and severance benefits, for employees in executive, operational (including commercialization), finance, information technology, legal, and corporate communications functions. Other significant SG&A expenses include rent and utilities, insurance, accounting, external commercialization costs, legal services (including the cost of settling any claims and lawsuits), and expenses associated with obtaining and maintaining our intellectual property. In addition, although not significant, shipping and handling costs on outgoing shipments to customers are recorded as incurred in SG&A and were approximately $395 and $0 for the three months ended March 31, 2026 and 2025, respectively. SG&A expenses may fluctuate in the future depending on the scaling of our corporate functions required to support our corporate initiatives, the strategic prioritization, the build-up of our commercialization efforts and the outcomes of legal claims and assessments against us. Other income (expense), net Other income and expense, net consists primarily of interest expense related to the term loans entered into in 2025 that mature in 2030, and interest earned on our cash and cash equivalents and short-term and long-term investments, which may fluctuate based on amounts invested and changing interest rates. In addition, 2025 other income (expense) included changes in the fair value of warrant liabilities, until the warrants were classified into equity in the third quarter of 2025, Results of operations Comparison of the three months ended March 31, 2026 and the three months ended March 31, 2025 The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025, together with the changes in those items in dollars and as a percentage (dollars are in $000s): Three Months Ended March 31, Dollar Change Percent Change 2026 2025 Revenues Product revenues $ 21,828 $ 203 $ 21,625 >200% Service revenues 1,424 1,138 286 25.1 % Total revenues 23,252 1,341 21,911 >200% Operating expenses Cost of product and services 2,559 1,100 1,459 132.6 % Research and development 5,638 10,478 (4,840) (46.2) % Selling, general and administrative 21,049 12,359 8,690 70.3 % Total operating expenses 29,246 23,937 5,309 22.2 % Operating loss (5,994) (22,596) 16,602 (73.5) % Total other expense, net (1,935) (31,557) 29,622 (93.9) % Net loss $ (7,929) $ (54,153) $ 46,224 (85.4) % Total revenues Total revenues increased by $21.9 million, or >200%, compared to the three months ended March 31, 2025.The significant increase in total revenues for the three months ended March 31, 2026, was primarily due to the ramp up of commercial sales of Papzimeos following its FDA approval in August 2025. Revenues related to the sale of Papzimeos for the three months ended March 31, 2026 was $21.6 million. No Papzimeos sales were recorded for the three months ended March 31, 2025, as the product had not yet been approved or launched. 34 Table of Contents Cost of product and services Cost of product and services increased $1.5 million, or 132.6%, compared to the three months ended March 31, 2025 almost entirely due to the ramp up of commercial sales of Papzimeos following its FDA approval in August 2025. Prior to regulatory approval, costs associated with the production of Papzimeos were expensed as research and development in accordance with our accounting policy. Upon FDA approval and the commencement of commercial sales, these costs are now capitalized as inventory and recognized in cost of product and services as product is sold. Research and development expenses R&D expenses decreased by $4.8 million, or 46.2%, compared to the three months ended March 31, 2025, primarily due to the change in the accounting treatment of Papzimeos manufacturing costs. Prior to the FDA approval of Papzimeos in August 2025, costs associated with the manufacturing of Papzimeos were expensed as R&D, as regulatory approval and the probability of future economic benefit had not yet been established. Following the FDA approval and the commencement of commercial sales, these production costs are no longer expensed as research and development, but are capitalized as inventory on the balance sheet and recognized as cost of product and services as the product is sold. We expect that R&D expenses will increase as the year progresses as we further develop PRGN-2009 and increase our research efforts. Selling, general and administrative expenses SG&A expenses increased by $8.7 million, or 70.3%, compared to the three months ended March 31, 2025. This increase was primarily driven by commercial activities related to Papzimeos following its FDA approval in August 2025. The higher expenses reflect increased costs to support commercialization, expanded marketing and promotional activities to drive product awareness and adoption, and increased personnel costs, including stock compensation expense. Total other expense, net Total other expense, net decreased by $29.6 million, or 93.9%, compared to the three months ended March 31, 2025 . This change was primarily attributable to the absence of a $32.5 million charge related to the increase in the fair value of warrant liabilities that was recorded in the prior-year period. The prior-year increase in warrant liabilities was mainly driven by a rise in Precigen’s stock price and, to a lesser extent, by an increase in the liability for additional warrants expected to be issued as paid-in-kind dividends on the Company’s Series A Preferred Stock. The remaining change (an increase in other expense) primarily relates to an increase of $2.9 million in interest expenses related to long-term debt that