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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-06 · 95 added, 78 removed, 192 unchanged (47% of the section changed)

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 in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K.

Unless the context otherwise requires, for purposes of this subsection only, all references to the “Company,” “our,” “us” “we” or “VYNE” refer to VYNE Therapeutics Inc.

and its subsidiaries prior to the consummation of the Merger.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section entitled “Item 1A.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in the section entitled “Item 1A.

Risk Factors”.

Company Overview

We are a clinical-stage biopharmaceutical company focused on developing differentiated therapies to treat chronic inflammatory and immune-mediated conditions with high unmet need.

We are a clinical-stage biopharmaceutical company focused on developing differentiated therapies to treat inflammatory and immune-mediated conditions with high unmet need.

We have exclusive worldwide rights to research, develop and commercialize products containing small molecule bromodomain and extra-terminal domain ("BET") inhibitors for the treatment of any disease, disorder or condition in humans, which we licensed from Tay Therapeutics Ltd., formerly known as In4Derm Ltd (“Tay”).

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Through our transaction with Tay, we obtained access to a library of new small molecule BET inhibitor compounds including those that inhibit both BD1 and BD2 (“pan-BD” BET inhibitor) and that selectively inhibit BD2 (“BD2-selective” BET inhibitor).

Through our access to this library of new BET inhibitors, which comprise our InhiBET™ portfolio, we plan to develop product candidates for a diverse set of therapeutic indications.

We have chosen to initially focus our development efforts with these molecules on immune-mediated inflammatory diseases, which are not being targeted by current BET inhibitors in development.

Our lead program is repibresib gel (also known as VYN201), a topically administered, small molecule pan-BD BET inhibitor designed as a “soft” drug to address diseases involving multiple, diverse inflammatory cell signaling pathways while providing low systemic exposure.

In preclinical testing, repibresib produced consistent reductions in pro-inflammatory and disease-related biomarkers and improvements in disease severity across a variety of inflammatory and fibrotic preclinical models.

In November 2022, we initiated a Phase 1 clinical trial evaluating a topical formulation of repibresib first in healthy volunteers (Phase 1a) and then in subjects (Phase 1b) with nonsegmental vitiligo (NSV), an immune-mediated condition that has a high unmet need and only one approved therapy.

In the first quarter of 2023, we announced positive preliminary safety and tolerability, including hematology data, and predicted pharmacokinetic results (minimal systemic exposures) from the Phase 1a portion of the trial.

We initiated the Phase 1b portion of the trial in NSV subjects in January 2023 and announced positive data from the Phase 1b trial in October 2023.

We showed significant clinical improvements in vitiligo involving the face, which has the greatest psychosocial impact on patients, after 16 weeks of treatment which was assessed using the Facial-Vitiligo Area Scoring Index ("F-VASI"), a measure of severity of the condition on the face.

We initiated a Phase 2b trial with repibresib gel in NSV subjects in June 2024.

The Phase 2b trial is a randomized, double-blind, vehicle-controlled trial evaluating the efficacy, safety and pharmacokinetics of once-daily repibresib gel in NSV subjects in three dose cohorts (1%, 2% or 3% concentrations) compared to vehicle over 24 weeks, followed by a 28-week active treatment extension with subjects on vehicle crossing over to active doses.

We enrolled approximately 45 patients in each arm and expect to report top-line results from the 24-week double-blind portion of the trial in mid-2025.

Our second program is VYN202, an oral, small molecule BD2-selective BET inhibitor.

Prior studies have shown that while BD1 modulates cell-cycling and homeostatic functions, BD2 regulates gene expression of pro-inflammatory mediators in cells.

We initially focused our development efforts with these molecules on immune-mediated inflammatory diseases, which are not being targeted by current BET inhibitors in development.

We are developing VYN202, an oral, small molecule BD2-selective BET inhibitor.

VYN202 has been designed to achieve potential class-leading potency and selectivity for BD2 vs.

