CTOR 10-K & 10-Q changes, risk factors and insider trading

Risks Related to the Company’s Business and Our IndustryFinancial Position and Need for Additional Capital

As of September 30, 2024,2025, and without giving effect to subsequent capital raises in October and December 2025, our cash and cash equivalents were approximately $0$3.9 million, and we had an accumulated deficit of $39,278,587.approximately $64 million. The amount and timing of our future funding requirements will depend on many factors, some of which are outside of our control, including but not limited to:

We were formed in August 2021 and began operations in April 2022 when Citius Pharma transferred the assets related to LYMPHIR to us, including the license agreement with Eisai and the asset purchase agreement with of Dr. Reddy’s. Our ability to become profitable depends upon our ability to generate revenues from sales of LYMPHIR, and any future product candidates, if any, resulting from our ongoing research with LYMPHIR for other possible indications. We have been focused on product development and have not generated any revenues to date. We have incurred losses in each period of our operations, and we expect to continue to incur losses for the foreseeable future. These losses are likely to continue to adversely affect our working capital, total assets, and stockholders’ equity. The process of developing product candidates requires significant clinical development, laboratory testing and clinical trials. In addition, commercialization of LYMPHIR and any future approved product candidates requires that we establish sales, marketing, and manufacturing capabilities, through internal hiring and contractual relationships with others. We expect to incur substantial losses for the foreseeable future as a result of anticipatedthe theongoing commercial launch of LYMPHIR, increases increases in our research and development costs, including costs associated with conducting preclinical testing and clinical trials for any other potential products, and regulatory compliance activities. We incurred a net lossesloss of $$24.7 $21,148,747million for the year ended September 30, 2024. 2025. At September 30, 2024,2025, the Company had stockholders’ equity of $46,140,339$44.9 million and an accumulated deficit of $39,278,587. $64 million. The Company has isreceived currentlysignificant fundedfunding byfrom Citius Pharma. Citius Pharma funded the Company with net cash used for our operating activities in the amounts of $14,270,648approximately $8.9 million for the year ended September 30, 2024.2025.

As of September 30, 2024,2025, we have outstanding commitments totaling $25.7$38.4 million due to third-party suppliers and manufacturers, primarily related to the development and commercialization commercialization of LYMPHIR, and an aggregate of $28.4$22.7 million of due and outstanding amounts under our license agreements, that, if left unpaid, could result in aan delay interruption in the commercialization of LYMPHIR, breach of contract, loss of licensing rights or other events that would have a material adverse effect on our business and operations.

We continue to evaluate strategic paths to provide the resources necessary to successfully commercialize LYMPHIR and maximize stockholder value. Potential strategic paths may include partnerships, joint joint ventures, mergers, acquisitions, or licensing transactions, a combination of these, or other strategic transactions. There can be no assurance, however, that our evaluation will result in transactions or other alternatives, even when deemed necessary. There is no set timetable for our strategic processprocess, and we do not intend to provide updates unless or until the Board of Directors approves a specific action or or otherwise determines that disclosure is appropriate or necessary.

In the event we do not successfully complete a strategic transaction, should this be deemed necessary, our Board of Directors may decide to pursue a dissolution and liquidation of our Company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

There can be no guarantee that the process to identify strategic transactions will result in successfully completed transactions when necessary. If additional transactions are not completed that enable us to continuesuccessfully the commercialization ofcommercialize LYMPHIR and sustain our business operations, our Board ofmay Directors may decide that it is in the best interest of our stockholders to dissolve our Company and liquidate our assets. In that event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation since the amount of cash available for distribution continues to decrease as we fund our operations and evaluate our strategic alternatives. In addition, if our Board were to approve and recommend, and our stockholders were to approve, a dissolution of our Company, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations. In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of our Company. If a dissolution and liquidation were pursued, our Board, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a dissolution, liquidation or winding up of our Company.

We have one approved product and have an unproven business strategy and may never achieve successful commercialization of LYMPHIR or any future product candidates or achieve or maintain maintain profitability.

