Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The terms "we," "us," "our," "Evofem" or the "Company" refer collectively to Evofem Biosciences, Inc. and its wholly-owned subsidiaries, unless otherwise stated. All information presented in this quarterly report on Form 10-Q (Quarterly Report) is based on our fiscal year. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending December 31 and the associated quarters, months and periods of those fiscal years.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis is set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Overview

We are a San Diego-based commercial-stage biopharmaceutical company with a strong focus on innovation in women's health. We currently commercialize two FDA-approved products: PHEXX^® (lactic acid, citric acid and potassium bitartrate) vaginal gel and SOLOSEC^® (secnidazole) 2 g oral granules.

Approved by the FDA on May 22, 2020, PHEXX is the first and only non-hormonal prescription contraceptive gel. It is locally acting, with no systemic activity, and used on-demand by women only when they have sex. Because PHEXX is a non-hormonal contraceptive, it is not associated with side effects of exogenous hormone use, which include depression, weight gain, headaches, loss of libido, mood swings and irritability. Taking hormones may not be right for some women, especially those with certain medical conditions, including clotting disorders hormone-sensitive cancer, diabetes, or a BMI over 30, or those who are breast feeding or who smoke. Per the National Center for Health Statistics (NCHS), more than 23.3 million women in the U.S. will not use a hormonal contraceptive.

Evofem has delivered PHEXX net sales growth in each consecutive year since it was launched in September 2020. Key growth drivers for 2025 include social media campaigns, participation in strategic medical conferences, and initiatives to expand use of PHEXX in women who take oral birth control pills in conjunction with GLP-1 prescription medications like Ozempic, Mounjaro and Zepbound for weight loss. These drugs may make oral birth control pills less effective at certain points in the dosing schedule. Per the United States Prescribing Information (USPI), prescribers are instructed to "advise patients using oral contraceptives to switch to a non-oral contraceptive method or add a barrier method" to prevent unintended pregnancy during these times.

In July 2024 we acquired global rights to SOLOSEC. This FDA-approved single-dose oral antimicrobial agent provides a complete course of therapy for the treatment of two common sexual health infections - bacterial vaginosis (BV) and trichomoniasis. The SOLOSEC acquisition aligns with and advances our mission to improve access to innovative and differentiated options that impact women's daily lives. We expect commercialization of SOLOSEC will benefit from our commercial infrastructure and strong physician relationships.

We intend to expand the global reach of our products and further increase our global potential through ex-U.S. partnerships or licensing agreements for PHEXX and SOLOSEC.

We licensed exclusive commercial rights for PHEXX in MENA to Pharma 1 Drug Store, an emerging Emirati health care company. Under the License and Supply Agreement dated on July 17, 2024, as amended on May 3, 2025, the licensed territory includes the UAE, Kuwait, Saudi Arabia, Qatar, Oman, and Jordan, with potential to expand into 15 other countries in the region. Pharma 1 is responsible for obtaining and maintaining any regulatory approvals required to market and sell PHEXX, and will handle all aspects of distribution, sales and marketing, pharmacovigilance and all other commercial functions in these countries. Evofem will supply product to Pharma 1 at cost-plus. Pharma 1 filed for regulatory approval of PHEXX in the UAE in June 2025.

The Company also licensed commercial rights to SOLOSEC in MENA to Pharma 1 on May 19, 2025. Under this agreement, the licensed territory includes the UAE, Kuwait, Saudi Arabia, Qatar, Oman, and Jordan, with potential to expand into 15 other countries in the region. Pharma 1 is responsible for obtaining and maintaining any regulatory approvals required to market and sell SOLOSEC, and will handle all aspects of distribution, sales and marketing, pharmacovigilance and all other commercial functions in these countries. Evofem will supply product to Pharma 1 at a specified cost per unit. Pharma 1 filed for regulatory approval of SOLOSEC in the UAE in September 2025.

Additionally, PHEXX was approved in Nigeria on October 6, 2022, as Femidence™ by the National Agency for Food and Drug Administration and Control. PHEXX has also been submitted for approval in Mexico, Ethiopia and Ghana.

We halted clinical development of our investigational product candidates in October 2022 to focus resources on growing domestic sales of PHEXX for the prevention of pregnancy.

