Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

The following discussion and analysis of the financial condition and results of operations of BeyondSpring Inc. (the "Company") should be read in conjunction with the condensed consolidated financial statements and the notes related thereto which are included in "Part I. Financial Information-Item 1. Financial Statements" of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 25, 2026. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Forward-Looking Statements," "Part II. Other Information-Item 1A. Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are a clinical stage global biopharmaceutical company focused on developing innovative therapies to improve clinical outcomes for patients with high unmet medical needs. Our first-in-class lead asset, Plinabulin, is a novel brain-penetrant microtubule modulator with mechanism as a guanine nucleotide exchange factor H1 (GEF H1) agonist with the biological outcome of dendritic cell maturation, vasculature modulation and reduction of CIN, which can potentially mitigate "acquired resistance" from prior immune checkpoint inhibitors (ICI) treatment in cancer patients. Plinabulin has been administered to over 700 cancer patients with generally good tolerability and is being developed as a potential "pipeline in a drug" in various cancer indications as a direct anti-cancer agent with the safety benefit of reducing CIN. After completion of a successful global phase 3 study (DUBLIN-3) in NSCLC, the data of which was published in LANCET Respiratory Medicine journal in September 2024, we plan to launch a confirmatory global phase 3 study (DUBLIN-4) with "plinabulin and docetaxel" versus standard of care docetaxel in second- and third-line non-squamous NSCLC with epidermal growth factor receptor (EGFR) wild type after progression on prior immune checkpoint inhibitors, a severe unmet medical need. We are also developing three small molecule immune agents, which are currently in pre-clinical stages. In addition, we founded and continue to own an equity stake in SEED Therapeutics Inc., or SEED.

Plinabulin binds in a unique pocket of tubulin and activates the immune defense protein GEF-H1, which leads to induction of innate and adaptive immunity via dendritic cell (DC) maturation. In June 2025, we published in Cell Press "Med" Plinabulin's DC maturation benefit to responding patients in eight cancers, based on our multi-year collaboration with MD Anderson Cancer Center. In January 2026, our research collaborator Dr. Steinmetz group published in "Cell" on the structural basis of microtubule-mediated signal transduction, which suggests the important role of microtubule as signal sensors to regulate cellular function, further supporting Plinabulin's unique biological function. With this unique immune mechanism, Plinabulin is being studied as an anti-cancer agent in a number of company-sponsored studies and investigator-initiated studies in late-line and first-line cancer treatments, including targeting patients progressed on checkpoint inhibitors in NSCLC with no actionable driver alteration, which we believe presents a severe unmet medical need.

The current standard of care for first-line EGFR wild type NSCLC is PD-1/PD-L1 antibodies with or without platinum doublet. However, over 60% of patients progress on these therapies. Defined as "acquired resistance" due to "T cell exhaustion" and/or "antigen presenting cell (APC) pathway mutation" (Memon et al., Cancel Cell 2024). Once patients progress on these regimens, docetaxel, a drug approved over 25 years ago, is recommended in the second- and third-line EGFR wild type NSCLC, but it has modest clinical benefit and high severe neutropenia. Recently, multiple phase 3 studies, with agents including PD-1/PD-L1 antibodies combinations or Antibody Drug Conjugate (ADC) have failed to surpass docetaxel in overall survival (OS) in this population. We believe that Plinabulin's mechanism of DC maturation could help mitigate ICI acquired resistance, as DC is the most potent APC with its ability to prime T cells.

To address the significant unmet need in this population, we have been conducting multiple studies on Plinabulin combinations. First, we completed a randomized global Phase 3 study of Plinabulin in combination with docetaxel compared with docetaxel alone for second- and third-line treatment of NSCLC, with EGFR wild type (DUBLIN-3 Phase 3 registration study). The DUBLIN-3 study enrolled 559 patients at 58 clinical sites globally and the final results from the study showed that the Plinabulin and docetaxel combination had statistically significant and clinically meaningful overall survival benefit compared to standard of care (SOC) docetaxel alone with doubling 2-year and 3-year OS rate. It has more pronounced overall survival benefit in plinabulin-mechanism targeted non-squamous patients (OS HR 0.72 after additional 2-year follow-up, p=0.0078). Key secondary endpoints were also achieved with additional clinically significant benefits in progression free survival (PFS) and objective response rate (ORR), coupled with a significant reduction in grade 4 neutropenia, with over 80% reduction from over 33% to 5% (p<0.0001). The finding was published in LANCET Respiratory Medicine journal in September 2024, and at the same time we made an oral presentation at the International Association for the Study of Lung Cancer (IASLC) conference. Based on the DUBLIN-3 data described above and productive discussion with U.S. and China regulatory agencies, we plan to initiate a confirmatory global phase 3 study (DUBLIN-4) in second- and third-line non-squamous NSCLC with EGFR wild type after progression on prior immune checkpoint inhibitors.

