Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties, including those set forth under "Cautionary Statement About Forward-Looking Statements." Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in this Item and in Part I, Item 1A. "Risk Factors." Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under "Risk Factors" and elsewhere in this Annual Report on Form 10-K.

Summary Overview

We are a pre-revenue, development-stage biopharmaceutical company with a pipeline focused on developing new medicines to treat pain and neuropathy. Our Halneuron® Na_v1.7 modulation program is intended to treat chronic neuropathic pain and acute pain disorders. Our recently licensed SP16 program is centered on a cell signaling molecule that has shown early promise in treating neuropathy and nerve damage.

Na_v1.7 Non-Opioid Analgesic Program

Our lead product candidate, Halneuron^®, is in late-stage clinical development for the treatment of CINP. The active pharmaceutical ingredient is highly purified TTX, a potent sodium channel modulator found in puffer fish and several other marine animals. Halneuron^® works as an analgesic by modulating the activity of Na_v1.7, a key sodium channel involved in pain signal transmission. By reducing the activity of the Na_v1.7 channel, Halneuron^® has the potential to reduce pain associated with conditions involving neuropathic pain.

In the first quarter of 2025, we commenced a HAL-CINP-203 clinical trial in the United States. HAL-CINP-203 is a double-blind, placebo controlled clinical trial to access the efficacy and safety of Halneuron^® in approximately 240 patients with moderate to severe neuropathic pain caused by previous platinum and/or taxane chemotherapy. The primary efficacy endpoint is the change from baseline at week 4 in the weekly average of daily 24-hour recall pain intensity scores, comparing Halneuron^® to placebo. The secondary endpoints are patient global impression of change, PROMIS regarding fatigue, PROMIS related to sleep, PROMIS-29, pain interference, hospital anxiety and depression scale and neuropathic pain symptom inventory. We released interim data from HAL-CINP-203 in December 2025 and expect to have top-line results available during the third quarter of 2026.

SP16 Program

SP16 is currently at the Phase 1 stage with studies in breast cancer patients scheduled to begin in mid-2026. These initial investigational studies are supported by a National Cancer Institute grant to investigate the potential for SP16 to reduce neuropathy secondary to treatment with chemotherapeutic agents that are also neurotoxic. SP16 is the focus of a planned Phase 1b study that is fully funded through a research grant supplied by the National Cancer Institute, with patient enrollment projected to start in mid-2026.

Share Exchange Agreement

On October 7, 2024, the Company, entered into the Exchange Agreement with Sealbond, pursuant to which the Company acquired 100% of the issued and outstanding common shares of Pharmagesic and the parent company of Wex Pharmaceuticals, Inc. in the Combination. Prior to the Combination, Pharmagesic was a wholly-owned subsidiary of Sealbond and an indirect wholly-owned subsidiary of CKLS, a listed entity on the Main Board of the Hong Kong Stock Exchange.

Loan Agreement

On October 7, 2024, in connection with the Exchange Agreement, the Company entered into a Loan Agreement (the "Loan Agreement") with Conjoint Inc., a Delaware corporation ("Lender"). Pursuant to the Loan Agreement, Lender agreed to make a loan to the Company in the aggregate principal amount of $19,500,000, of which (i) $16,500,000 was disbursed on October 7, 2024 and (ii) $3,000,000 was disbursed on February 18, 2025. Prior to the Debt Exchange and Cancellation Transaction described below, the Loan Agreement bore interest at the Secured Overnight Financing Rate ("SOFR"). The Loan Agreement was payable in full with principal and accrued interest on October 7, 2027.

On March 12, 2025, we entered into the Exchange and Cancellation Agreement with the Lender. Pursuant to the Exchange and Cancellation Agreement, the principal amount of all loans made to the Company under the Loan Agreement, along with accrued interest through March 12, 2025, was deemed repaid and all of the Company's obligations satisfied in full and cancelled in exchange for 284.2638 shares of the Company's Series A-1 Non-Voting Convertible Preferred Stock, par value $0.0001 per share.