was entered into in the third quarter of 2025. Liquidity and capital resources Sources of liquidity We have incurred losses since our inception, and as of March 31, 2026, we had an accumulated deficit of $2.3 billion. From our inception through March 31, 2026, we have funded our operations principally with proceeds received from private and public equity and debt offerings, cash received from our collaborators, cash received through sales of businesses, and through product and service sales made directly to customers. As of March 31, 2026, we had cash and cash equivalents of $7.5 million and investments of $49.3 million. Cash in excess of immediate requirements is typically invested primarily in money market funds, certificate of deposits and U.S. government debt securities in order to maintain liquidity and preserve capital. In August 2024, we closed a public offering of 39,878,939 shares of our common stock, resulting in net proceeds to us of $30.9 million, after deducting underwriting discounts, fees, and an estimate of other offering expenses. In December 2024, we issued 79,000 shares of 8.00% Series A Convertible Perpetual Preferred Stock with an initial liquidation preference and stated value of $1,000 per share, together with warrants to purchase 52,666,669 shares of common stock for net proceeds of approximately $78.5 million, after deducting offering expenses. The Series A Convertible Perpetual Preferred Stock was converted into 54,937,411 shares of common stock of the Company in the third quarter of 2025. See"Notes to the Condensed Consolidated Financial Statements - Note 11" appearing elsewhere in this Report for further discussion on the issuance of the preferred stock and the conversion of such into common shares. In September 2025, the Company entered into a loan agreement with investment entities managed by Pharmakon Advisors, LP. The Company received net proceeds of $92,818 after deducting fees and expenses of $7,182. See "Notes to the Condensed 35 Table of Contents Consolidated Financial Statements - Note 9" appearing elsewhere in this Report for further discussion on this loan agreement. Cash flows The following table sets forth the significant sources and uses of cash for the periods set forth below: Three Months Ended March 31, 2026 2025 (In thousands) Net cash (used in) provided by: Operating activities $ (43,827) $ (16,325) Investing activities 20,967 (6,457) Financing activities 109 (679) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (3) 2 Net decrease in cash, cash equivalents, and restricted cash $ (22,754) $ (23,459) Cash flows from operating activities: During the three months ended March 31, 2026, our net loss was $7.9 million, which includes the following significant noncash expenses and benefits totaling $4.5 million: (i) $3.0 million of stock-based compensation expense, (ii) $1.1 million of depreciation and amortization expense, and (iii) $0.5 million of shares issued as payment for services. In addition, changes in operating assets and liabilities used $40.5 million of cash for operating activities. During the three months ended March 31, 2025, our net loss was $54.2 million, which includes the following significant noncash expenses and benefits totaling $35.6 million: (i) $32.5 million of unrealized appreciation in the fair value of warrant liabilities, (ii) $2.7 million of stock-based compensation expense, (iii) $0.6 million of depreciation and amortization expense, and (iv) $0.5 million of shares issued as payment for services, partially offset by non-cash benefits of $0.7 million due to amortization of discounts on investments. In addition, changes in operating assets and liabilities provided $2.2 million of cash for operating activities. Cash flows from investing activities: During the three months ended March 31, 2026, we received $21.2 million of cash from sales and maturities of investments, net of purchases, and purchased $0.3 million of property, plant and equipment, primarily related to our manufacturing facility. During the three months ended March 31, 2025, we received $5.8 million of cash, from sales and maturities of investments, net of purchases, and purchased $0.6 million of property, plant and equipment, primarily related to the build-out of our manufacturing facility. Cash flows from financing activities: During the three months ended March 31, 2026, we received $0.3 million of cash from the exercise of stock options and paid $0.1 million to taxing authorities in connection with the vesting of performance stock units. In the three months ended March 31, 2025, we paid $0.4 million in issuance costs related to a prior year equity issuance and $0.5 million to taxing authorities in connection with the vesting of performance stock units. We received $0.2 million from the exercise of stock options. Future capital requirements Our future capital requirements will depend on many factors, including: • the successful commercialization of Papzimeos and the level of revenue generated from its sales; 36 Table of Contents • progress in our research and development programs, as well as the magnitude and speed of development of these programs; • capital expenditures to expand our manufacturing capabilities, including the potential manufacturing of other product candidates; • the speed and scale of continuing to maintain and build our commercial operations; • adequate third-party coverage and reimbursement for Papzimeos; • selling and marketing activities undertaken in connection with the commercialization of Papzimeos; • potential commercialization of any future product