By maximizing BD2 selectivity, we believe VYN202 has the potential to be a potent oral immunomodulator option for both acute control and chronic management of immune-mediated inflammatory conditions, without the hematologic and gastrointestinal adverse effects associated with earlier generation systemic pan-BD BET inhibitors that were being developed in oncologic settings.

have completed a Phase 1a single ascending dose/multiple ascending dose ("SAD/MAD") trial of VYN202 in healthy volunteers and announced positive data from this trial in December 2024.

We observed that VYN202 had a favorable safety and tolerability profile with no drug-related adverse events historically associated with earlier generation, less BD2-selective BET inhibitors.

VYN202 also demonstrated robust pharmacodynamic activity including evidence of target engagement and inhibition of several inflammatory biomarkers relevant to immune-mediated disorders in ex vivo stimulation assays.

We have evaluated VYN202 in preclinical studies in areas such as nephrology, pulmonology, rheumatology and myeloproliferative neoplasms, among others.

In December 2024, we announced positive data from have completed a Phase 1a single ascending dose/multiple ascending dose (“SAD/MAD”) trial of VYN202 in healthy volunteers and announced positive data from this trial in December 2024.

We initiated a Phase 1b trial in February 2025 in adult subjects with moderate-to-severe plaque psoriasis.

The Phase 1b trial is a randomized, double-blind, placebo-controlled trial of once daily treatment with VYN202 capsules dosed for 12 weeks, to primarily evaluate the safety of VYN202 across four cohorts (0.25 mg, 0.5 mg, 1 mg doses and placebo), with secondary objectives that include pharmacokinetics and preliminary evidence of efficacy via endpoints evaluating improvements from baseline in PASI scores.

The trial will also include a 4-week safety follow-up visit after completion of the 12-week dosing period.

We expect to enroll approximately 80 subjects with moderate-to-severe plaque psoriasis and to report top-line results from the placebo-controlled trial by the end of 2025.

Additionally, we anticipate that the data from the Phase 1b trial in plaque psoriasis subjects will provide key insights into VYN202's potential activity across a range of immune-mediated diseases.

We intend to advance our product candidates through further phases of clinical development toward regulatory approval.

As part of our strategy to maximize the value of our pipeline, we may partner with larger pharmaceutical companies to expand and accelerate the development of our programs and explore other indications and therapeutic areas outside of our core focus in immune-mediated diseases.

Sale of Legacy Commercial Business

In January 2022, we entered into an Asset Purchase Agreement with Journey Medical Corporation ("Journey") pursuant to which we sold our Molecule Stabilizing Technology franchise, including our former products AMZEEQ, ZILXI, and FCD105, referred to collectively as the MST Franchise, to Journey.

The assets included certain contracts, including license agreements, inventory and intellectual property related to the MST Franchise.

We have classified the results of the MST Franchise as discontinued operations in our consolidated statements of operations and comprehensive loss and cash flows for all periods presented in this Annual Report on Form 10-K.

We received an upfront payment of $20.0 million at the closing of the sale of the MST franchise and an additional $5.0 million deferred payment in January 2023.

We are also eligible to receive sales milestone payments of up to $450.0 million in the aggregate upon the achievement of specified levels of net sales on a product-by-product basis, beginning with annual net sales exceeding $100.0 million, as well as certain payments from any licensing or sublicensing of the purchased assets by Journey outside of the United States.

In April 2025, the U.S.

Food and Drug Administration ("FDA") verbally placed a clinical hold on the Company’s Phase 1b trial evaluating VYN202 in subjects with moderate-to-severe plaque psoriasis following an observation of testicular toxicity in dogs from a non-clinical toxicology study of VYN202.

In June 2025, the FDA lifted the clinical hold for two doses of VYN202 for female subjects and indicated that sufficient data from a 12-week non-clinical toxicology study of VYN202 in dogs would be required in order to resume studies in male clinical subjects.

Following the clinical hold, we made the decision to unblind the clinical data from the subjects who were enrolled in the trial.

Based on interim unblinded clinical data from the Phase 1b trial, together with promising results from multiple preclinical models, we terminated the Phase 1b psoriasis trial in support of continued advancement of VYN202 into other serious, immune-mediated diseases with more limited effective treatment options.