Contingent Value Rights Agreement

Concurrently with the closing of the Combination, the Company entered into a contingent value rights agreement (the "CVR Agreement") with a rights agent (the "Rights Agent"), pursuant to which each holder of Common Stock as of October 17, 2024, including those holders receiving shares of Common Stock in connection with the Combination, is entitled to one contractual contingent value right (each, a "CVR") issued by the Company, subject to and in accordance with the terms and conditions of the CVR Agreement, for each share of Common Stock held by such holder as of 5:00 p.m. Eastern Daylight Time on October 17, 2024. The CVR Agreement has a term of seven years.

Each contingent value right entitles the holders (the "Holders") thereof, in the aggregate, to 87.75% of any Upfront Payment (as defined in the CVR Agreement) or Milestone Payment (as defined in the CVR Agreement) received by the Company in a given calendar quarter.

The distributions in respect of the CVRs that become payable will be made on a quarterly basis and will be subject to a number of deductions, subject to certain exceptions or limitations, including but not limited to for certain taxes and certain out-of-pocket expenses incurred by the Company.

Under the CVR Agreement, the Rights Agent has, and Holders of at least 30% of the CVRs then-outstanding have, certain rights to audit and enforcement on behalf of all Holders of the CVRs. The CVRs may not be sold, assigned, transferred, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, other than as permitted pursuant to the CVR Agreement. The Holders of the CVRs do not have the rights of a shareholder and do not have the ability to vote, rights to dividends, or other interests. The CVRs also establish certain restrictions of mergers and change in control activities, as defined in the agreement.

Name Change

On October 7, 2024, the Company changed its name from "Virios Therapeutics, Inc." to "Dogwood Therapeutics, Inc." In addition, effective at the open of market trading on October 9, 2024, the Company's Common Stock ceased trading under the ticker symbol "VIRI" and began trading on the Nasdaq Stock Market under the ticker symbol "DWTX".

Reverse Stock Split

On October 7, 2024, the Company effected the Reverse Stock Split, pursuant to which every 25 shares of the Company's issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock. The Reverse Stock Split affected all stockholders uniformly and did not by itself alter any stockholder's percentage interest in the Company's equity, except to the extent that the

Reverse Stock Split would result in a stockholder owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split and any stockholder who would have received any fractional shares instead received a cash payment equal to the fair market value of such fractional share.

Registered Direct Offering

On March 12, 2025, we entered into an agreement with Maxim Group LLC as placement agent in connection with the issuance and sale by the Company in a registered direct offering of 578,950 shares of our Common Stock at a price of $8.26 per share, pursuant to an effective shelf registration statement on Form S-3 (File No. 333-263700) (the "March 2025 Offering"). The March 2025 Offering closed on March 14, 2025, and the gross proceeds were approximately $4.78 million. The net proceeds of the March 2025 Offering were approximately $4.25 million after deducting placement agent fees and offering expenses payable by the Company.

Serpin License Agreement

On September 29, 2025, the Company entered into the Licensing Agreement with Serpin, pursuant to which Serpin granted the Company an exclusive royalty-free, sublicensable global license to develop Serpin Pharma's intravenous formulation of SP16. SP16 is a first-in-class low density LRP1 agonist which has demonstrated both anti-inflammatory, immunomodulatory and neural repair activity that has the potential to treat chemotherapy-induced peripheral neuropathy. In consideration of the Licensing Agreement, the Company issued shares of common stock and Series A-2 Non-Voting Convertible Preferred Stock to Serpin Pharma and Rejuvenation.