In the second quarter of 2025, enrollment commenced in an investigator-led randomized, open-label, parallel Phase 4 clinical trial to evaluate the efficacy and cost-effectiveness of secnidazole (SOLOSEC® 2 g, one dose administered one time) versus metronidazole (Flagyl® 500 mg, administered twice daily for seven days) for the treatment of trichomoniasis in men and women. Study investigators hypothesize that, in the current clinical trial, the rate of repeat infections with T. vaginalis will be 1.75 lower in the SOLOSEC arm versus the multi-dose oral metronidazole arm and that single-dose SOLOSEC will have higher initial cost but will be more cost effective compared to multi-dose metronidazole, largely due to lower breakthrough rates of infection. This trial is funded directly by the National Institutes of Health (NIH).

In an investigator-led clinical study of SOLOSEC in 24 women with recurrent bacterial vaginosis (BV), once-weekly dosing with demonstrated efficacy matching or potentially surpassing outcomes of current CDC-recommended suppressive treatments. These promising results underscore SOLOSEC's potential to redefine the standard of care for recurrent BV - offering a simpler treatment option for long-term symptom control. The study was presented at the 2025 American College of Obstetricians and Gynecologists (ACOG) Annual Clinical and Scientific Meeting.

PHEXX as a Contraceptive; Commercial Strategies

In September 2020, we commercially launched PHEXX in the United States. Our sales force promotes PHEXX directly to obstetrician/gynecologists and their affiliated health professionals, who collectively write the majority of prescriptions for contraceptive products. Our sales force comprises approximately 16 regional sales representatives, two business directors and a Senior Vice President of Commercial Operations. Additionally, we offer women direct access to PHEXX via a telehealth platform. Using this platform, women can directly meet with an HCP to determine their eligibility for a PHEXX prescription and, if eligible, have the prescription written by the HCP, then filled and mailed directly to them by a third-party pharmacy.

Our comprehensive commercial strategy for PHEXX includes marketing and product awareness campaigns targeting HCPs and women of reproductive potential in the U.S., including the approximately 23.3 million women who are not using hormonal contraception and the approximately 20.0 million women who are using a prescription contraceptive, some of whom, particularly oral birth control pill users, may be ready to move to an FDA-approved, non-invasive, non-systemic hormone-free contraceptive, as well as certain identified target HCP segments. In addition to marketing and product awareness campaigns, our commercial strategy includes payer outreach and execution of our consumer digital and media strategy.

Key growth drivers for 2025 include social media campaigns, participation in strategic medical conferences, and initiatives to expand use of PHEXX in women who take oral birth control pills in conjunction with GLP-1 prescription medications like Ozempic, Mounjaro and Zepbound for weight loss. These drugs may make oral birth control pills less effective at certain points in the dosing schedule. Per the USPI, prescribers are instructed to "advise patients using oral contraceptives to switch to a non-oral contraceptive method or add a barrier method" to prevent unintended pregnancy during these times.

We continue working to increase the number of lives covered and to gain a preferred formulary position for PHEXX.

Previous contracting efforts have validated our access strategy. With PHEXX approval rates consistently above 80%, the Company has shifted from broad payer contracting to strengthening pharmacy partnerships. In 2025, we expanded our network in two of our highest-volume markets - California and the Northeast - by adding new partners in California and a regional distributor with more than 90 pharmacies in the Northeast. These targeted partnerships represent low-hanging fruit in high-demand areas, improving patient access while supporting more cost-effective and scalable pull-through.

Since the second quarter of 2022, we have been under contract with one of the largest pharmacy benefit managers (PBMs) in the nation, which added PHEXX to its formulary with no restrictions for most women covered by the plan. The agreement was retroactive and took effect January 1, 2022 and is representative of approximately 46 million lives.

An additional 13.7 million lives are covered under our December 2020 contract award from the U.S. Department of Veterans Affairs.

We also participate in government programs, including the 340B and the Medicaid Drug Rebate Program. As a result of our participation in the Medicaid National Drug Rebate Program, the U.S. Medicaid population gained access to PHEXX on January 1, 2021. As of May 2025, Medicaid provides health coverage to approximately 70.5 million members; nearly two-thirds of adult women enrolled in Medicaid are in their reproductive years (19-44). Additionally, we began participating in a 340B Group Purchasing Organization (GPO) that serves safety-net clinics throughout the U.S. in June 2024. This GPO has over 6,500 members, which expands our reach among safety-net providers.

As of July 2025, approximately 86% of commercial and Medicaid PHEXX prescriptions are being approved by payers.

PHEXX is classified in the databases and pricing compendia of Medi-Span and First Databank, two major drug information databases that payers can consult for pricing and product information, as the first and only "Vaginal pH Modulator."

Effective as of January 1, 2023, most insurers and PBMs must provide coverage, with no out-of-pocket costs (e.g., $0 copay) to the subscriber or dependent, for FDA-approved contraceptive products, like PHEXX, prescribed by healthcare providers.