In addition, we are conducting a number of investigator-initiated study (IIT) on Plinabulin in ICI progressed cancers, including NSCLC, head-and-neck cancer and Hodgkin's Lymphoma, and first line extensive-stage small cell lung cancer (ES-SCLC). We provide financial support for these various investigator-initiated clinical trials as well as the drug supply of Plinabulin. First, our collaborators at Peking Union Medical College Hospital in China are conducting an investigator-initiated Phase 2 study (Study 303) with the completion of all 47 patients enrolled: Plinabulin in combination with Keytruda® (pembrolizumab), a PD-1 antibody, and docetaxel for the treatment of NSCLC patients who progressed from PD-1/PD-L1 antibodies. We presented clinically meaningful data of high disease control rate of 80% and prolonged PFS from this study at European Society for Medical Oncology (ESMO) 2024, Society for Immunotherapy of Cancer (SITC) 2024, and American Society of Clinical Oncology (ASCO) 2025 and 2026. Further, our collaborators at MD Anderson Cancer Center have completed a phase 1 IIT study in Plinabulin's combination with PD-1 or PD-L1 antibodies and radiation for the treatment of patients with eight cancer types who progressed from PD-1/PD-L1 antibodies, with disease control rate of 54%. This paper was published in Cell Press "Med" in June 2025. Plinabulin's rapid DC maturation biomarker analysis was observed in responding patients. Additionally, Plinabulin is being studied in a Phase 2 IIT study (Study 302) in combination with Keytruda®, etoposide and platinum for the first-line treatment of ES-SCLC patients at Wuhan Union Hospital in China, where the current standard of care has limited median PFS. Additional completed IITs with Plinabulin include: 1) in combination with nivolumab, a PD-1 antibody, for the treatment of NSCLC at the University of California San Diego, or UCSD, and the University of Washington (Phase 1 completed); and 2) in combination with nivolumab and ipilimumab, a CTLA-4 antibody, for the treatment of second line ES-SCLC at the Rutgers University and other U.S. clinical centers (both Phase 1 and Phase 2 completed).

Recently, we reported the preclinical study data of Plinabulin in combination with antibody drug conjugates (ADC), which are targeted chemotherapy, at American Association for Cancer Research (AACR) 2026, showing that plinabulin improves complete response rates, overall survival, and tolerability when combined with leading ADC drugs (T-DXd (trastuzumab deruxtecan) and Dato-DXd (datopotamab deruxtecan)), with or without immunotherapy. Biomarker analysis also showed that Plinabulin enhanced the body's own cancer-fighting T-cells, significantly increasing CD8+T cell/Treg ratio - providing a biological explanation for why the combination outperforms either drug alone.

We expect each of these studies to benefit from our previous investigation of Plinabulin as an agent that has been studied in two randomized, controlled Phase 3 clinical studies to have demonstrated a statistically significant reduction in CIN. In total, over 700 patients have been treated with Plinabulin, where improvements in CIN have been repeatedly observed. Our strategy is to develop Plinabulin in multiple indications with the potential for Plinabulin to be an important component of the multi-agent combination with immune checkpoint inhibitor regimens to elevate the anti-cancer benefit for cancer patients, supported by Plinabulin's potent dendritic cell maturation mechanism. To implement our strategy, we use a highly efficient business model that integrates clinical resources in the U.S. and China. We work with global contract research organizations, or CROs, such as ICON and Covance (now Labcorp), to ensure data quality with studies conducted under U.S. Good Clinical Practice requirements. Our drug development capabilities are facilitated by interest from clinical investigators in the U.S. and China, as well as by our understanding of the pharmaceutical industry, clinical resources and regulatory system in China.