In October 2025, we initiated the repeat non-clinical toxicology study of VYN202 in male dogs to remedy the partial hold in male clinical subjects.

The study is expected to be completed in the second half of 2026, with a final report expected in the fourth quarter of 2026.

Until July 2025, our lead product was repibresib gel (also known as VYN201), a topically administered, small molecule pan-bromodomain (“BD”) BET inhibitor designed as a “soft” drug to address diseases involving multiple, diverse inflammatory cell signaling pathways while providing low systemic exposure.

We announced positive results from a Phase 1b trial evaluating repibresib in nonsegmental vitiligo in October 2023 and initiated a Phase 2b trial in nonsegmental vitiligo in June 2024.

In July 2025, we announced that the trial did not meet its primary endpoint of the proportion of subjects achieving an improvement in Facial Vitiligo Area Scoring Index of at least 50% from baseline (“F-VASI50”) at week 24 compared to vehicle.

Based on these data, we discontinued the then ongoing extension phase of the trial and terminated the trial.

In August 2025, our board of directors initiated a strategic review to evaluate a range of options to maximize stockholder value, including the assessment of our internal pipeline, financing opportunities and strategic alternatives.

Following the strategic review, we entered into an Agreement and Plan of Merger and Reorganization, dated as of December 17, 2025, which was amended on January 30, 2026 (as amended, the "Merger Agreement") with Yarrow Biosciences, Inc.

("Yarrow"), pursuant to which among other matters, Yellow Merger Sub Corp., a direct, wholly owned subsidiary of ours ("Merger Sub"), will merge with and into Yarrow, with Yarrow surviving as a wholly owned subsidiary of VYNE and the surviving corporation of the merger (the "Merger").

Following the completion of the Merger, the current business of Yarrow will become the Company’s primary business.

As such, we may continue to evaluate opportunities for repibresib and VYN202 prior to the closing of the Merger, which may include a sale, license, transfer, disposition, divestiture or other monetization transaction to a third party or to a related party so long as the transaction would not result in material post-closing obligations to the Company without Yarrow’s consent.

The Proposed Merger

The Merger Agreement

Following the strategic review described above, on December 17, 2025, we entered into the Merger Agreement with Yarrow, a privately held biotechnology company advancing YB-101 (also known as GS-098), a clinical-stage, humanized monoclonal antibody targeting the thyroid-stimulating hormone receptor for the treatment of Graves’ disease and exploring a clinical development plan for thyroid eye disease, pursuant to which Yarrow will become a wholly owned subsidiary of VYNE and VYNE will operate under the name Yarrow Bioscience, Inc.

following the Merger.

We anticipate that the Merger will close in the second quarter of 2026, subject to the satisfaction of certain closing conditions, along with the concurrent Yarrow Pre-Closing Financing (as described below).

Following the Merger, the current business of Yarrow will become our primary business.

Yarrow Series A Preferred Stock Financing

In connection with the execution of the Merger Agreement, certain institutional and accredited investors (the "Series A Investors", led by an affiliate of RTW Investments) and Yarrow entered into a Series A stock purchase agreement, pursuant to which such persons invested in and purchased an aggregate of 20,242,911 shares of Yarrow Preferred Stock at a purchase price of $4.94 per share for aggregate gross proceeds to Yarrow of $100.0 million.

Yarrow Pre-Closing Financing

Concurrently with the execution and delivery of the Merger Agreement, the Series A Investors also entered into the Securities Purchase Agreement with Yarrow, pursuant to which such investors have agreed to purchase, immediately prior to the Merger, shares of Yarrow common stock or, in lieu thereof, Yarrow pre-funded warrants, representing an aggregate commitment of approximately $100.0 million in the Yarrow Pre-Closing Financing.

The shares of Yarrow common stock and Yarrow pre-funded warrants that are issued in the Yarrow Pre- Closing Financing will be or will have the right to be, respectively, converted into shares of VYNE common stock in the Merger.

The Securities Purchase Agreement contains customary representations and warranties of Yarrow and the purchaser parties thereto.