candidates, if approved, and costs involved in creating and maintaining an effective sales and marketing organization; • the timing of regulatory approval of our product candidates; • the timing, receipt, and amount of any payments received in connection with strategic transactions; • the timing, receipt, and amount of sales and royalties, if any, from our product candidates; • the timing and capital requirements to scale up our various product candidates and service offerings and customer acceptance thereof; • the resources, time, and cost required for the preparation, filing, prosecution, maintenance, and enforcement of our intellectual property portfolio; • strategic mergers and acquisitions, if any, including both the upfront acquisition cost as well as the cost to integrate, maintain, and expand the strategic target; and • the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes. Until such time, if ever, as we can regularly generate positive operating cash flows, we plan to finance our cash needs through a combination of collection of accounts receivables from the sale of Papzimeos, debt and/or royalty financings, equity offerings, government, or other third-party funding, strategic alliances, sales of assets, and licensing arrangements. We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. To the extent that we raise additional capital through the sale of equity, convertible debt, warrants or preferred securities, the ownership interests of our common shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. Our current stock price may make it more difficult to pursue equity financings and lead to substantial dilution if the price of our common stock does not increase. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through strategic transactions, collaborations, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates, or to grant licenses on terms that may not be favorable to us. We are subject to a number of risks similar to those of other companies launching their first commercial product as well as conducting high-risk, early-stage research and development of product candidates. Principal among these risks are the forecasted demand for Papzimeos, dependence on key individuals and intellectual property, competition from products and companies, the technical risks associated with the manufacturing of Papzimeos, and the technical risks associated with the successful research, development and manufacturing of therapeutic product candidates. Our success is dependent upon our ability to continue to raise additional capital, including the collection of accounts receivable in order to fund ongoing research and development, obtain regulatory approval of our products, successfully commercialize our products, generate revenue, meet our obligations, and, ultimately, attain profitable operations. Our condensed consolidated financial statements as of March 31, 2026 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. 37 Table of Contents Based on current projections, management believes that its existing cash, cash equivalents and short and long-term investments, combined with anticipated collection of potential revenue from the commercialization of Papzimeos, will enable us to continue our operations for at least one year from the date of this filing. We are subject to all of the risks inherent in the development of new products (including manufacturing and commercialization of Papzimeos), and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. See the section entitled "Risk Factors" in our Annual Report for additional risks associated with our substantial capital requirements. Contractual obligations and commitments The following table summarizes our significant contractual obligations and commitments from continuing operations as of March 31, 2026 and the effects such obligations are expected to have on our liquidity and cash flows in future periods: Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years (In thousands) Operating leases $ 5,974 $ 1,573 $ 2,793 $ 1,608 $ — Purchase commitments 221 115 106 — — Cash interest payable on long term debt (*) 37,615 10,392 20,493 6,730 — Long-term debt 100,000 — 25,000 75,000 — Total $ 143,810 $ 12,080 $ 48,392 $ 83,338 $ — (*) Interest is calculated using static annual rate of 10.25%, although our long-term debt carries a variable interest rate (see Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 9" appearing elsewhere in this Quarterly Report). In addition to the obligations in the table above, as of March 31, 2026, we are party to license agreements with various third parties that contain future milestones and royalty payment obligations related to development milestones and/or commercial sales of products that incorporate or use their technologies. Because these agreements are generally subject to termination by us or are dependent on certain conditions precedent within our control, no amounts are included in the tables above. As of March 31, 2026, we also had research and development commitments with third parties totaling $5.0 million that had not yet been incurred. 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 under Securities and Exchange Commission rules. Critical accounting policies and estimates Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. There have been no material changes to our critical accounting policies from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report. 38 Table of Contents Recent accounting pronouncements For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 2" appearing elsewhere in this Quarterly Report.