Conversion of Preferred Stock to Common Stock

On November 21, 2025, we held a Special Meeting of our stockholders. At the Special Meeting, our stockholders approved for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the potential issuance of our Common Stock upon the conversion of the Company's Series A Preferred Stock, Series A-1 Preferred Stock, and Series A-2 Preferred Stock. As a result, on November 21, 2025, all outstanding shares of Series A Preferred Stock, Series A-1 Preferred Stock and Series A-2 Preferred Stock converted into Common Stock at a ratio of one preferred stock to 10,000 shares of Common Stock.

Equity Distribution Agreement

On November 28, 2025, the Company entered into an Equity Distribution Agreement (the "Northland Agreement") with Northland Securities, Inc., as sales agent, relating to the issuance and sale from time to time by the Company (the "ATM Program") of shares of the Company's common stock having an aggregate offering price of up to $8,558,712. We have sold shares of Common Stock for gross proceeds of $89,762 pursuant to the Northland Agreement during the fourth quarter of 2025.

Recent Developments

On January 9, 2026, the Company provided notice of its termination, effective January 9, 2026, of the Northland Agreement. The Company is not subject to any termination penalties related to the termination of the Northland Agreement.

Subsequent to year end, on January 11, 2026, the Company entered into an agreement with Maxim Group LLC as placement agent in connection with the issuance and sale by the Company in a registered direct offering of 2,338,948 shares of its Common Stock (the "Registered Offering"), pursuant to an effective shelf registration statement on Form S-3 (File No. 333-287575). In a concurrent private placement (together with the Registered Offering, the "January 2026 Offering"), the Company agreed to sell (i) unregistered pre-funded warrants to purchase up to 2,047,089 shares of Common Stock (the "Pre-funded Warrants") and (ii) unregistered common stock warrants to purchase up to 4,386,037 shares of Common Stock (the "Common Stock Warrants") at a

combined offering price of $2.85 per share of Common Stock and accompanying Common Stock Warrant and $2.8499 per Pre-funded Warrant and accompanying Common Stock Warrant. The January 2026 Offering closed on January 13, 2026, and the gross proceeds to the Company were approximately $12.5 million. The net proceeds of the January 2026 Offering were approximately $11.4 million after deducting placement agent fees and offering expenses payable by the Company.

On January 15, 2026, the Company filed a Form S-3 Registration Statement for the resale of up to 6,433,126 shares of the Company's Common Stock consisting of (i) 2,047,089 shares of Common Stock underlying the Pre-Funded Warrants at an exercise price of $0.0001 per share; and (ii) 4,386,037 shares of Common Stock underlying the Common Stock Warrants to purchase shares of Common Stock at an exercise price of $3.28 per share. The Form S-3 Registration Statement was declared effective by the SEC on January 29, 2026.

Subsequent to year end, the Company received notification and payment for the exercise of 1,319,089 Pre-Funded Warrants at an exercise price of $0.0001 per share and 1,319,089 shares of Common Stock were issued. As of March 10, 2026, there are 728,000 Pre-Funded Warrants outstanding.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Research and Development Expenses

Our research and development expenses consist of expenses incurred in development and clinical studies relating to our product candidates, including:

We expense all research and development costs as incurred. Clinical development expenses for our product candidates are a significant component of our current research and development expenses. Products in later stage clinical development generally have higher research and development expenses than those in earlier stages of development, primarily due to increased size and duration of the clinical trials. We track and record information regarding research and development expenses for each study or trial we conduct. We use third-party CROs, CMOs, contractor laboratories and independent contractors. We recognize the expenses associated with third parties performing services for us in our clinical studies based on the percentage of each study completed at the end of each reporting period.

Our research and development expenses in 2025 included approximately $12.0 million of acquired In-Process Research and Development ("IPR&D") related to the Licensing Agreement with Serpin and approximately $9.8 million on the development of Halneuron^® including costs associated with the HAL-CINP-203 clinical trial and development related activities associated with the synthetic manufacture of Halneuron^®.

