Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a late-stage clinical specialty pharmaceutical company with the sole mission to address the global nicotine dependence epidemic through the development and commercialization of cytisinicline. There are approximately 25 million adults in the United States who smoke combustible cigarettes. Tobacco use is currently the leading cause of preventable death that is responsible for more than eight million deaths worldwide and nearly half a million deaths in the United States annually.

While nicotine e-cigarettes are thought to be less harmful than combustible cigarettes, they remain highly addictive and can deliver harmful chemicals which are associated with lung injury, cardiovascular disease and cancer. In 2024, 1.6 million high school and middle school students reported using e-cigarettes. Research shows adolescents who have used e-cigarettes are seven times more likely to become smokers one year later compared to those who have never used e-cigarettes. In 2024, the FDA granted Breakthrough Therapy designation for cytisinicline for nicotine e-cigarette, or vaping, cessation. Breakthrough Therapy designation is a process that expedites the development and review of new drugs and biologics that are intended to treat serious or life-threatening conditions and have preliminary clinical evidence indicating substantial improvement over existing therapies.

In October 2025, the FDA awarded cytisinicline for nicotine e-cigarette, or vaping, cessation the Commissioner's National Priority Voucher, or CNPV, as part of the pilot program. A CNPV is granted to product candidates with significant potential to address a major national priority, such as meeting a large unmet medical need, reducing downstream health care utilization or addressing a public health crisis. CNPV recipients will receive a decision from the FDA within one to two months following filing of a complete application for a drug, as well as enhanced communication with review staff throughout the development process prior to their final submission and during the review period. Currently, there are no FDA-approved therapies indicated specifically as an aid for nicotine e-cigarette cessation.

Cytisinicline is a naturally occurring alkaloid with a high binding affinity to the nicotinic acetylcholine receptor. It is believed to work in treating nicotine dependence for smoking and e-cigarette cessation by interacting with nicotine receptors in the brain by reducing the severity of craving and withdrawal symptoms, and reducing the reward and satisfaction associated with nicotine products. Cytisinicline is an investigational product candidate being developed for treatment of nicotine dependence. In September 2025, we announced that the FDA accepted for review our New Drug Application, or NDA, for cytisinicline as a treatment for smoking cessation as the first indication in the United States and assigned a Prescription Drug User Fee Act, or PDUFA, targeted action date of June 20, 2026.

One third-party manufacturer named in our NDA underwent a non-Achieve related FDA current Good Manufacturing Practices, or cGMP, inspection and the FDA made observations, two of which were related to solid oral dose manufacturing. As a result, the third-party manufacturer's facility, where the FDA made the two observations, received an Official Action Indicated, or OAI, classification and a warning letter. The observations resulting in the OAI classification and warning letter at the third-party manufacturer's facility relate to general cGMP matters at the facility and are not specific to cytisinicline. We expect to receive a Complete Response Letter, or CRL, from the FDA on or before our June 20, 2026 PDUFA targeted action date, which would delay our NDA approval. We have partnered with a U.S.-based manufacturer, Adare Pharma Solutions, or Adare, to manufacture cytisinicline drug product for potential commercial launch and beyond (see Note 8 "Related Party Transactions" in the accompanying consolidated financial statements). We have completed the analytical method transfer to Adare's manufacturing facility in Vandalia, Ohio. In addition, we have completed our first cytisinicline engineering batch manufactured at Adare's facility. We anticipate the partnership with Adare will help to decrease risks related to our supply chain, international importation of pharmaceuticals and reduce costs, including potential tariffs. We intend to resubmit the NDA naming Adare as our manufacturer for commercial supply in the fourth quarter of 2026 and anticipate the commercial launch of cytisinicline in the first half of 2027.

We believe cytisinicline represents a unique opportunity to significantly impact global health by addressing the considerable unmet need among millions of smokers and e-cigarettes users. We believe cytisinicline is differentiated from existing smoking cessation treatments given its combination of efficacy, well-tolerated safety profile and dosing flexibility with a 6 or 12-week regimen, as demonstrated in clinical trials.

We believe we will be able to commercialize independently in the U.S. market by focusing our marketing and sales efforts on highly targeted prescriber and patient audiences. We are planning to launch cytisinicline by utilizing a well-established marketing technology infrastructure and embedding Artificial Intelligence, or AI, tools to enhance targeting, decision making, and performance metrics. Launch planning and readiness activities are underway, leveraging our integrated agency partnership with Omnicom, with teams

established for key functional areas including market access, medical education, prescriber and patient marketing, and digital infrastructure. Additionally, field-based and virtual sales representatives will supplement digital promotional efforts.