The Securities Purchase Agreement also contemplates Yarrow and the investors participating in the Yarrow Pre-Closing Financing entering into a registration rights agreement at the closing of the Yarrow Pre-Closing Financing, pursuant to which, among other things, the Combined Company will agree to provide for the registration and resale of certain shares of VYNE common stock that are held by the investors participating in the Yarrow Pre-Closing Financing from time to time pursuant to Rule 415.

Pre-Closing Special Cash Dividend

Further, prior to the closing of the Merger, we expect to declare and set aside the aggregate cash amount to be paid in accordance with a special cash dividend (the “special cash dividend”) to holders of record of outstanding shares of our common stock as of a record date prior to the effective time of the Merger, to be determined by our board of directors.

The ex-dividend date in respect of such special cash dividend will be determined by Nasdaq.

Our stockholders of record prior to the ex-dividend date will be entitled to receive the special cash dividend, regardless of whether they beneficially own such shares as of the dividend date.

The amount of the special cash dividend is expected to be approximately $14.5 million to $16.5 million in the aggregate.

Known Trends, Events and Uncertainties

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Uncertainty in the global economy presents significant risks to our business.

We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including inflation, interest rates, financial market volatility and uncertainty, the impact of war or military conflict, including the wars in Ukraine and the Middle East, rising tensions between China and Taiwan and the response thereto, public health pandemics, and supply chain disruptions.

Adverse effects of these large macroeconomic conditions have been prevalent in many of the areas where we, our CROs, suppliers or third-party business partners conduct business and as a result, we have experienced disruptions and may continue to experience more pronounced disruptions in our operations.

Adverse effects of these large macroeconomic conditions have been prevalent in many of the areas where we, our contract research organizations, suppliers or third-party business partners conduct business and as a result, we have experienced disruptions and may continue to experience more pronounced disruptions in our operations.

In addition, financial markets have experienced a period of high volatility due to these macroeconomic factors.

The persistence of this volatility may impact our ability to engage in capital market activities and adequately fund our operations.

As of the filing date of this Annual Report on Form 10-K, the extent to which these macroeconomic events and conditions may impact our financial condition, results of operations or liquidity is uncertain.

As of the filing date of this Annual Report, the extent to which these macroeconomic events and conditions may impact our financial condition, results of operations or liquidity is uncertain.

The effect of these macroeconomic events and conditions may not be fully reflected in our results of operations and overall financial performance until future periods.

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Pursuant to the terms of the VYN202 License Agreement, we agreed to make cash payments to Tay of up to $43.75 million upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed oral product in the United States for all indications, of which $2.3 million has been paid or accrued through December 31, 2025.

In August 2025, we paid Tay $1.0 million in partial satisfaction of the “Phase 2 Milestone” under the VYN202 License Agreement for the initiation of the Phase 1b trial in psoriasis and amended the VYN202 License Agreement to provide that upon initiation of a new clinical trial in a target patient population involving VYN202 for oral administration with an efficacy endpoint, regardless of the trial’s phase designation or regulatory classification, we shall pay Tay the remaining $4.0 million under the “Phase 2 Milestone.” All other terms of the VYN202 License Agreement were unchanged.

Tay is entitled to additional milestone payments upon the achievement of regulatory approvals in certain non-U.S.

jurisdictions.

with respect to any products we commercialize under the VYN202 License Agreement, we will pay tiered royalties to Tay on net sales of such licensed products by us, our affiliates, or sublicensees, of 5%, 7.5% and 10% based on tiered annual net sales of licensed products under the VYN202 License Agreement and the Repibresib License Agreement, subject to specified reductions.

In addition, with respect to any products we commercialize under the VYN202 License Agreement, we will pay tiered royalties to Tay on net sales of such licensed products by us, our affiliates, or sublicensees, of 5%, 7.5% and 10% based on tiered annual net sales of licensed products under the VYN202 License Agreement and the Repibresib License Agreement, subject to specified reductions.