We have partnered with Hengrui to commercialize Plinabulin, if approved, in Greater China through our subsidiary, Dalian Wanchunbulin Pharmaceuticals Ltd., or Wanchunbulin. China recognized Plinabulin as a National Science and Technology Major Project for "essential new drug research and development." Also, with the grant of status as a 2017 National Science and Technology Major Project in China, or the 2017 Grant, Plinabulin has been included in the National Drug Priority Review List. We believe that, pending drug approval and successful pricing negotiations with the Chinese government, the 2017 Grant could help position Plinabulin for inclusion in the National Insurance System, which would allow for faster access to patients and reimbursement. In the U.S. and for the rest of the world, we currently plan to seek a co-development and commercialization partner to maximize Plinabulin's potential in multiple cancer indications, if approved.

Since the inception of Wanchun Biotech, the former holding company of our U.S. subsidiary, in 2010, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, including protecting the rights to Plinabulin, and conducting studies in animals and clinical trials of Plinabulin. We do not have any product candidates approved for sale and have not generated any revenue from product sales. We have financed our operations with a combination of equity financings, shareholder and third-party loans, including bank loans, sale of subsidiary interests and collaboration arrangements.

Through June 30, 2026, we have raised approximately $301.0 million in equity financings, $10.2 million of issuance of non-controlling interests, $37.0 million from the sale of preferred shares of SEED in connection with its Series A-2/A-3 financings and $7.4 million from the sale of preferred shares of SEED by the Company to third-party investors, $2.1 million from bank loans, of which $0.6 million has been forgiven in July 2021 and $1.5 million has been repaid in March 2022, $2.5 million in third party loans, of which $1.0 million has since been converted into an equity investment and $1.5 million has been repaid, and $14.4 million in shareholder loans, of which $6.0 million has been repaid and $8.4 million was assumed by Wanchun Biotech, the former holding company of our U.S. subsidiary, on July 20, 2015 pursuant to our internal restructuring, $10.0 million upfront payment to SEED from Eli Lilly and Co. ("Eli Lilly") and RMB 200 million (approximately $29 million) upfront payment to Wanchunbulin from Hengrui. As of June 30, 2026, our continuing operations had no outstanding debt and held $6.5 million in cash and cash equivalents and short-term investments. We expect to receive $28.07 million in tranches from the sale of our Series A-1 Preferred Shares of SEED as described under "-Discontinued Operations."

Our consolidated net loss was $4.6 million and $3.5 million for the three and six months ended June 30, 2025, respectively. Our consolidated net loss was $5.7 million and $12.4 million for the three and six months ended June 30, 2026, respectively. As of December 31, 2025 and June 30, 2026, we had an accumulated deficit of $408.4 million and $411.4 million, respectively. Substantially all of our losses have resulted from funding our preclinical studies, clinical trials, manufacturing our drug product, our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses may increase in connection with our ongoing activities, as we:

	●	continue preclinical studies and clinical development of our programs including in connection with the clinical development programs for Plinabulin in NSCLC and combination studies with immune agents and related chemistry, manufacturing, and controls and regulatory activities;
	●	incur additional costs associated with operating as a domestic issuer;
	●	maintain, expand and protect our intellectual property portfolio; and
	●	fund the discovery and development of new product candidates.

We will need substantial additional funding to support our operating activities as we advance our product candidates through clinical development, seek regulatory approval and prepare for and, if any of our product candidates are approved, proceed to commercialization. We continue to explore strategic options in the U.S. and globally to support the execution of our business plan and to maximize shareholder value. These options may include licensing and partnership arrangements, a sale of the Company or its assets, equity or debt financing, or a combination of the above. Adequate funding may not be available to us on acceptable terms, or at all. In particular, inflation and high interest rates across the global economy, governments' monetary policy in response to inflation concerns, concerns around tariffs and a possible recession, the ongoing hostilities between Russia and Ukraine and escalating geopolitical tensions and military conflicts in the Middle East, including conflicts involving Israel, Hamas, Iran and other regional actors, have caused, and may continue to cause, market volatility, and under such market conditions, we may not be able to obtain funding on reasonable terms or at all.