We have no products approved for commercial sale and have not generated any revenue from product sales to date. We have never been profitable and have incurred operating losses in each year since inception. Our net loss was $10.2 million for the three months ended March 31, 2026. As of March 31, 2026, we had an accumulated deficit of $270.4 million, cash, cash equivalents and marketable securities balance of $29.3 million and a positive working capital balance of $19.2 million. For the three months ended March 31, 2026, net cash used in operating activities was $6.9 million. In April 2026, we entered into a securities purchase agreement with certain institutional and accredited investors for a private placement of our securities. We received gross proceeds of approximately $180.0 million from the private placement, before deducting placement agent fees and other expenses. We estimate net proceeds to be approximately $168.6 million after deducting estimated placement agent fees and other expenses of approximately $11.4 million. In connection with the private placement, our board of directors appointed Andrew D. Goldberg, MD to the position of Chief Executive Officer and President, and as a member of the board of directors, effective following the closing of the private placement. We also appointed two additional members of our board of directors, Lucian Iancovici, MD and Aaron Royston, MD.

License & Supply Agreements

Sopharma License and Supply Agreements

We are party to a license agreement, or the Sopharma License Agreement, and a supply agreement, or the Sopharma Supply Agreement, with Sopharma AD, or Sopharma. Pursuant to the Sopharma License Agreement, we were granted access to all available manufacturing, efficacy and safety data related to cytisinicline. Additional rights granted under the Sopharma License Agreement include the exclusive use of, and the right to sublicense, certain Sopharma patent rights and the trademark Tabex in all territories described in the Sopharma License Agreement. Under the Sopharma License Agreement, we agreed to pay a nonrefundable license fee. In addition, we agreed to make certain royalty payments equal to a mid-single digit percentage of all net sales of Tabex branded products in our territory during the term of the Sopharma License Agreement, including those sold by a third party pursuant to any sublicense which may be granted by us. We have agreed to coordinate with Sopharma in the defense against any actual or threatened infringement claims with respect to Tabex branded products. The Sopharma License Agreement will terminate under customary termination provisions including bankruptcy or insolvency and material breach. To date, any amounts paid to Sopharma pursuant to the Sopharma License Agreement have been immaterial.

We communicated to Sopharma that we had concerns regarding their ability to pass an FDA pre-approval inspection and that if those concerns were not resolved, we planned to engage third-party manufacturers, and include such manufacturers in our NDA, until such time that Sopharma is able to pass an FDA inspection. In June 2025, we submitted our NDA, which included third-party manufacturers. Sopharma has alleged that our engagement of third-party manufacturers is a breach of our agreement, which we have disputed and have proposed steps to resolve.

Share Purchase Agreement

On May 14, 2015, we entered into a Share Purchase Agreement with Sopharma to acquire 75% of the outstanding shares of Extab Corporation for $2.0 million in cash and $2.0 million in a deferred payment, contingent on regulatory approval of cytisinicline by the FDA or the European Medicines Agency. The fair value of the contingent consideration on the acquisition date was nil. The contingent consideration liability is measured at fair value in our financial statements.

As of March 31, 2026, the fair value of the contingent consideration was estimated to be $1.3 million (see Note 5 "Fair Value Measurements, Fair Value of Sopharma Share Purchase Agreement Contingent Consideration" in the accompanying unaudited consolidated financial statements). We recognized a gain of $0.3 million for the three months ended March 31, 2026 and a loss of $0.1 million for the three months ended March 31, 2025.

Research and Development Expenses

Research and development, or R&D, expenses consist primarily of costs for clinical trials, manufacture of product, personnel costs, milestone payments to third parties, facilities, regulatory activities, non-clinical studies and allocations of other R&D-related costs. External expenses for clinical trials include fees paid to clinical research organizations, clinical trial site costs and patient treatment costs.

We manage our clinical trials through contract research organizations and independent medical investigators at our sites and at hospitals and expect this practice to continue. Due to our ability to utilize resources across several projects, we do not record or maintain information regarding the indirect operating costs incurred for our R&D programs on a program-specific basis. In addition,

we believe that allocating costs on the basis of time incurred by our employees does not accurately reflect the actual costs of a project.

Our R&D expenses will vary materially between quarters based on the timing of our clinical trials. The process of conducting clinical trials and non-clinical studies necessary to obtain regulatory approval is costly and time consuming and we may never succeed in achieving marketing approval for cytisinicline. (See "Item 1A. Risk Factors-Risks Related to the Development of Our Product Candidate Cytisinicline.").