We are obligated to pay royalties until the latest of (1) the tenth anniversary of the first commercial sale of the relevant licensed product, (2) the expiration of the last valid claim of the licensed patent rights covering such licensed product in such country and (3) the expiration of regulatory exclusivity for the relevant licensed product in the relevant country, on a licensed product-by-licensed product and country-by-country basis.

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We previously licensed the rights to Finacea to LEO Pharma A/S (“LEO Pharma”).

This license was not part of the sale of our commercial business to Journey.

Royalty revenues for the years ended December 31, 2025 and 2024 were $0.6 million and $0.5 million, respectively, from LEO Pharma in connection with sales of Finacea.

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• employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses, for research and development personnel;

• expenses incurred under agreements with third parties, including CROs, subcontractors, suppliers and consultants that conduct regulatory activities, clinical trials and preclinical studies;

• expenses incurred under agreements with third parties, including contract research organizations, subcontractors, suppliers and consultants that conduct regulatory activities, clinical trials and preclinical studies;

• expenses incurred to acquire, develop and manufacture clinical trial materials;

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Other Income, net

Other income, net primarily consists of interest earned on our cash, cash equivalents and marketable securities.

Other income, net primarily consists of amounts recognized for the settlement of the ERTC in 2025 and interest earned on our cash, cash equivalents, and marketable securities.

Income Taxes and Net Operating Loss Carryforwards

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As of December 31, 2025, we had $227.8 million in federal and state NOLs with no limited period of use.

Other than the federal NOLs expected to expire unutilized as noted below, there were no significant updates through December 31, 2025.

NOLs and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.

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State NOLs and tax credit carryforwards may be subject to similar limitations under state laws.

We have not completed a 382 study through December 31, 2024, however, w e may have experienced ownership changes in the past, including in connection with the 2020 merger between Menlo (our predecessor company) and Foamix.

Our private placement transaction in November 2023 also likely resulted in an ownership change for purposes of Section 382.

We may experience ownership changes in the future as a result of the subsequent shifts in our stock ownership, some of which may be outside of our control.

We have not completed a Section 382 study through December 31, 2025;

however, we have completed a 382 study through March 31, 2025, and we determined that we experienced ownership changes in connection with the 2020 merger between Menlo Therapeutics (our predecessor company) and Foamix Pharmaceuticals Ltd.

and with our private placement transaction in November 2023.

As a result of the ownership changes, $40.2 million of federal NOLs and $2.1 million of research and development tax credits are expected to expire unutilized and have been written off.

We may experience ownership changes in the future as a result of the Merger or subsequent shifts in our stock ownership, some of which may be outside of our control.

As a result, even if we earn net taxable income, our ability to use the NOL and tax credit carryforwards may be materially limited, which could harm our future operating results by effectively increasing our future tax obligations.

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Loss from continuing operations (26,736) (39,807) (13,071) (32.8) %

Loss from discontinued operations, net of income taxes

Income (loss) from discontinued operations, net of income taxes

253 (27) (280) *

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Research and development expenses

Our research and development expenses for the year ended December 31, 2024 were $30.9 million, representing an increase of $14.6 million, or 89.8%, compared to $16.3 million for the year ended December 31, 2023.

The increase was primarily due to an increase of $11.7 million in expenses for repibresib, an increase of $2.5 million in expenses for VYN202 and an increase of $0.8 million of employee-related expenses following the hiring of additional research and development personnel.

The $11.7 million increase in expenses for repibresib primarily relates to preparatory activity and clinical trial costs incurred for our ongoing Phase 2b trial of repibresib in subjects with NSV.

The $2.5 million increase in expenses for VYN202 is primarily associated with costs incurred for our Phase 1a SAD/MAD trial which was completed in the fourth quarter of 2024.

Both trials were initiated in June 2024.

These increases were partially offset by lower consulting expenses of $0.4 million.

Our research and development expenses for the year ended December 31, 2025 were $19.2 million, representing a decrease of $11.7 million, or 37.8%, compared to $30.9 million for the year ended December 31, 2024.