We have one approved product candidate, LYMPHIR, while future product candidates, if any, resulting from our ongoing research with LYMPHIR for other possible indications, are and would be in the pre-clinical stage. As a result, our success is dependent upon our ability to commercialize LYMPHIR, which was launched in December 2025, and we, as a company, have not demonstrated an ability to perform the functions necessary for the approval or successful commercialization of any current or future product candidates. While various members of our executive management and key employees have significant prior experience in pharmaceutical development, as a company we have to date successfully completed only one late-stage clinical trial (much of which had been undertaken by Eisai prior to our in-licensing of the intellectual property for LYMPHIR) and we are undertaking commercialization activities for the first time for LYMPHIR. DespiteWe have contracted with Innovation Partners, a large third-party commercial sales and marketing organization with an existing commercial infrastructure and product launch experience to assist in our progresscommercial efforts related to LYMPHIR. We have distribution agreements with LYMPHIR,three national companies and an agreement with EVERSANA to support the launch and commercialization of LYMPHIR. Our success will depend upon our operationsthird-party havesales beenand limitedmarketing primarilyinfrastructure. If we are not successful in implementing our strategy to business planning, research and development, and raising capital. These operations provide a limited basis for you to assesscommercialize our abilityproduct tocandidates, successfullywe commercialize ourmay currentnever achieve, maintain, or futureincrease product candidates and the advisability of investing in the securities.profitability.

Under the terms of the License Agreement with Eisai, we arewere required to pay Eisai a $5.9 million development milestone payment upon initial approval by the FDA of LYMPHIR for the CTCL indication, which occurred in August 2024, and an aggregate of up to $22 million related to the achievement of net product sales thresholds. Under the terms of the agreement with Dr. Reddy’s, we are obligated to pay up to an aggregate of $40 million related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, and up to $300 million for commercial sales milestones. Further, under the agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials, (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before September 1, 2025, the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.jurisdiction; the launch of LYMPHIR in December 2025 satisfied this requirement in the U.S.

Our commercial success will depend in part on the maintenance of our current and any future license agreements. Our license agreements impose, and we expect that future license agreements will impose on us, various diligence, milestone payment, royalty and other obligations. For example, under the license agreement and related purchase agreement for the intellectual property for LYMPHIR, we are required to use commercially reasonable diligence to develop and commercialize a product and to satisfy specified payment obligations for various developmental and regulatory milestones. Specifically, upon the approval of LYMPHIR, we became subject to the paymentpayments of an aggregate of $27.5$33.4 million under the license and asset purchase agreements covering covering LYMPHIR.LYMPHIR through Eisai and Dr. Reddy’s separately. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of a milestone payment by us, which was triggered upon regulatory approval of LYMPHIR by the FDA and due on September 9, 2024, pursuant to the terms of the Asset Purchase Agreement.

We have secured supply agreements for LYMPHIR with the two third-party facilities who are in compliance with current good manufacturing practices (“cGMP”) as generally accepted accepted by the FDA. We rely on these third-party contractors for our manufacturing. Manufacturing of drugs for clinical and commercial purposes purposes must comply with the FDA’s cGMP and applicable non-U.S. regulatory requirements and before any of our collaborators can begin to commercially manufacture our product candidates, each must obtain regulatory approval of the manufacturing facility and process. If, for any reason, we become unable to rely on these sources or any future source or sources to manufacture LYMPHIR or any future product candidates, candidates, either for pre-clinical or clinical trials or for commercial quantities, then we would need to identify and contract with additional or replacement third-party manufacturers to manufacture compounds for preclinical, clinical, and commercial purposes. We might not be successful in identifying additional or replacement third-party manufacturers, or in negotiating acceptable terms with any that we might identify. If we are unable to secure and maintain third-party manufacturing capacity, the developmentcommercialization and sales of LYMPHIR, and any future product candidates, and our financial performance might be materially and adversely affected.