Successful development of cytisinicline is highly uncertain and may not result in an approved product. We cannot estimate completion dates for development activities or when we might receive material net cash inflows from our R&D projects, if ever. We anticipate we will make determinations as to which markets, and therefore, which regulatory approvals, to pursue and how much funding to direct toward achieving regulatory approval in each market on an ongoing basis in response to our ability to enter into new strategic alliances with respect to each program or potential product candidate, the scientific and clinical success of each future product candidate, and ongoing assessments as to each future product candidate's commercial potential. We will need to raise additional capital and may seek additional strategic alliances in the future in order to advance our various programs.

Our projects or intended R&D activities may be subject to change from time to time as we evaluate results from completed studies, our R&D priorities and available resources.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs related to executive, finance and accounting, and other administrative functions, as well as consulting costs, including commercial, corporate communications, market research, business consulting, human resources and intellectual property. Other costs include professional fees for legal and auditing services, insurance and facility costs.

Results of Operations

For the three months ended March 31, 2026 and 2025

Research and development expenses

Our R&D expenses are devoted to our one ongoing clinical development program, cytisinicline. R&D expenses for the three months ended March 31, 2026 decreased to $3.3 million as compared to $7.1 million for the three months ended March 31, 2025. The decrease in expense for the three months ended March 31, 2026, was due to a decrease in clinical trial costs of $3.3 million in 2026 as compared to 2025, associated with the ORCA-OL trial, which was completed in September 2025 and wound down through the first quarter of 2026, as compared to the same period in 2025, in which higher costs incurred were associated with the continued full enrollment of the ORCA-OL trial. In addition, R&D expenses were lower due to a decrease in stock-based compensation expense of $1.0 million for the three months ended March 31, 2026 as compared to the same period in 2025, due to the revaluation of the probability on the achievement of certain performance conditions of our outstanding performance based restricted stock unit awards, or PRSUs. This was partially offset by higher manufacturing and supply chain costs of $0.6 million during the three months ended March 31, 2026 as compared to the same period in 2025, which was associated with commercial launch preparation, including purchase of raw cytisinicline inventory expensed to R&D prior to regulatory approval and completion of analytical method transfer to Adare and completion of an engineering batch manufactured at Adare's facility.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2026 increased to $7.2 million from $5.8 million for the three months ended March 31, 2025. The increase in expenses for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily due to higher commercial launch preparation costs, which were $3.2 million for the three months ended March 31, 2026 as compared to $1.2 million for the same period in 2025, higher employee expenses of $0.6 million for the three months ended March 31, 2026 as compared to the same period in 2025, which was associated with increased headcount, and an increase in legal expenses of $0.4 million for the three months ended March 31, 2026 as compared to the same period in 2025, associated with patent activities. This was partially offset by a decrease in stock-based compensation expense of $1.9 million for the three months ended March 31, 2026 as compared to the same period in 2025, due to the revaluation of the probability on the achievement of certain performance conditions of our outstanding PRSUs.

Interest income

Total interest income for each of the three months ended March 31, 2026 and 2025, was $0.3 million.

Interest expense

Total interest expense for the three months ended March 31, 2026, was $0.3 million compared to $0.2 million for the three months ended March 31, 2025. The increase in interest expense for the three months ended March 31, 2026 as compared to the same period in 2025 was due to a higher average debt balance of $15.0 million in 2026 as compared to $10.0 million in 2025.

Change in fair value of contingent consideration

We determine the fair value of the contingent consideration using a probability based discounted cash flow model whereby we forecast the timing of the cash flow of the related future payment based on cytisinicline's current clinical development phase and the remaining requirements for regulatory approval. Adjustments to the fair value of the contingent liabilities, other than payments, are recorded as a gain or loss in the Consolidated Statements of Loss and Comprehensive Loss (see Note 5 "Fair Value Measurements, Fair Value of Sopharma Share Purchase Agreement Contingent Consideration" in the accompanying consolidated financial statements).

For the three months ended March 31, 2026, we recognized a gain on the fair value of the contingent consideration of $0.3 million. For the three months ended March 31, 2025, we recognized a loss on the fair value of the contingent consideration of $0.1 million.

Liquidity, Capital Resources

We have incurred an accumulated deficit of $270.4 million through March 31, 2026, and we expect to incur substantial additional losses in the future as we operate our business and continue or expand our regulatory, manufacturing, commercialization and other R&D activities and other operations. We have not generated any revenue from product sales to date, and we may not generate product sales revenue in the near future, if ever. As of March 31, 2026, we had a cash, cash equivalents and marketable securities balance of $29.3 million and a positive working capital balance of $19.2 million. For the three months ended March 31, 2026, net cash used in operations was $6.9 million. In April 2026, we entered into a securities purchase agreement with certain institutional and accredited investors for a private placement of our securities. We received gross proceeds of approximately $180.0 million from the private placement, before deducting placement agent fees and other expenses. We estimate net proceeds to be approximately $168.6 million after deducting estimated placement agent fees and other expenses.