As we advance the HAL-CINP-203 clinical trial, we expect our research and development expenses related to the development of Halneuron^® to increase. These expenditures are subject to numerous uncertainties regarding timing and cost to completion. Completion of our clinical development and clinical trials may take several years or more. Because of the numerous risks and uncertainties associated with product development,

we cannot determine with certainty the duration and completion costs of the current or future studies and clinical trials or if, when, or to what extent we will generate revenues from the commercialization and sale of our product candidates. We may never succeed in achieving regulatory approval for our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

A change in the outcome of any of these factors could mean a significant change in the costs and timing associated with the development of our current and future product candidates. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development, or if we experience significant delays in execution of or enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. We expect our research and development expenses to increase for the foreseeable future as we continue the development of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, benefits and other related personnel costs, including equity and stock-based compensation, for personnel serving in our executive, finance and administrative functions. General and administrative expenses also include public company costs, directors' and officers' insurance, professional fees for legal, including patent related expenses, consulting, auditing and tax services.

We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities and potential commercialization of our product candidates and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses.

Other Income/Expense

Other income/expense consists of a $6.1 million loss on debt conversion with a related party related to the Exchange and Cancellation Agreement with the Lender offset by interest income of $0.1 million earned on cash in a money market account.

Related Parties

The Company uses Gendreau Consulting, LLC, a consulting firm ("Gendreau"), for drug development, clinical trial design and the planning, implementation and execution of contracted activities with the clinical research organization. Gendreau's managing member is the Company's Chief Medical Officer ("CMO"). From time to time, the Company contracts the services of immediate family members of the Company's CMO through Gendreau to perform certain activities in connection with the Company's ongoing clinical development of its product candidates. Such services have included service as the Company's Medical Monitor and currently include service by immediate family members of the CMO as the Company's Chief Safety Officer for the HAL-CINP-203 clinical trial and as an assistant in connection with various clinical site related activities.

On October 7, 2024, in connection with the Exchange Agreement, the Company entered into the Loan Agreement with Lender, who is an affiliate of CKLS. Pursuant to the Loan Agreement, the Lender agreed to make a loan to the Company in the aggregate principal amount of $19,500,000, of which (i) $16,500,000 was disbursed on October 7, 2024 and (ii) $3,000,000 was disbursed on February 18, 2025. The Loan Agreement bore interest at SOFR plus 2.00%. On March 12, 2025, the principal amount of all loans made to the Company under the Loan Agreement, along with accrued interest through such date was deemed repaid and all of the Company's obligations with respect to the principal amount and accrued interest was satisfied in full and cancelled in connection with the Debt Exchange and Cancellation Transaction.

For a full discussion of related party transactions see Note 11 to the Financial Statements included in this Annual Report on Form 10-K.

Income Taxes

As of December 31, 2025, the Company has U.S. federal net operating loss carryforwards of approximately $45,410,000, which have an indefinite carryforward and Georgia and Florida state net operating loss carryforwards of approximately $58,689,000 and $1,750,000, respectively, which have a twenty-year carryforward and begin expiring in 2037. As of December 31, 2025, the Company also had Canadian non-capital loss carryforwards of approximately $22,024,000, which have a twenty-year carryforward and begin expiring in 2026 and Hong Kong tax losses carryforwards of approximately $58,026,000, which have no expiry. These net operating losses can be carried forward and applied against future taxable income, if any. As the Company was incorporated in December 2020, all tax years of the Company remain open to examination by tax authorities.

At December 31, 2024, the Company evaluated the realizability of its deferred tax assets and determined that the valuation allowance should be adjusted for the consideration of the acquired in-process research and development intangible assets. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible.

Critical Accounting Policies and Use of Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates - which also would have been reasonable - could have been used. On an ongoing basis, we

evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets consist of IPR&D. The fair values of IPR&D project assets acquired in business combinations are capitalized. The Company generally utilizes the Multi-Period Excess Earning Method to determine the estimated fair value of the IPR&D assets acquired in a business combination and for subsequent annual impairment testing. The projections used in this valuation approach are based on many factors, such as relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, and estimated payments. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate.

Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset's fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of our intangible assets with indefinite lives may not be recoverable, including, but not limited to, recent clinical data, expected growth rates, the cost of equity and debt capital, general economic conditions, outlook and market performance of the Company's industry and recent and forecasted financial performance.

The Company evaluates indefinite-lived intangible assets for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable. For the years ended December 31, 2025 and 2024, the Company determined that there was no impairment to IPR&D.

Goodwill

Goodwill represents the amount of consideration paid in excess of the fair value of net assets acquired as a result of the Company's business acquisitions accounted for using the acquisition method of accounting. The intangible assets acquired represented the fair value of IPR&D which has been recorded on the accompanying consolidated balance sheet as indefinite-lived intangible assets. A deferred tax liability was recorded for the difference between the fair value of the acquired IPR&D and its tax basis which was recognized as goodwill in applying the purchase method of accounting. Goodwill is not amortized and is subject to impairment testing at a reporting unit level on an annual basis or when a triggering event occurs that may indicate the carrying value of the goodwill is impaired. An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting units is less than its carrying amount.

The Company evaluates goodwill for impairment at least annually on October 1 and whenever facts and circumstances indicate that its carrying amount may not be recoverable. When conducting our annual

impairment test, we elected to perform a quantitative assessment. As the Company consists of one reporting unit, we compare the estimated fair value of our reporting unit to its carrying value. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment exists. If the carrying amount exceeds the fair value, the difference between the carrying value and the fair value is recorded as an impairment loss, the amount of which may not exceed the total amount of goodwill. We determined the fair value of our reporting unit based upon the quoted market price and related market capitalization of the Company's common stock, adjusted for an estimated control premium. For the years ended December 31, 2025 and 2024, the Company determined that there was no impairment to goodwill.

Redeemable and Convertible Preferred Stock

The Company applies ASC 480, Distinguishing Liabilities from Equity, when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders' equity (deficit).

Research and Development

Research and development costs are expensed as incurred. The Company arranges and contracts with third-party contract research organizations ("CROs"), contract development and manufacturing organizations ("CMOs"), contractor laboratories and independent consultants. As part of the process of preparing its financial statements, the Company may be required to estimate some of its expenses resulting from its obligations under these arrangements and contracts. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided. The Company's objective is to reflect the appropriate expenses in its financial statements by matching those expenses with the period in which services are rendered. The Company determines any accrual estimates based on account discussions with applicable personnel and outside service providers as to the progress or state of completion. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The Company's estimates are dependent upon the timely and accurate reporting of CROs, CMOs and other third-party vendors. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that the Company considers in preparing these estimates include the number of patients enrolled in studies, milestones achieved, and other criteria related to the efforts of its vendors. These estimates will be subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company will record prepaid or accrued expenses related to these costs.

Equity and Share-Based Compensation

The Company recognizes compensation expense relating to equity-based payments based on the fair value of the equity or liability instrument issued. For equity-based instruments, the expense is based upon the grant date fair value and recognized over the service period. For awards with a performance condition, compensation expense is recognized over the requisite service period if it is probable that the performance condition will be satisfied. Expense is recognized within both research and development and general and administrative expenses and forfeitures are recognized as they are incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the Company had paid cash for the goods or services. The Company estimates the fair value of options and warrants granted using an options pricing model.

Results of Operations

Operating expenses and other expense were comprised of the following:

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Years Ended December 31, 2025 and 2024

Research and Development Expenses

Research and development expenses increased by $18.3 million to $21.8 million for the year ended December 31, 2025 from $3.5 million for the year ended December 31, 2024. The increase was primarily due to $12.0 million of acquired In-Process Research and Development ("IPR&D") related to the Licensing Agreement with Serpin and the impact of the Combination, including increases in expenses for clinical trials of $6.1 million related to the HAL-CINP-203 study, drug development and manufacturing costs of $0.3 million and salaries and related personnel costs of $0.3 million offset by a decrease in research and preclinical costs of $0.4 million.