Discontinued Operations

SEED was founded by us in 2019. Since then, Eli Lilly participated in SEED's Series A-2 financing in 2020 and Eisai Co., Ltd. ("Eisai") participated in SEED's Series A-3 financing in 2024. SEED is utilizing a proprietary Targeted Protein Degradation (TPD) drug discovery platform, or "molecular glue" technology, to develop innovative therapeutic agents from internal research and development efforts and with our collaborators on currently undruggable protein targets. SEED has advanced its wholly owned lead oncology asset, a novel RBM39 degrader, into phase 1 clinical studies in January 2026. SEED has partnered with Eli Lilly and Eisai to discover and develop new chemical entities through this proprietary TPD platform which could produce therapeutic benefits to patients suffering from immunology and central nervous system (CNS) disease, among others. SEED has received notice of Eli Lilly's decision to voluntarily end that certain Research and Collaboration Agreement by and between SEED and Eli Lilly, dated November 12, 2020. The notice specifies an effective end date of August 20, 2026. SEED will retain its rights to the collaboration targets and SEED-owned inventions, subject to the terms of the agreement. SEED is currently in discussions with Eli Lilly regarding a potential license to certain Eli Lilly intellectual property that could support the continued development of specific compounds arising from the collaboration. These discussions remain preliminary, and there is no assurance that SEED and Eli Lilly will enter into a new agreement, or if an agreement is reached, what its terms or timing may be.

In January 2025, we entered into definitive agreements to sell a portion of our Series A-1 Preferred Shares of SEED for $35.4 million, or $4.25 per share, to certain third-party investors in three installments. The first closing of 1,730,454 shares for approximately $7.35 million occurred in February 2025. The second closing of 3,103,055 shares for approximately $13.19 million is expected to be completed in 2026. Under the terms of the definitive agreements, the third closing of 3,500,128 shares for approximately $14.88 million is scheduled to occur no later than December 15, 2026. Each agreement contains specified termination rights for us and each purchaser, including a mutual termination right in the event a closing shall not have occurred by such specified date as set forth in each agreement.

In September 2025, SEED entered into share purchase agreements with a related party and certain third-party investors to sell an aggregate of 1,411,761 of its Series A-3 Preferred Shares for an aggregate purchase price of $6 million at a cash purchase price of $4.25 per share.

As of the date of this Quarterly Report on Form 10-Q, the BYSI Entities own approximately 38.03% of the outstanding equity interest in SEED, and are expected to own approximately 26.56% and 13.62% of the outstanding equity interest in SEED after the second and third closings, respectively, in each case calculated on an as-converted basis (excluding any shares that may be reserved under an employee stock ownership plan, or similar arrangement), and assuming there is no other change to SEED's share capital prior to such closings. For so long as the BYSI Entities remain holders of a majority of the Series A-1 Preferred Shares of SEED, they have the right to elect two directors of SEED. In addition, holders of a majority of the Series A-1 Preferred Shares and ordinary shares of SEED will have the right to elect two independent directors of SEED.

As a result, SEED's operations met the criteria under ASC 205-20 as discontinued operations for financial reporting purposes. We classified the financial results of SEED to Discontinued Operations in the Condensed Consolidated Statements of Comprehensive Income (Loss) for all periods presented. In connection with the first closing described above, we recorded a gain on sale of subsidiary interests of $7.0 million. We also classified the related assets and liabilities as current and noncurrent assets and liabilities of discontinued operations on the accompanying Condensed Consolidated Balance Sheets as of December 31, 2025 and June 30, 2026. Cash flows from discontinued operations are not reclassified in the Condensed Consolidated Statements of Cash Flows but are disclosed in the accompanying condensed consolidated financial statements footnotes. See Note 3 (Discontinued operations) to our condensed consolidated financial statements for additional information.

Segments

From 2022 to 2024, we operated in two reportable segments, namely Plinabulin pipeline and TPD platform. The TPD platform segment was comprised of SEED's operations. As a result of SEED's operations being classified as discontinued operations, the TPD platform segment is excluded from the Company's continuing operations.

See Note 14 (Segment reporting and geographic information) to our condensed consolidated financial statements for additional information.