The decrease was primarily due to a decrease of $7.8 million in expenses for repibresib, a decrease of $3.5 million in expenses for VYN202 and a decrease of $0.4 million related to consulting services .

The $7.8 million decrease in expenses for repibresib was primarily driven by the timing of expenses for the Phase 2b trial in nonsegmental vitiligo, including our decision to terminate the trial following the announcement of topline results in July 2025.

The $3.5 million decrease in expenses for VYN202 was primarily driven by decreased clinical expenses for the Phase 1 trials evaluating VYN202, partially offset by a $1.0 million milestone payment made to Tay in the third quarter of 2025 under an amendment to the VYN202 License Agreement.

General and administrative expenses

Our general and administrative expenses for the year ended December 31, 2025 were $11.1 million, representing a decrease of approximately $2.1 million, or 16.0%, compared to $13.2 million for the year ended December 31, 2024.

The decrease was primarily driven by $0.9 million of employee related expenses, partially offset by increased consulting and professional fees of $0.8 million.

The decrease was primarily driven by $1.6 million of employee related expenses and consulting and professional fees of $0.5 million.

Other Income, net

Other income, net for the years ended December 31, 2024 and 2023 was $3.8 million and $1.4 million, respectively, primarily related to interest income earned on cash, cash equivalents and marketable securities.

Other income, net for the years ended December 31, 2025 and 2024 was $3.0 million and $3.8 million, respectively.

The decrease was primarily related to decreased interest income earned on cash, cash equivalents and marketable securities compared to prior period, partially offset by the recognition of $1.3 million in income during 2025 related to the closure of the IRS examination period of the Company’s ERTC filings.

Loss from discontinued operations, net of income taxes

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Sources of Liquidity

Since the sale of the MST Franchise in January 2022, we have not generated any revenue from product sales.

In addition, we have incurred losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses until such a time when our product candidates, if approved, are commercially successful, if at all.

We will not generate any revenue from any current or future product candidates unless and until we obtain regulatory approval and commercialize such products.

As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

See Item 1A “Risk Factors” for additional risks associated with our substantial capital requirements.

On December 17, 2025, we entered into the Merger Agreement pursuant to which, among other matters, Merger Sub will merge with and into Yarrow, with Yarrow surviving as a wholly owned subsidiary of the Company.

The closing of the Merger is subject to approval by our stockholders and the stockholders of Yarrow and other customary closing conditions.

Our future operations are highly dependent on the success of the proposed Merger with Yarrow.

As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $29.0 million and an accumulated deficit of $757.7 million.

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For the year ended December 31, 2025, we incurred a net loss of $26.5 million and used $33.1 million of cash in operations.

Based on our current operating plan, we believe our existing cash, cash equivalents, and marketable securities are sufficient to fund our operating and capital expenditure requirements for a period of at least 12 months from the date of issuance of the audited consolidated financial statements included in this Annual Report on Form 10-K.

Based on our current operating plan, we believe our existing cash, cash equivalents, and marketable securities are sufficient to fund our operating and capital expenditure requirements through the anticipated closing date of the Merger and for a period of at least 12 months from the date of issuance of the audited consolidated financial statements included in this Annual Report;

however, we have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

If our available cash, cash equivalents, and marketable securities are insufficient to satisfy our liquidity requirements, we may need to raise additional capital to fund our operations.

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Other than our obligations pursuant to the Tay License Agreements, we have no ongoing material financial commitments that may affect our liquidity over the next five years.

See the section titled “Development and License Agreements—Agreements with Tay” for additional discussion of our financial obligations under the Tay License Agreements.

See the section titled “Development and License Agreements—Agreements with Tay Therapeutics” for additional discussion of our financial obligations under the Tay License Agreements.

Future Funding Requirements

We do not expect to generate any product revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if, that will occur.

Until we can generate significant revenue from product sales, if ever, we will continue to require substantial additional capital to develop our current and future product candidates and fund operations for the foreseeable future.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and studies and initiate clinical trials.

We are subject to all the risks incident in the development of new biopharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may harm our business.