General and Administrative Expenses

General and administrative expenses decreased by $2.6 million to $6.1 million for the year ended December 31, 2025 from $8.7 million for the year ended December 31, 2024. This decrease was primarily due to a decrease in nonrecurring transaction costs of $3.9 million related to the Combination with Pharmagesic in October 2024 and a decrease in expenses associated with being a pubic company of $0.2 million offset by increases in salaries and related personnel costs of $0.5 million, legal and professional fees of $0.6 million, franchise tax fees of $0.2 million and other general and administrative costs of $0.2 million.

Other Expense

Other expense increased by $6.0 million to $6.1 million in expense for the year ended December 31, 2025 from $0.1 million in expense for the year ended December 31, 2024. The increase in other expense was primarily due to a $6.1 million loss on debt conversion with a related party related to the Exchange and Cancellation Agreement with the Lender offset by interest income of $0.1 million.

Liquidity and Capital Resources

Since our inception, we have financed our operations through public offerings of common stock and proceeds from private placements of membership interests and convertible promissory notes. To date, we have not generated any revenue from the sale of products, and we do not anticipate generating any revenue from

the sales of products for the foreseeable future. We have incurred losses and generated negative cash flows from operations since inception. As of December 31, 2025, our principal source of liquidity was our cash, which totaled $6.5 million.

Equity Financings

Subsequent to year end, on January 11, 2026, the Company entered into an agreement with Maxim Group LLC as placement agent in connection with the issuance and sale by the Company in a registered direct offering of 2,338,948 shares of its Common Stock (the "Registered Offering"), pursuant to an effective shelf registration statement on Form S-3 (File No. 333-287575). In a concurrent private placement (together with the Registered Offering, the "January 2026 Offering"), the Company agreed to sell (i) unregistered pre-funded warrants to purchase up to 2,047,089 shares of Common Stock (the "Pre-funded Warrants") and (ii) unregistered common stock warrants to purchase up to 4,386,037 shares of Common Stock (the "Common Stock Warrants") at a combined offering price of $2.85 per share of Common Stock and accompanying Common Stock Warrant and $2.8499 per Pre-funded Warrant and accompanying Common Stock Warrant. The January 2026 Offering closed on January 13, 2026, and the gross proceeds to the Company were approximately $12.5 million. The net proceeds of the January 2026 Offering were approximately $11.4 million after deducting placement agent fees and offering expenses payable by the Company.

On March 12, 2025, we entered into an agreement with Maxim Group LLC as placement agent in connection with the issuance and sale by the Company in a registered direct offering of 578,950 shares of our Common Stock at a price of $8.26 per share (the "March 2025 Offering"), pursuant to an effective shelf registration statement on Form S-3 (File No. 333-263700). The March 2025 Offering closed on March 14, 2025, and the gross proceeds from the March 2025 Offering were approximately $4.78 million. The net proceeds of the March 2025 Offering were approximately $4.25 million after deducting placement agent fees and offering expenses payable by the Company.

On May 19, 2024, the Company entered into an agreement with Maxim Group LLC as placement agent in connection with the issuance and sale by the Company in a public offering of 340,000 shares of its Common Stock at a public offering price of $5.00 per share (the "May 2024 Offering"), pursuant to an effective shelf registration statement on Form S-3 (File No. 333-263700). The May 2024 Offering closed on May 22, 2024, and the gross proceeds from the May 2024 Offering were $1.7 million. The net proceeds of the May 2024 Offering were approximately $1.4 million after deducting placement agent fees and offering expenses payable by the Company.