Components of Results of Operations

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. For the three and six months ended June 30, 2026, our discontinued operations generated $0.5 million and $1.0 million of revenue, respectively, through SEED's research collaboration and license agreement with Eli Lilly and our continuing operations did not generate any revenue. The RMB 200 million (approximately $29 million) upfront payment received by Wanchunbulin from Hengrui is recorded as deferred revenue and will be recognized as revenue over time after product approval using unit of delivery measure of progress. In the future, we may generate revenue from a combination of product sales, reimbursements, upfront payments, milestone payments and royalties in connection with existing and future collaborations. If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, we will not generate revenue from product sales in the future.

Operating Expenses

Research and Development Expenses

The largest component of our total operating expenses has historically been our investment in research and development activities. Research and development expenses consist of costs associated with our research and development activities, conducting preclinical studies and clinical trials of Plinabulin and development of our pipeline of immune-oncology product candidates. Research and development expenses also include activities related to:

	●	employee-related expenses, including salaries, benefits, share-based compensation and travel expense for research and development personnel;
	●	expenses incurred under agreements with CROs, contract manufacturing organizations, and consultants that conduct and support clinical trials and preclinical studies;
	●	costs associated with preclinical studies and development activities;
	●	costs associated with regulatory operations;
	●	costs associated with protecting intellectual property;
	●	share-based compensation to employees, directors and non-employee consultants; and
	●	other expenses, which include direct and allocated expenses for rent, insurance and other supplies used in research and development activities.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to continue to be significant over the next several years as we continue to develop our product pipeline through additional preclinical studies and clinical trials.

We expense research and development costs when we incur them. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or information our vendors provide to us.

There are numerous factors that will impact research and development costs, including future clinical trials and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial requirements and regulatory factors beyond our control will impact our clinical development programs and plans. The successful development of our product candidates is highly uncertain. Due to the inherently unpredictable nature of preclinical studies and clinical development and commercialization of product candidates, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from, any of our other product candidates. This unpredictability is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials and commercialization of product candidates, which vary significantly over the life of a project as a result of many factors, including:

	●	the number of clinical sites included in the trials;
	●	the design of the trial and changes to the design of the trial;
	●	establishing an appropriate safety profile;
	●	the length of time required to enroll suitable patients;
	●	the number of patients that ultimately participate in the trials;
	●	the number of doses patients receive;
	●	the duration of patient follow-up;
	●	the results of our clinical trials;
	●	making arrangements with third-party manufacturers;
	●	receipt of marketing approvals from applicable regulatory authorities;
	●	commercializing the product candidates, if and when approved, whether alone or in collaboration with others;
	●	obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;
	●	continued acceptable safety profiles of the products following approval; and
	●	retention of key research and development personnel.

A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs, including executive, finance and human resource functions, and information technology, and share-based compensation costs. Other general and administrative expenses include professional fees for legal, consulting, auditing and tax services as well as other direct expenses for rent, insurance and supplies used in general and administrative activities. We currently do not expect to incur significant pre-commercialization costs in the near future. We also incur legal, compliance, accounting, directors and officers insurance, and investor and public relations expenses associated with being a public company.

Other Income (Expenses)

Other income consists primarily of interest income earned on our cash and cash equivalents and short-term investments, and foreign exchange gains. Other expenses consist primarily of foreign exchange losses.

Results of Operations

Comparison of the Three Months Ended June 30, 2026 and 2025

The following table summarizes the results of our operations for the three months ended June 30, 2026 and 2025, respectively, together with the percentage changes in those items:

		Three Months Ended June 30,
		2026				2025				Change
		(in thousands of U.S. Dollars ("$"))								%
Revenue			-				-				-
Operating expenses
Research and development			(973	)			(1,002	)			-3	%
General and administrative			(758	)			(947	)			-20	%
Loss from operations			(1,731	)			(1,949	)			-11	%
Other income
Foreign exchange gain, net			61				47				30	%
Interest income			4				28				-86	%
Other income, net			16				18				-11	%
Total other income, net			81				93				-13	%
Net loss before income tax			(1,650	)			(1,856	)			-11	%
Income tax expenses			(100	)			(22	)			355	%
Net loss from continuing operations			(1,750	)			(1,878	)			-7	%
Discontinued operations:
Loss from discontinued operations			(3,950	)			(2,771	)			43	%
Net loss from discontinued operations			(3,950	)			(2,771	)			43	%
Net loss			(5,700	)			(4,649	)			23	%

Research and Development Expenses

Research and development (R&D) expenses were $1.0 million for the three months ended June 30, 2026, compared to $1.0 million for the three months ended June 30, 2025. R&D expenses remained relatively flat, as a $0.3 million increase in drug manufacturing activities to prepare for potential future study initiation was substantially offset by lower patent-related professional services and personnel-related costs.