To comply with these federal guidelines, payers are increasingly covering PHEXX by:

	-	Adding PHEXX to formulary (commercial insurers) or preferred drug list (Medicaid)
	-	Removing the requirement for a Prior Authorization letter from the HCP (commercial insurers)
	-	Moving PHEXX to $0 copay (commercial insurers)

In 2022, Evofem developed and introduced a new contraceptive educational chart for patients and HCPs that details high-level information about birth control methods currently available to women in the U.S., including the vaginal pH modulator. This new contraceptive educational tool has been extremely well received and has had a positive impact with HCPs and patients alike.

SOLOSEC

In July 2024, we expanded our commercial portfolio by acquiring global rights to SOLOSEC^® (secnidazole) 2 g oral granules, a single-dose oral antimicrobial agent that provides a complete course of therapy with just one dose for the treatment of two common sexual health infections. SOLOSEC is FDA-approved for the treatment of:

	1)	Bacterial vaginosis (BV), a common vaginal infection, in females 12 years of age and older, and
	2)	Trichomonas vaginalis, a common sexually transmitted infection (STI), in people 12 years of age and older.

SOLOSEC has the same call point as PHEXX, enabling us to leverage our commercial infrastructure and strong physician relationships. We re-launched the brand in November 2024.

Bacterial Vaginosis

Bacterial vaginosis (BV) affects an estimated 21 million women in the U.S., approximately 29% of the U.S. population, making it the most common vaginal condition in women ages 15-44. It results from an overgrowth of bacteria, which upsets the balance of the natural vaginal microbiome and can lead to symptoms including odor and discharge. Of interest, BV raises the pH of the vagina, making it a more friendly environment for trichomoniasis and other STIs; approximately 20% of BV patients also have trichomoniasis.

If left untreated, BV can have serious health consequences. Untreated or improperly treated BV is associated with increased risk of infection with STIs like HPV, herpes, trichomoniasis, chlamydia, gonorrhea, and HIV, as well as transmission of STIs to a partner. Additional risks include developing pelvic inflammatory disease (PID), which can threaten a woman's fertility, and complications with gynecological surgery.

Research has shown that as many as 50% of patients with BV do not adhere to a full course of metronidazole treatment (500mg BID x 7d) 14 doses. 58% of women who do not complete therapy will have a recurrence within one year. Noncompliance to a multiple-day metronidazole regimen is a contributing factor to persistent BV.

In clinical trials, SOLOSEC demonstrated clinically and statistically significant efficacy in the treatment of BV with just one dose; 68% of patients treated with SOLOSEC did not require any additional treatment for BV. Guidelines from the American College of Obstetricians and Gynecologists (ACOG) in 2020 and the U.S. Centers for Disease Control (CDC) in 2021 each include single dose SOLOSEC for the treatment of BV.

In May 2025, an investigator-led clinical trial entitled 'Once Weekly Secnidazole Granules for the Treatment of Recurrent Bacterial Vaginosis' was presented at the 2025 ACOG Annual Clinical and Scientific Meeting; the abstract was subsequently published in Obstetrics & Gynecology. In this focused clinical study of 24 women with recurrent BV, once-weekly dosing with SOLOSEC demonstrated efficacy matching or potentially surpassing outcomes of current CDC-recommended suppressive treatments. These promising results underscore SOLOSEC's potential to redefine the standard of care for recurrent BV by offering a simpler treatment option for long-term symptom control.

Trichomoniasis

Trichomoniasis (Trich) is the most common non-viral STI in the world. It is caused by a parasite called Trichomonas vaginalis and affects both women and men. All sexual partners of an infected person must be treated to prevent reinfection with the parasite. In 2018, there were an estimated 6.9 million new T. vaginalis infections in the U.S. According to the CDC, the U.S. prevalence of T. vaginalis is 2.1% among females and 0.5% among males, with the highest rates among Black females (9.6%) and Black males (3.6%). A study of STD clinic attendees in Birmingham, Alabama, identified a prevalence of 27% among women and 9.8% among men. Approximately 70% of women with trichomoniasis are also infected with the bacteria that cause BV.

In clinical trials, a single dose of SOLOSEC demonstrated a cure rate of 92.2% for Trich in women, while reported cure rates in males range from 91.7%-100%.

SOLOSEC's one-and-done dosing and the resulting high level of compliance is believed to be a significant differentiator. Non-compliance to a multi-day metronidazole regimen is a contributing factor to persistent Trich or BV; and ACOG and the CDC no longer recommend single dose metronidazole to treat Trich in women.