In order to complete the development of repibresib and VYN202 (including making milestone payments pursuant to the repibresib License Agreement and VYN202 License Agreement), or any future product candidates, we will require substantial additional capital.

Accordingly, we expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants.

Our primary uses of capital were historically compensation and related expenses, research and development costs to support our product candidate pipeline, legal and other regulatory expenses and general overhead costs.

Now that we have suspended and are winding down our research and development activities in anticipation of the Merger with Yarrow, our operations will be limited and we expect that our expenses other than those related to the Merger will decrease significantly.

Our future operations are highly dependent on the success of the proposed Merger with Yarrow.

If the Merger Agreement with Yarrow is terminated, we may pursue other strategic alternatives, including financing opportunities, or liquidation.

If the Merger is not completed, in order to continue the development of VYN202 (including making milestone payments pursuant to the VYN202 License Agreement), or any future product candidates, we will require substantial additional capital.

Accordingly, we may seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include collaborations, partnerships or other licensing or other strategic arrangements with third parties.

To the extent that we raise additional capital through equity financings or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation, voting or other preferences that adversely affect the rights of our common stockholders.

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In addition, the amount of proceeds we may be able to raise pursuant to our shelf registration statement on Form S-3 is limited.

As of the filing of this Annual Report on Form 10-K, we are subject to the general instructions of Form S-3 known as the "baby shelf rules." Under these rules, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of our common stock held by our non-affiliates.

As of the filing of this Annual Report, we are subject to the general instructions of Form S-3 known as the "baby shelf rules." Under these rules, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of our common stock held by our non-affiliates.

Therefore, we will be limited in the amount of proceeds we are able to raise by selling shares of common stock using our Form S-3 until such time as our public float exceeds $75.0 million.

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Our present and future funding requirements will depend on a number of factors, including the following:

• the scope, timing, progress, results, and costs of researching and developing repibresib and VYN202 and conducting clinical trials, including larger and later-stage trials;

• the costs and timing of the Merger;

• our ability to complete the Merger or, if the Merger is not completed, identify and consummate another strategic transaction;

• the scope, timing, progress, results, and costs of researching and developing VYN202;

• the scope, timing, progress, results, and costs of preclinical studies and clinical trials for any other current and future programs;

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During the year ended December 31, 2025, net cash used in operating activities was $33.1 million and primarily reflected our net loss of $26.5 million adjusted for non-cash share-based compensation expense of $2.3 million, partially offset by the amortization of premium on marketable securities of $0.8 million.

The remainder of the cash used in operations was due to net changes in assets and liabilities, which was largely driven by a $12.3 million decrease in trade payables, accrued expenses, employee related obligations and other long-term liabilities and a $4.2 million decrease in trade receivables, prepaid expenses and other assets.

The decreases were largely attributable to the wind down of the clinical trials for repibresib and VYN202 and the related fees for contract research organizations, investigative sites, and other service providers that assist in conducting preclinical research studies and clinical trials.

During the year ended December 31, 2024, net cash used in operating activities was $34.0 million and primarily reflected our net loss of $39.8 million adjusted for non-cash share-based compensation expense of $3.3 million, partially offset by the amortization of premium on marketable securities of $2.4 million.

The remainder of the cash used in operations was due to net changes in assets and liabilities, which was largely driven by a $6.0 million increase in trade payables, accrued expenses, employee related obligations and other long-term liabilities.

This increase was primarily comprised of accruals related to fees for contract research organizations, investigative sites, and other service providers that assist in conducting preclinical research studies and clinical trials.

During the year ended December 31, 2023, net cash used in operating activities was $25.3 million and primarily reflected our net loss of $28.5 million adjusted for non-cash items of $3.1 million primarily related to share-based compensation expense.

The remainder of the cash used in operations was driven by net changes in assets and liabilities.

Net cash provided by (used in) investing activities

Net cash provided by inv esting activities

During the year ended December 31, 2025, net cash provided by investing activities was $37.4 million and consisted of $68.3 million of proceeds received from the sale and maturity of marketable securities, partially offset by $30.9 million paid for the purchase of marketable securities.