The following table summarizes the research and development expenses for the three months ended June 30, 2026 and 2025:

		Three Months Ended June 30,
		2026				2025				Change
		(in thousands of U.S. Dollars ("$"))								%
Clinical expenses			563				129				338	%
Preclinical expenses			6				59				-90	%
Professional services			89				373				-76	%
Personnel compensation and related costs			267				347				-23	%
Facility and other expenses			48				94				-49	%
Total research and development			973				1,002				-3	%

General and Administrative Expenses

General and administrative (G&A) expenses were $0.8 million for the three months ended June 30, 2026, compared to $0.9 million for the three months ended June 30, 2025. The $0.1 million decrease was primarily due to lower legal fees and lower consulting costs related to accounting advisory and business development.

Other Income

Other income for the three months ended June 30, 2026 and 2025 consisted primarily of foreign exchange gains and interest income.

Comparison of the Six Months Ended June 30, 2026 and 2025

The following table summarizes the results of our operations for the six months ended June 30, 2026 and 2025, respectively, together with the percentage changes in those items:

		Six Months Ended June 30,
		2026				2025				Change
		(in thousands of U.S. Dollars ("$"))								%
Revenue			-				-				-
Operating expenses
Research and development			(2,049	)			(1,876	)			9	%
General and administrative			(1,914	)			(2,683	)			-29	%
Loss from operations			(3,963	)			(4,559	)			-13	%
Other income
Foreign exchange gain, net			111				76				46	%
Interest income			12				45				-73	%
Other income, net			31				18				72	%
Total other income, net			154				139				11	%
Net loss before income tax			(3,809	)			(4,420	)			-14	%
Income tax expenses			(292	)			(42	)			595	%
Net loss from continuing operations			(4,101	)			(4,462	)			-8	%
Discontinued operations:
Loss from discontinued operations			(8,273	)			(6,003	)			38	%
Gain on sale of subsidiary interests			-				6,986				-100	%
Net income (loss) from discontinued operations			(8,273	)			983				-942	%
Net loss			(12,374	)			(3,479	)			256	%

Research and Development Expenses

Research and development (R&D) expenses were $2.0 million for the six months ended June 30, 2026 compared to $1.9 million for the six months ended June 30, 2025. The $0.1 million increase was primarily driven by expanded drug manufacturing activities, partially offset by lower patent-related professional service fees, regulatory filing advisory expenses and a non-cash adjustment for 2024 incentive compensation recognized in 2025.

The following table summarizes the research and development expenses for the six months ended June 30, 2026 and 2025:

		Six Months Ended June 30,
		2026				2025				Change
		(in thousands of U.S. Dollars ("$"))								%
Clinical expenses			991				181				448	%
Preclinical expenses			110				121				-9	%
Professional services			288				661				-56	%
Personnel compensation and related costs			556				760				-27	%
Facility and other expenses			104				153				-32	%
Total research and development			2,049				1,876				9	%

General and Administrative Expenses

General and administrative (G&A) expenses were $1.9 million for the six months ended June 30, 2026, compared to $2.7 million for the six months ended June 30, 2025. The $0.8 million decrease was primarily due to lower incentive compensation and share-based compensation for G&A personnel and lower professional services expenses in legal advisory.

Other Income (Expenses)

Other income for the six months ended June 30, 2026 and 2025 consisted primarily of foreign exchange gains and interest income.

Non-Accelerated Filer

As a non-accelerated filer, we intend to rely on an exemption from the rule requiring us to provide an auditor's attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and potential exemptions from the rule requiring us to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis.