A Phase 4 investigator-led randomized, open-label, parallel arm clinical trial is underway to evaluate the efficacy and cost-effectiveness of secnidazole (SOLOSEC 2 g, one dose administered one time) versus metronidazole (Flagyl® 500 mg, administered twice daily for seven days) for the treatment of trichomoniasis in men and women. Study investigators hypothesize that, in the current clinical trial, the rate of repeat infections with T. vaginalis will be 1.75 lower in the SOLOSEC arm versus the multi- dose oral metronidazole arm and that single-dose SOLOSEC will have higher initial cost but will be more cost effective compared to multi-dose metronidazole, largely due to lower breakthrough rates of infection. This trial is funded by the National Institutes of Health (NIH).

Recent Developments

Aditxt Merger Termination

On July 12, 2024, the Company entered into an Agreement and Plan of Merger, as amended, (the A&R Merger Agreement) with Aditxt, Inc., a Delaware corporation (Aditxt), and Adifem, Inc., a Delaware corporation and wholly-owned Subsidiary of Aditxt (Merger Sub), pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Aditxt (the Merger).

On October 20, 2025, the Company held a Special Meeting of Stockholders. After the Company's stockholders did not approve a proposal to approve the transactions contemplated by the A&R Merger Agreement, the Company delivered a notice of termination to Aditxt notifying it that the Company was exercising its right to terminate the A&R Merger Agreement effective October 20, 2025. The termination was in accordance with (i) Section 8.1(b)(ii), which allows either party to terminate the A&R Merger Agreement if the Merger shall not have been consummated on or before 5:00 p.m. Eastern Time, on September 30, 2025, and (ii) as per Section 8.1(b)(iv), which allows either party to terminate the A&R Merger Agreement if the Company Shareholder Approval shall not have been obtained at a duly held Company Shareholders Meeting at which a vote was taken on the approval of the Agreement and the Transactions, including the Merger.

As a result of the termination of the A&R Merger Agreement, all other ancillary agreements related to the A&R Merger Agreement, with the exception of the obligations under the Non-Disclosure Agreement, entered into by and between the Company and Aditxt, as of October 23, 2023, terminated concurrently with the termination of the A&R Merger Agreement. No consideration was paid in connection with the termination.

We are now pursuing a new path, including aiming to re-list our stock on the Nasdaq Capital Market or a comparable national market and complete a fundraising round to provide critical capital for sales and marketing initiatives designed to catalyze our net sales growth over the next 18-24 months.

Adjuvant Amendment

On October 13, 2025, we entered into a Third Amendment to our Securities Purchase Agreement with Adjuvant Global Health Technology Fund, which extended the maturity and payment terms of the Adjuvant Notes. See Note 10 - Subsequent Events.

2025 Equity Incentive Plan

On October 3, 2025, our Board approved the 2025 Equity Incentive Plan authorizing up to 50 million shares, subject to stockholder approval at the 2025 Annual Meeting. No awards have been granted under the plan to date.

Financial Operations Overview

Net Product Sales

Our revenue recognition is based on unit shipments from our third-party logistics warehouse to our customers, which consist of wholesale distributors, retail pharmacies, telehealth companies, and a mail-order specialty pharmacy. We have recognized net product sales in the U.S. since the commercial launch of PHEXX in September 2020; SOLOSEC net product sales were added to our revenue beginning in July 2024. Gross revenues, as discussed in Note 3 - Revenue, are adjusted for variable consideration, including our patient support programs.

Operating Expenses

Cost of Goods Sold

Inventory costs include all purchased materials, direct labor, and manufacturing overhead. In addition, in prior years we accrued quarterly royalty amounts that would have been due pursuant to our license agreement with Rush University had their application for PTE been granted. The royalty expense accrued were amounts equal to a single-digit percentage of the gross amounts we receive on a quarterly basis, less certain deductions incurred in the quarter based on a sliding scale. Due to the patent expiration, no royalty costs were recorded for the three and nine months ended September 30, 2025, while $0.2 million and $0.6 million were recorded for the three and nine months ended September 30, 2024 and were included in the costs of goods sold in the condensed consolidated statements of operations. As described in Note 7 - Commitments and Contingencies, no further royalties are due to Rush University now that the patent has expired and the amounts that had been previously accrued but were unpaid as of December 31, 2024 were reversed in the current period, which had a favorable impact on the total operating expenses during the three months ended September 30, 2025 of approximately $1.9 million that is not expected to be repeated in further periods. Due to the materiality and the one-time nature of the reversal, the amount was included in the gain on change in accounting estimates on contingent royalty liability in the condensed consolidated statements of operations.