During the year ended December 31, 2024, net cash provided by investing activities was $23.4 million and consisted of $84.0 million of proceeds received from the sale and maturity of marketable securities, partially offset by $60.5 million paid for the purchase of marketable securities and $0.1 million paid for the purchase of property and equipment.

During the year ended December 31, 2023, net cash used in investing activities was driven by the purchase of marketable securities of $62.4 million, partially offset by the receipt of the deferred payment from Journey in January 2023 of $5.0 million in connection with the sale of the MST Franchise.

Net cash (used in) provided by fina ncing activities

Net cash used in fin a ncing activities

During the year ended December 31, 2025, net cash used in financing activities related to $0.1 million of withholdings from the exercise of options and issuance of shares for share-based compensation arrangements.

During the year ended December 31, 2023, net cash provided by financing activities was $82.4 million and consisted primarily of net proceeds of $82.7 million from our issuance and sale of common stock and pre-funded warrants and $0.2 million of proceeds received from the sales of common stock under our at-the-market equity offering program, partially offset by $0.4 million paid for the redemption of previously outstanding convertible preferred stock.

During the year ended December 31, 2024, net cash used in financing activities related to $0.1 million of withholdings from the exercise of options and issuance of shares for share-based compensation arrangements.

Cash and Funding Sources

Our sources of funding in the year ended December 31, 2025 consisted primarily of $68.3 million of proceeds received from the sale and maturity of marketable securities.

Our sources of funding in the year ended December 31, 2023 totaled $87.8 million and consisted primarily of net proceeds of $82.7 million from our issuance and sale of common stock and pre-funded warrants, $5.0 million in proceeds from the deferred payment from the sale of the MST Franchise and $0.2 million in net proceeds from the issuance of common stock pursuant to our at-the-market offering program.

Our sources of funding in the year ended December 31, 2024 consisted primarily of $84.0 million of proceeds received from the sale and maturity of marketable securities.

Contractual Obligations

Lease Commitments

In November 2022, we transitioned to a smaller corporate headquarters and signed a Sublease Agreement (the “Sublease”) to sublease approximately 5,755 square feet of office space (the “Leased Premises”) in Bridgewater, New Jersey through September 30, 2023.

We signed a Lease Agreement (the “Master Lease”) to lease the Leased Premises following the termination of the Sublease through September 30, 202 5.

We have aggregate operating lease obligations of $0.1 million at December 31, 2024 .

In November 2022, we signed a Sublease Agreement (the “Sublease”) to sublease approximately 5,755 square feet of office space (the “Leased Premises”) in Bridgewater, New Jersey through September 30, 2023.

We signed a Lease Agreement (the “Master Lease”) to lease the Leased Premises following the termination of the Sublease through September 30, 2025, which we extended to October 30, 2025.

Since November 1, 2025, we operate on a fully remote model.

We have no operating lease obligations at December 31, 2025.

R&D Commitments

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To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

While our significant accounting policies are more fully described in “Note 2—Significant Accounting Policies,” to the consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following accounting policies are the most critical to assist stockholders and investors reading the consolidated financial statements in fully understanding and evaluating our financial condition and results of operations.

While our significant accounting policies are more fully described in “Note 2—Significant Accounting Policies,” to the consolidated financial statements included in this Annual Report, we believe that the following accounting policies are the most critical to assist stockholders and investors reading the consolidated financial statements in fully understanding and evaluating our financial condition and results of operations.

These policies relate to significant areas involving management’s judgments and estimates and that require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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In accruing expenses, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of the prepaid expense accordingly.

If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of the prepaid expense accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting higher or lower amounts in any particular period.

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Recently Issued Accounting Pronouncements

Certain recently issued accounting pronouncements are discussed in “Note 2—Significant Accounting Policies,” to the consolidated financial statements included in this Annual Report on Form 10-K.

Certain recently issued accounting pronouncements are discussed in “Note 2—Significant Accounting Policies,” to the consolidated financial statements included in this Annual Report.

ITEM 7A - 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-K

Item 7. Management’s Discussion and Analysis