Liquidity and Capital Resources

Since inception, we have incurred negative cash flows from our operations. Substantially all of our negative cash flows have resulted from funding our research and development programs and general and administrative expenses associated with our operations. We incurred consolidated net losses of $12.4 million and $3.5 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and December 31, 2025, we had an accumulated deficit of $411.4 million and $408.4 million, respectively. Our primary use of cash is to fund research and development programs and for general and administrative expenses. Our operating activities used $7.1 million and $10.1 million of cash, including $4.6 million and $5.8 million used in discontinued operating activities, during the six months ended June 30, 2026 and 2025, respectively. We have financed our operations with a combination of equity offerings, shareholder and third-party loans, including bank loans, sale of subsidiary interests and collaboration arrangements. As of June 30, 2026, our continuing operations had cash and cash equivalents of $2.7 million and short-term investments of $3.8 million.

Going Concern

Our liquidity is affected by financing activities, our clinical trials, and research and development and general and administrative expenses. In order to operate as a going concern in the foreseeable future, we will need, among other things, additional capital resources. We are evaluating various financing alternatives to fund our operations, including equity and debt financings, potential licensing and partnership arrangements, sale of subsidiary or investee interests, as well as other strategic transactions. There can be no assurance that capital will be available as necessary to meet our working capital requirements or, if the capital is available, that it will be on terms acceptable to us. The issuances of additional equity securities by us may result in dilution in the equity interests of our current shareholders. Obtaining commercial loans, assuming those loans will be available, will increase our liabilities and future cash commitments and may include financial covenants and restrictions. If we are unable to obtain financing in the amounts and on terms deemed acceptable, our business and future success will be materially and adversely affected. These factors raise substantial doubt regarding our ability to continue as a going concern.

The following table provides information regarding our consolidated cash flows for the six months ended June 30, 2026 and 2025:

		Six Months Ended June 30,
		2026				2025
		(in thousands of U.S. Dollars ("$"))
Net cash used in operating activities			(7,049	)			(10,072	)
Net cash provided by investing activities			4,474				17,154
Net cash used in financing activities			(4,231	)			-
Net effect of foreign exchange rate changes			33				(2	)
Net increase (decrease) in cash and cash equivalents			(6,773	)			7,080

The following table provides information regarding cash flows of discontinued operations for the six months ended June 30, 2026 and 2025:

		Six Months Ended June 30,
		2026				2025
		(in thousands of U.S. Dollars ("$"))
Net cash used in discontinued operating activities			(4,552	)			(5,790	)
Net cash provided by discontinued investing activities			3,531				9,800
Net cash used in discontinued financing activities			(4,223	)			-

Cash inflows generated by our discontinued operations were used to support their own operations, including funding their own R&D activities, rather than being transferred to or used by the continuing operations. As such, we believe the liquidity of our continuing operations will not be negatively affected by the absence of discontinued operation's cash flows.

Net Cash Used in Operating Activities

The cash used in operating activities for the six months ended June 30, 2026 and 2025 reflects adjustments to our net loss of $12.4 million and $3.5 million, respectively, for non-cash gains and charges, and changes in components of working capital. During the six months ended June 30, 2026, these non-cash adjustments mainly consisted of $1.0 million of non-cash share-based compensation and $0.4 million of non-cash operating lease expenses. Net cash used in operating activities was $7.1 million for the six months ended June 30, 2026, compared to $10.1 million for the six months ended June 30, 2025. The $3.0 million decrease was primarily driven by a strategic extension of payment terms with vendors to manage short-term liquidity requirements.

The primary use of our cash in the periods presented was to fund our research and development, regulatory and other clinical trial costs and related administrative costs. Our advances to suppliers and other current assets, accounts payable and accrued expense balances in all periods presented were affected by the timing of vendor invoicing and payments.

Net Cash Used in Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2026 was $4.5 million, consisting primarily of $26.6 million cash proceeds from maturity of time deposits and structured deposits, offset by $22.1 million used to purchase structured deposits. Net cash provided by investing activities for the six months ended June 30, 2025 was $17.2 million, consisting primarily of $14.9 million cash proceeds from maturity of time deposits, $7.4 million cash consideration received in February 2025 for the first closing of the sale of a portion of our equity interests in SEED, offset by $5.0 million used to purchase time deposits.