We are obligated to pay quarterly royalties under the SOLOSEC Asset Purchase Agreement dated July 14, 2024; this royalty is based on a percentage of SOLOSEC net sales, adjusted for co-pay program costs. There are no minimum quarterly or annual royalty amounts. Such royalty costs were immaterial and approximately $0.1 million for the three and nine months ended September 30, 2025, respectively.

Research and Development Expenses

Our research and development expenses primarily consist of costs associated with ongoing improvements related to our products. These expenses include:

	●	continuous improvements of manufacturing and analytical efficiency;
	●	ongoing product characterization and process optimization;
	●	alternative raw material evaluation to secure an uninterrupted supply chain and reduce cost of goods sold;
	●	employee-related expenses, including salaries, benefits, travel and noncash stock-based compensation expense; and
	●	facilities, depreciation, and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment, and research and other supplies.

We expense internal and third-party research and development expenses as incurred. We do not anticipate significant investment in clinical development for the foreseeable future.

Selling and Marketing Expenses

Our selling and marketing expenses consist primarily of PHEXX and SOLOSEC commercialization costs, the PHEXX telehealth platform, training, salaries, benefits, travel, noncash stock-based compensation expense, PDUFA fees, and other related costs for our employees and consultants.

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries, benefits, travel, business development expenses, investor and public relations expenses, noncash stock-based compensation, and other related costs for our employees and consultants performing executive, administrative, finance, legal and human resource functions. Other general and administrative expenses include facility-related costs not otherwise included in research and development or selling and marketing, and professional fees for accounting, auditing, tax and legal fees, and other costs associated with obtaining and maintaining our patent portfolio.

Other Income (Expense)

Other income (expense) consists primarily of interest expense and the fair value adjustments of financial instruments issued in various capital raise transactions, including loss on issuance of financial instruments, quarterly change in fair value adjustments, and gains or losses on debt extinguishment. The change in fair value of financial instruments was recognized as a result of mark-to-market adjustments for those financial instruments.

Results of Operations

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024 (in thousands):

Net Product Sales

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Product sales, net		$	4,952			$	4,496			$	456				10	%

The increase in product sales, net, primarily reflects a full quarter of SOLOSEC in the current year period as well as the increased PHEXX WAC that took effect January 1, 2025.

Cost of Goods Sold

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Cost of goods sold		$	905			$	869			$	36				4	%

The immaterial increase in cost of goods sold was in line with the increased product sales, net, partially offset by the lack of accrual for the Rush Royalty contingent liability in the current year.

Gain on Change in Accounting Estimates on Contingent Royalty Liability

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Gain on change in accounting estimates on contingent royalty liability		$	(1,933	)		$	-			$	(1,933	)			(100	)%

The $1.9 million gain on change in accounting estimates on contingent royalty liability was due to the reversal of previously accrued but unpaid amounts related to the Rush Royalty as a result of the additional information obtained during the three months ended September 30, 2025, including clarification by the FDA that no PTE should be granted. See Note 7 - Commitments and Contingencies for more information regarding this reversal.

Amortization of Intangible Asset

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Amortization of intangible asset		$	80			$	301			$	(221	)			(73	)%

The decrease in amortization of intangible asset was primarily due to the decrease in the intangible value due to the prior quarterly valuation of the SOLOSEC contingent liability.

Research and Development Expenses

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Research and development, net		$	470			$	332			$	138				42	%

The increase in research and development expenses was primarily due to a $0.1 million increase in personnel costs.

Selling and Marketing Expenses

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Selling and marketing		$	2,391			$	2,382			$	9				0	%

The immaterial increase in selling and marketing expenses reflects a $0.1 million increase in personnel costs, partially offset by a decrease in business development and outside services expenses.

General and Administrative Expenses

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
General and administrative		$	2,088			$	3,052			$	(964	)			(32	)%

The decrease in general and administrative expenses was primarily due to an approximately $0.8 million decrease in professional services costs and a reduction of approximately $0.2 million in personnel costs.

Total Other Income (Expense), Net

		Three Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Total other income (expense), net		$	(2,524	)		$	67			$	(2,591	)			(3,867	)%

Total other expense, net, for the three months ended September 30, 2025 primarily included $0.7 million of interest expense related primarily to the Adjuvant Note and a loss of $1.8 million related to the change in fair value of financial instruments including adjustments related to the purchase rights of $1.1 million and those related to the Baker Notes of $0.7 million. Historically the changes in fair value related to the Baker Notes have been recorded in the condensed consolidated statements of comprehensive operations as the changes were determined to be related to changes in the Company's credit risk. However, in the three months ended September 30, 2025, the primary driver for the increase in the fair value of the Baker Notes is related to the Company not retiring the notes by September 8, 2025, which caused the total amount legally payable to repurchase the notes to increase by approximately $2.8 million.