We have historically financed our operations through equity offerings, debt financings, and government grants. As a late-stage clinical specialty pharmaceutical company with no current sources of revenue, we are dependent on our ability to raise funds (through public or private securities offerings, debt financings, government funding or grants, or other sources, which may include licensing, collaborations or other strategic transactions or arrangements) to support the ongoing clinical development and commercialization activities. While we believe that we will be able to settle our commitments and liabilities in the normal course of business as they fall due during the next 12 months, as a development-stage company with no current sources of revenue, we are dependent on our ability to raise funds (through public or private securities offerings, debt financings, government funding or grants, or from other sources, which may include licensing, collaborations or other strategic transactions or arrangements) to fund our operations and finance the remaining development and commercialization of our product candidate.

We did not have during the periods presented, and we do not currently have, any commitments or obligations, including contingent obligations, other than the Sopharma Contingent Consideration (as defined in Note 4 "License Agreements" in the accompanying consolidated financial statements), arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

Convertible Debt

On July 25, 2024, we entered into a contingent convertible debt agreement, or New Debt Agreement, with Silicon Valley Bank, or SVB, a division of First-Citizens Bank & Trust Company, or FCB, in its capacity as administrative agent and collateral agent, and FCB, as a lender, or Lender, pursuant to which the Lender provided term loans having an aggregate original principal amount of $10.0 million, with additional term loans of up to $10.0 million available upon the occurrence of certain events as provided for in the New Debt Agreement and further described below, or New Convertible Term Loan. Our obligations under the New Debt Agreement are secured by substantially all of our assets, other than intellectual property.

The New Convertible Term Loan matures on June 1, 2028. The first tranche of the New Convertible Term Loan, which was advanced on July 25, 2024, has an aggregate original principal amount of $10.0 million. In October 2025, pursuant to the New Debt Agreement we drew down on the second tranche of the New Convertible Term Loan for an additional $5.0 million. We did not draw down on the third tranche of the New Convertible Term Loan and it expired and became unavailable on December 31, 2025.

Interest is calculated on the outstanding principal amount of the New Convertible Term Loan at a floating rate per annum equal to the greater of (i) 7.0% and (ii) the prime rate minus 1.0%, which interest shall be payable in cash monthly in arrears and shall be payable on the earlier to occur of (x) the first day of the first month following any extension of credit by the Lender for our credit, (y) the date of any prepayment pursuant to the New Debt Agreement, or (z) the maturity date. The New Convertible Term Loan will be "interest-only" until June 30, 2026 (see Note 6 "Convertible Debt" in the accompanying consolidated financial statements).

June 2025 Public Offering

On June 26, 2025, we entered into an underwriting agreement, or Underwriting Agreement, with Citizens JMP Securities, LLC and Raymond James & Associates, Inc., or the Underwriters, as representatives of the underwriters, pursuant to which we agreed to issue and sell to the Underwriters 15,000,000 shares of our common stock and accompanying common warrants to purchase up to 15,000,000 shares of common stock, or pre-funded warrants to purchase shares of our common stock in lieu thereof.

The shares and accompanying warrants were sold collectively at the public offering price of $3.00 per share and accompanying warrant, less underwriting discounts and commissions. Pursuant to the Underwriting Agreement, we also granted the Underwriters a 30-day option to purchase up to an additional 2,250,000 shares and/or up to an additional 2,250,000 accompanying warrants at the same public offering price per share and accompanying warrant, less underwriting discounts and commissions. On June 28, 2025, the Underwriters exercised their option in part to purchase an additional 1,766,666 accompanying warrants. On July 25, 2025, the Underwriters exercised their option in part to purchase an additional 1,419,896 shares.

Each accompanying warrant is exercisable, at the purchaser's election, for either warrant shares at an exercise price of $3.00 per share or for pre-funded warrants at an exercise price of $2.999 per pre-funded warrant. The accompanying warrants are exercisable at any time after the date of issuance, subject to certain ownership limitations, and will expire on the fifth anniversary of the date of issuance. A holder of accompanying warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of our common stock outstanding immediately after giving effect to such exercise. The pre-funded warrants have an exercise price of $0.001 per share, will be immediately exercisable subject to certain ownership limitations, and have no expiration. A holder of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of our common stock outstanding immediately after giving effect to such exercise. A holder of accompanying warrants and pre-funded warrants may increase or decrease the ownership limitation by providing at least 61 days' prior notice to us.