Net Cash Used by Financing Activities

Net cash used in financing activities for the six months ended June 30, 2026 was $4.2 million, which was primarily attributable to discontinued operations, consisting of $4.5 million repayment of short-term loans, offset by $0.3 million cash proceeds from the issuance of SEED's Series A-3 Preferred Shares. There were no cash provided or used by financing activities for the six months ended June 30, 2025.

Future Liquidity and Material Cash Requirements

We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize any of our current product candidates. We anticipate that we will continue to generate losses for the foreseeable future as we continue the development of, and seek regulatory approvals for, our current product candidates. Accordingly, we anticipate that we will need additional funding in connection with our future operations.

Our liquidity is affected by financing activities, our clinical trials, and research and development and general and administrative expenses. We will need, among other things, additional capital resources to fund our business activities. There can be no assurance that capital will be available as necessary to meet our working capital requirements or, if the capital is available, that it will be on terms acceptable to us. If we are unable to obtain financing in the amounts and on terms deemed acceptable, our business and future success will be materially and adversely affected. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development, regulatory approval and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development, regulatory filing and commercialization of our product candidates.

Our future capital requirements will depend on many factors, including:

	●	the costs, timing and outcome of regulatory reviews and approvals;
	●	the ability of our product candidates to progress through clinical development successfully;
	●	the initiation, progress, timings, costs and results of studies in animals and clinical trials for our other programs and potential product candidates;
	●	the number and characteristics of the product candidates we pursue;
	●	the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
	●	the extent to which we acquire or in-license other products and technologies;
	●	our ability to establish and maintain arrangements partnership with other pharmaceutical companies for the development, licensing and commercialization of our assets; and
	●	our ability to maintain and establish collaboration arrangements on favorable terms, if at all.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financing, potential licensing and partnership arrangements, sale of subsidiary or investee interests, or other strategic transactions. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our shareholders. Debt financing, if available, will increase our liabilities and future cash commitments and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute the ownership interest of our shareholders. If we raise additional funds through collaborations, strategic alliances, marketing or distribution arrangements or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. Sale of subsidiary or investee interests, such as the sale of our Series A-1 Preferred Shares of SEED as described under "-Discontinued Operations," will cause our controlling power over such subsidiary or investee to diminish and limit our ability to benefit from potential growth of its business. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations

Lease commitments

The principal commitments from continuing operations consist of obligations under our operating leases for office space.

We lease all of our facilities and believe our current facilities are sufficient to meet our needs. Our principal executive offices are located in New Jersey, and we also have offices in Dalian, China.

We currently lease office space in New Jersey, with total space of 9,727 square feet. The lease expires in February 2027. Our current rent is $26,749 per month. We additionally pay for the cost of utilities, as well as our share of building real estate taxes and building operating expenses. Payments under the lease are expensed on a straight-line basis over the period of the lease.

We lease office space in Dalian, China, with total space of 210.65 square meters and a monthly rent of RMB 10,255 (approximately $1,511). The lease is set to expire on December 31, 2027. Payments under the lease are expensed on a straight-line basis over the period of the lease. We are entitled to receive rent subsidy in the amount of RMB 220,000 (approximately $32,000) from the local government office of Dalian, China, with respect to our prior office lease in Dalian, China.

Other contractual obligations

We enter into agreements in the normal course of business with CROs and institutions to license intellectual property. These contracts are cancelable at any time by us with prior written notice.

Our subsidiary Wanchunbulin has entered into a government grant agreement with specific local authorities in the PRC. Wanchunbulin commits to staying within designated districts, maintaining current tax jurisdictions, and retaining its registered capital, until 2033. Wanchunbulin also undertakes not to establish additional entities in other jurisdictions within Greater China for the purposes of conducting research, development, and commercialization activities related to Plinabulin, provided such activities fall within the scope of the government grant agreement. Otherwise, Wanchunbulin may be required to refund the grants.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses. We evaluate our estimates and judgments on an ongoing basis, and our actual results may differ from these estimates. We base our estimates on historical experience, known trends and events, contractual milestones and other various factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

There have been no material changes to our critical accounting estimates as compared to those described in the section titled "Part I-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included in this Quarterly Report for recent accounting pronouncements.