Total other income, net, for the three months ended September 30, 2024 primarily included a $0.8 million gain on the change in fair value of financial instruments, partially offset by $0.6 million in interest expense related to the Adjuvant Note and loss on the debt extinguishment of $0.1 million.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024 (in thousands):

Net Product Sales

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Product sales, net		$	10,622			$	12,259			$	(1,637	)			(13	)%

The decrease in product sales, net, was primarily due to lower PHEXX sales volume, partially offset by the addition of SOLOSEC in the current year and the increased PHEXX WAC that took effect January 1, 2025.

Cost of Goods Sold

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Cost of goods sold		$	2,025			$	2,322			$	(297	)			(13	)%

The decrease in cost of goods sold in the current year was due primarily to the lower product sales, net as well as the lack of expense related to the Rush Royalty liability in the current year, which was an expense in the prior year.

Gain on Change in Accounting Estimates on Contingent Royalty Liability

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Gain on change in accounting estimates on contingent royalty liability		$	(1,933	)		$	-			$	(1,933	)			(100	)%

The gain on change in accounting estimates on contingent royalty liability was due to the reversal of previously accrued but unpaid amounts related to the Rush Royalty as a result of the additional information obtained during the three months ended September 30, 2025, including clarification by the FDA that no PTE should be granted. See Note 7 - Commitments and Contingencies for more information regarding this reversal.

Amortization of Intangible Asset

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Amortization of intangible asset		$	410			$	301			$	109				36	%

The increase in amortization of intangible asset was primarily due to the timing of the SOLOSEC acquisition. Because the acquisition closed in July 2024, the prior year amortization was therefore only for a partial portion of the nine-month period while the current year is for the entire nine-month period.

Research and Development Expenses

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Research and development, net		$	(3,819	)		$	1,196			$	(5,015	)			(419	)%

The decrease in research and development expenses was primarily due to the negotiation of a portion of the Company's trade payables and accrued liabilities, which resulted in a $5.6 million reduction in research and development expenses in the current period. The decrease was partially offset by an increase of $0.7 million in facilities and outside services costs.

Selling and Marketing Expenses

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Selling and marketing		$	7,616			$	6,970			$	646				9	%

The increase in selling and marketing expenses was primarily due to a $0.3 million increase related to the PDUFA fee for SOLOSEC as well as an increase in facilities and outside services costs of $0.3 million.

General and Administrative Expenses

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
General and administrative		$	6,296			$	8,143			$	(1,847	)			(23	)%

The decrease in general and administrative expenses was primarily due to a $1.0 million decrease in professional services, a $0.4 million decrease in personnel costs, and a $0.4 million reduction in facilities costs.

Total Other Income (Expense), Net

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Total other income (expense), net		$	(2,421	)		$	850			$	(3,271	)			(385	)%

Total other expense, net, for the nine months ended September 30, 2025 primarily included a $1.9 million interest expense related to the Adjuvant Note and a loss on the change in fair value of financial instruments of $0.5 million, including a gain related to the purchase rights of $0.2 million and a loss related to the Baker Notes of $0.7 million. Historically the changes in fair value related to the Baker Notes have been recorded in the condensed consolidated statements of comprehensive operations as the changes were determined to be related to changes in the Company's credit risk. However, in the three months ended September 30, 2025, the primary driver for the increase in the fair value of the Baker Notes is related to the Company not retiring the notes by September 8, 2025, which caused the total amount legally payable to repurchase the notes to increase by approximately $2.8 million.

Total other income, net, for the nine months ended September 30, 2024 primarily included a $4.9 million gain on the change in fair value of financial instruments and a gain of $1.0 million related to the Baker Notes extinguishment. The gains were partially offset by a $3.3 million loss on the issuance of financial instruments related to the anti-dilution adjustment for the purchase rights and $1.7 million of interest expense related to the Adjuvant Note.

Liquidity and Capital Resources

Overview

As of September 30, 2025, we had a working capital deficit of $70.3 million and an accumulated deficit of $900.2 million. We have financed our operations to date primarily through the issuance of preferred stock, Common Stock, warrants and convertible and term notes; cash received from private placement transactions; and, to a lesser extent, product sales. As of September 30, 2025, we had approximately $0.8 million in cash and cash equivalents, all of which is restricted cash available for use as prescribed in the Adjuvant Notes (as defined in Note 4 - Debt). Our cash and cash equivalents include amounts held in checking accounts. Management believes that the Company's cash and cash equivalents as of September 30, 2025 are insufficient to fund operations for at least the next 12 months from the date on which this Quarterly Report on Form 10-Q is filed with the SEC.