The June 2025 public offering of 15,000,000 shares and 15,000,000 accompanying warrants raised total gross proceeds of approximately $45.0 million, and after deducting approximately $3.8 million in underwriting discounts and offering expenses, we received net proceeds of approximately $41.2 million. The exercises in part of the Underwriters' option to purchase 1,766,666 accompanying warrants and 1,419,896 shares raised gross proceeds of $4.3 million, and after deducting approximately $0.3 million in underwriting discounts, we received net proceeds of approximately $4.0 million.

April 2026 Private Placement

On April 15, 2026 we entered into a securities purchase agreement with certain institutional and accredited investors, or Investors, pursuant to which we agreed to sell and issue to the Investors in a private placement an aggregate of (i) 49,418,069 shares of our common stock, and, in lieu of shares of our common stock for an Investor, pre-funded warrants to purchase up to 100,500 shares of our common stock, and (ii) accompanying warrants to purchase up to 49,518,569 shares of our common stock or pre-funded warrants to purchase shares of our common stock, or common warrant shares at a collective purchase price of (a) $3.635 per combination of shares and accompanying common warrants or (b) $3.634 per combination of pre-funded warrants and accompanying common warrants.

Each pre-funded warrant has an exercise price of $0.001 per pre-funded warrant share. The pre-funded warrants are exercisable at any time after their original issuance, subject to certain ownership limitations, and will not expire.

Each common warrant will be exercisable at an exercise price of $3.51 per common warrant share. The common warrants are exercisable at any time after the date of issuance, subject to certain ownership limitations, and will expire on the later of the twentieth business day following (i) the date on which we publicly announce that the U.S. Food and Drug Administration has approved cytisinicline for smoking cessation in adults, or FDA Approval, and (ii) the date on which we notify the common warrant holders of the FDA Approval, provided that if a common warrant is not fully exercisable because we have insufficient authorized and unreserved

shares of our common stock at the time of the public announcement of the FDA Approval, the common warrant will be exercisable for two years following the date on which we obtain stockholder approval for an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock.

A holder of common warrants or pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99%, 9.99% or 19.99%, at the election of the holder (provided that no holder may beneficially own more than 19.99%) (the "Ownership Limitation"), of the number of shares of our common stock outstanding immediately after giving effect to such exercise. A holder of common warrants or pre-funded warrants may generally increase or decrease the Ownership Limitation by providing at least 61 days' prior notice to us. A holder of common warrants or pre-funded warrants also may not exercise the common warrants or pre-funded warrants, as applicable, for shares of our common stock if we do not have sufficient authorized and unissued shares of our common stock to issue such shares of our common stock upon exercise.

We received gross proceeds of approximately $180.0 million from the private placement, before deducting placement agent fees and other expenses.We estimate net proceeds to be approximately $168.6 million after deducting estimated placement agent fees and other expenses of approximately $11.4 million.

Cash Flows

Operating Activities

For the three months ended March 31, 2026, net cash used in operating activities was $6.9 million compared to $11.1 million for the three months ended March 31, 2025. The decrease in cash used in operations in the 2026 period as compared to the 2025 period was due to the wind down of the ORCA-OL trial, which was completed in September 2025, as compared to the same period in 2025, in which costs incurred were associated with the continued full enrollment of the ORCA-OL trial.

Financing Activities

For the three months ended March 31, 2026, net cash provided by financing activities was $21,000, related to proceeds received from warrant exercises.

Investing Activities

For the three months ended March 31, 2026, net cash provided by investing activities was $14.3 million compared to $11.4 million for the three months ended March 31, 2025. Net cash provided by investing activities in the three months ended March 31, 2026 and 2025, respectively, was due to transactions involving marketable securities in the normal course of business.

Commitments and Contingencies

We previously disclosed certain contractual obligations and contingencies and commitments relevant to us within the financial statements and Management's Discussion and Analysis of Results of Operations and Liquidity and Capital Resources in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 24, 2026. For more information regarding our current contingencies and commitments, see Note 9 to the financial statements included above.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in our audited financial statements for the year ended December 31, 2025 in our Annual Report on Form 10-K filed with the SEC, on March 24 2026. Since December 31, 2025, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.

New Accounting Standards

See Note 2, "Accounting Policies," of the unaudited consolidated financial statements for information related to the adoption of new accounting standards in 2026, no new accounting standards were adopted.