Debt Financings

Concurrent with the Combination with Pharmagesic, on October 7, 2024, the Company entered into the Loan Agreement with Lender and an affiliate of CKLS. Pursuant to the Loan Agreement, the Lender agreed to make a loan to the Company in the aggregate principal amount of $19,500,000, of which (i) $16,500,000 was disbursed on October 7, 2024 and (ii) $3,000,000 was disbursed on February 18, 2025. Pursuant to the terms of the Loan Agreement, the proceeds are to be used for the purpose of (1) funding operations and (2) performing clinical and research & development activities related to Halneuron^®. The Loan Agreement bears interest at SOFR plus 2.00%, that increases by 1.00% in the event of default that resets on an annual basis on October 1^st. On March 12, 2025, the principal amount of all loans made to the Company under the Loan Agreement, along with accrued interest through such date was deemed repaid and all of the Company's obligations with respect to the principal amount and accrued interest was satisfied in full and cancelled in connection with the Debt Exchange and Cancellation Transaction. For more information, please see "Recent Developments" above.

There was no debt outstanding at December 31, 2025.

Future Capital Requirements

We anticipate our cash and cash equivalents on hand at December 31, 2025 of approximately $6.5 million, plus the additional net proceeds of approximately $11.4 million received from the January 2026 Offering, will fund operations through the third quarter of 2026. The Company will need to secure additional financing to fund its ongoing clinical trials and operations beyond the third quarter of 2026 to continue to execute its strategy. We will need to finance our cash needs through public or private equity offerings, debt financings, collaboration and licensing arrangements or other financing alternatives. To the extent that we raise additional funds by issuing equity or equity-linked securities, our shareholders will experience dilution. We can give no assurances that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs. As a result, substantial doubt exists regarding our ability to continue as a going concern 12 months from the issuance of the Annual Report on Form 10-K. Failure to secure the necessary financing in a timely manner and on favorable terms could have a material adverse effect on the Company's strategy and value and could require the delay of product development and clinical trial plans.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities.

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Years ended December 31, 2025 and 2024

Operating Activities

For the year ended December 31, 2025, net cash used in operations was $15.7 million and consisted of a net loss of $34.3 million and a net change in operating assets and liabilities of $0.2 million attributable to an increase in prepaid expenses of $0.2 million offset by non-cash items of $11.9 million for non-cash costs related to the Serpin License Agreement, $6.1 million loss on debt conversion with Conjoint, $0.4 million attributable to share-based compensation, $0.2 million related to deferred tax expense and $0.2 million of depreciation, amortization, loss on foreign exchange, reduction in carrying amount of right-of-use asset and loss on fixed asset disposal.

For the year ended December 31, 2024, net cash used in operations was $8.8 million and consisted of a net loss of $12.3 million and a net change in operating assets and liabilities of $3.5 million attributable to a net decrease in accounts payable and accrued expenses of $0.1 million and an increase in prepaid expenses of $0.5 million offset by non-cash items of $3.5 million for non-cash transaction costs, $0.5 million attributable to share-based compensation and $0.1 million of depreciation, amortization and loss on foreign exchange.

Investing Activities

There were no investing activities for the year ended December 31, 2025. Net cash provided by investing activities for the year ended December 31, 2024 consisted of $3.8 million in cash acquired in connection with the Combination.

Financing Activities

Net cash provided by financing activities during the year ended December 31, 2025 was $7.3 million and was attributable to cash proceeds from the Loan Agreement of $3.0 million, cash proceeds from our registered direct offering in March 2025, net of placement agent fees and offering costs, of $4.2 million, and cash proceeds from the sale of Common Stock under the ATM program, net of fees, of $0.1 million.

Net cash provided by financing activities during the year ended December 31, 2024 was $16.7 million and was attributable to loan proceeds, net of fees, of $15.3 million and cash proceeds from our public offering in May 2024, net of placement agent fees and offering costs, of $1.4 million.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Recent Accounting Pronouncements

See Note 2 - Summary of Significant Accounting Policies in the accompanying notes to the financial statements elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our financial statements.

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