We have incurred losses and negative cash flows from operating activities since inception. In 2024, we focused on further improving and increasing PHEXX access, acquired global rights to SOLOSEC, and delivered our fourth consecutive year of PHEXX net sales growth. In 2025, we continue to focus on top-line growth while maintaining a lean operating structure. We will continue to explore opportunities for organic growth, entry into new markets including those covered by our license and supply agreements with Pharma 1, and potential expansion of our product offerings beyond PHEXX and SOLOSEC.

As of September 30, 2025, the Company's significant commitments include the Baker Notes, Adjuvant Notes, SSNs, and Aditxt Notes as described in Note 4 - Debt and fleet leases, SOLOSEC contingent liability, and the potential settlement amount with TherapeuticsMD as described in Note 7 - Commitments and Contingencies. The purpose of these commitments is to further the commercialization of PHEXX and SOLOSEC. Management's plans to meet the Company's cash flow needs in the next 12 months include generating revenue from the sale of PHEXX and SOLOSEC, further restructuring of the Company's current payables, and obtaining additional funding through means such as the issuance of its capital stock, non-dilutive or dilutive financings, or through collaborations or partnerships with other companies, including license agreements for PHEXX and/or SOLOSEC in the U.S. or foreign markets, or other potential business combinations.

If the Company is not able to obtain the required funding through a significant increase in revenue, equity or debt financings, license agreements for our products in the U.S. or foreign markets, or other means, or is unable to obtain funding on terms favorable to the Company, there will be a material adverse effect on commercialization and development operations and the Company's ability to execute its strategic development plan for future growth. If the Company cannot successfully raise additional funding and implement its strategic development plan, the Company may be forced to make further reductions in spending, including spending in connection with its commercialization activities, extend payment terms with suppliers, liquidate assets where possible at a potentially lower amount than as recorded in the condensed consolidated financial statements, suspend, or curtail planned operations, or cease operations entirely. Any of these could materially and adversely affect the Company's liquidity, financial condition and business prospects, and the Company would not be able to continue as a going concern. The Company has concluded that these circumstances and the uncertainties associated with the Company's ability to obtain additional equity or debt financing on terms that are favorable to the Company, or at all, and otherwise succeed in its future operations raise substantial doubt about the Company's ability to continue as a going concern.

If we are unable to continue as a going concern, we may have to liquidate our assets and, in doing so, we may receive less than the value at which those assets are carried on our condensed consolidated financial statements. Any of these developments would materially and adversely affect the price of our stock and the value of an investment in our stock. As a result, our condensed consolidated financial statements include explanatory disclosures expressing substantial doubt about our ability to continue as a going concern.

The opinion of our independent registered public accounting firm on our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Future reports on our consolidated financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Our unaudited condensed consolidated financial statements as of September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024 included in this Quarterly Report do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue our operations.

The Company expects future equity-based compensation expense to increase following stockholder approval of the 2025 Equity Incentive Plan, which authorizes up to 50 million additional shares.

Potential Impact of Federal Government Shutdown

Certain functions of the U.S. federal government, including the Food and Drug Administration (FDA) and other agencies that regulate or reimburse our products, may be limited or delayed in the event of a government shutdown. A prolonged shutdown could delay FDA reviews or other regulatory interactions, temporarily slow processing of payor or government program reimbursements, or defer implementation of new coverage or public-health initiatives. At this time, management does not expect any material adverse impact on our ongoing commercial operations, but we continue to monitor the situation.

Summary Statement of Cash Flows

The following table sets forth a summary of the net cash flow activity for each of the periods set forth below (in thousands):

		Nine Months Ended September 30,								2025 vs. 2024
		2025				2024				$ Change				% Change
Net cash, cash equivalents and restricted cash used in operating activities		$	(2,023	)		$	(1,477	)		$	(546	)			(37	)%
Net cash, cash equivalents and restricted cash used in investing activities			(59	)			(523	)			464				89	%
Net cash, cash equivalents and restricted cash provided by in financing activities			2,181				2,142				39				2	%
Net change in cash, cash equivalents and restricted cash		$	99			$	142			$	(43	)			(30	)%

Cash Flows from Operating Activities. During the nine months ended September 30, 2025, the primary use of cash, cash equivalents and restricted cash in operating activities was driven by net loss of $2.4 million plus net adjustments to reconcile net loss to net cash, cash equivalents, and restricted cash used in operating activities of $4.4 million. The increase in cash used in operating activities was also driven by the payment of trade payables of $1.4 million, contingent liabilities of $0.5 million, and the purchase of inventory of $0.3 million. The use of cash, cash equivalents, and restricted cash in operating activities was partially offset by the collection of $5.4 million of accounts receivable and increases in accrued expenses and other liabilities of $1.0 million and prepaid expenses of $0.5 million.

During the nine months ended September 30, 2024, the primary use of cash, cash equivalents and restricted cash in operating activities was driven by net loss of $5.8 million offset by net adjustments to reconcile net loss to net cash, cash equivalents, and restricted cash used in operating activities of $1.0 million. The cash used in operating activities was also driven by the payment of trade payables of $0.2 million, partially offset by the collection of $0.3 million of accounts receivable, $0.2 million fewer inventory purchases, and increases in accrued expenses and other liabilities of $2.2 million, accrued compensation of $0.6 million, and prepaid expenses of $0.2 million.

Cash Flows from Investing Activities. During the nine months ended September 30, 2025, the primary use of cash, cash equivalents and restricted cash was the payment of legal and accounting fees related to the acquisition of SOLOSEC which had previously been recorded as accounts payable. During the nine months ended September 30, 2024, the primary use of cash, cash equivalents and restricted cash was the acquisition of the SOLOSEC asset.

Cash Flows from Financing Activities. During the nine months ended September 30, 2025, the primary source of cash, cash equivalents and restricted cash was related to the Aditxt Notes and the financing agreement with First Insurance Funding for total net proceeds to the Company of approximately $2.8 million, partially offset by the payment of short-term debt and quarterly cash payments due under the Fourth Baker Amendment of $0.6 million. During the nine months ended September 30, 2024, the primary source of cash, cash equivalents, and restricted cash was from the $1.0 million received from Aditxt in order to reinstate the Merger Agreement as described above as well as the $1.3 million in Series F-1 Preferred Stock purchased by Aditxt, and the finance agreement with First Insurance Funding for $0.4 million. These inflows were partially offset by $0.5 million of payments under the Baker Notes and short-term debt.

Operating and Capital Expenditure Requirements

Our specific future operating and capital expense requirements are difficult to forecast. However, we can anticipate the general types of expenses and areas in which they might occur. In 2025, while we expect to maintain a lean operating structure at approximately the same level as 2024; should resources become available we may increase marketing spend to drive further sales growth.

Contractual Obligations and Commitments

Operating Leases

Operating lease right-of-use assets and lease liabilities were $0.2 million and $0.1 million on September 30, 2025 and December 31, 2024, respectively. See Note 7- Commitments and Contingencies for more detailed discussions on leases and financial statements information under ASC 842, Leases.

Other Contractual Commitments

As described in Note 7 - Commitments and Contingencies, in November 2019, the Company entered into a supply and manufacturing agreement with a third-party to manufacture PHEXX, with potential to manufacture other product candidates, in accordance with all applicable current good manufacturing practice regulations. There were $0.3 million and $1.1 million in purchases under the supply and manufacturing agreement for the three and nine months ended September 30, 2025, respectively, and $0.8 million and $1.0 million in such purchases during the three and nine months ended September 30, 2024.

As described in Note 7 - Commitments and Contingencies, the Company also has commitments related to the SOLOSEC asset acquisition, including a commitment to purchase inventory from the seller through November 2026 at a pre-defined unit price. The Company is further obligated to pay contingent liabilities and quarterly royalties based on SOLOSEC net revenue over the Earnout Term as described in Note 7 - Commitments and Contingencies.

Intellectual Property Rights

As described in Note 7 - Commitments and Contingencies, royalty costs estimated to be payable to Rush University pursuant to the Rush License Agreement were $0.2 million and $0.6 million for the three and nine months ended September 30, 2024. No such amounts were incurred for the three and nine months ended September 30, 2025 due to the expiration of the Rush patent. As of December 31, 2024, approximately $1.9 million were included in accrued expenses in the condensed consolidated balance sheets and no such accrual existed at September 30, 2025 due to the gain on change in accounting estimates on contingent royalty liability recorded during the nine months ended September 30, 2025.

Other Matters

Recently Issued Accounting Pronouncements

For information with respect to recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies to our condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report.

Critical Accounting Policies

There have not been any material changes to the critical accounting policies disclosed in our Form 10-K for the year ended December 31, 2024.