Each of these risks could delay our clinical trials or the approval, if any, of our future product candidates by the FDA or any foreign regulatory agency or the successful commercialization of LYMPHIR and could result in higher costs or deprive us of potential product revenues. As a result, our business, financial condition, and results of operations might be materially harmed.

We face significant risks in our developmentcommercialization efforts of LYMPHIR and development of any future product candidate.

Our business depends on the successful development and commercialization of LYMPHIR. We are not permitted to market any product candidate in the U.S. until we receive approval from the FDA, or in any foreign jurisdiction until we receive the requisite approvals from such jurisdiction. We received approval from the FDA for LYMPHIR in August 2024. The process of developing new drugs and/or therapeutic products is inherently complex, unpredictable, time-consuming, expensive and uncertain. We must make long-term investments and commit significant resources before knowing whether our development programs will result in products that will receive regulatory approval and achieve market acceptance. For example, while LYMPHIR received FDA approval in August 2024, we had incurred significant expenses in its development and planned commercialization; as of September 30, 2024, we had outstanding obligations of approximately $54.1 million to third parties for LYMPHIR licensing, supply and other costs. Product candidates that appear to be promising at some or all stages of development may not receive approval or reach the market for a number of reasons that may not be predictable based on results and data of the clinical program. Product candidates may be found ineffective or may cause harmful side effects during clinical trials, may take longer to progress through clinical trials than had been anticipated, may not be able to achieve the pre-defined clinical clinical endpoints due to statistical anomalies even though clinical benefit may have been achieved, may fail to receive necessary regulatory approvals, may prove impracticable to manufacture in commercial quantities at reasonable cost and with acceptable quality, or may fail fail to achieve market acceptance.

Our strategy with our product candidatesLYMPHIR is to outsource to third parties all or most aspects of the product development process, as well as much of our marketing, sales, and distribution activities. activities.We Currently,have we are in the process of developingdeveloped our sales, marketing and distribution capabilities and have contracted with Innovation Partners, a large third-party commercial sales and marketing organization with an existing commercial infrastructure and product launch experience to assist in our commercial efforts for LYMPHIR. In addition, we have entered into distribution agreements with Cardinal Health, Cencora and McKesson Corporation and have contracted with EVERSANA to support the launch and commercialization of LYMPHIR. The development and maintenance of a sales and distribution infrastructure requires substantial resources, which may divert the attention of management and key personnel and defer the company’s our product development efforts. Contracting with third-party commercial sales and marketing organizations means that our revenues will depend on the efforts of others. These efforts may not be successful. If the collaboration is terminated or is otherwise unsuccessful, we will experience delays in product launch and sales and incur increased costs.

If we are found to have improperly promoted any off-label uses use of LYMPHIR or for any other product candidates, if approved, or if we are found to have improperly engaged in pre-approval promotion prior to the approval of such product candidates, we may become subject to significant liability. Such enforcement has become more common in the pharmaceutical industry. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as LYMPHIR and any other product candidates that might be approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. If we receive marketing approval for our product candidates for the proposed indications, physicians may nevertheless use the product for their patients in a manner that is inconsistent with the approved label, if the physicians believe in their professional medical judgment, it could be used in such manner. However, if we are found to have promoted a product for any off-label uses, the federal government could levy civil, criminal and/or administrative penalties, and seek fines against us. The FDA, Department of Justice or other regulatory authorities could also request that we enter into a consent decree or a corporate integrity agreement, or seek a permanent injunction against us under which specified promotional conduct is monitored, changed or curtailed. If we cannot successfully manage the promotion of LYMPHIR or any other product candidates that receive approval, we could become subject to significant liability, which would materially adversely affect our our business, financial condition and results of operations.

Competition in the pharmaceutical and medical medical products industries is intense and is characterized by costly sales and marketing infrastructuresinfrastructures, as well as extensive research efforts and rapid technological progress. We are aware of several pharmaceutical companies who commercially market products for the same condition or conditions we are targeting for LYMPHIR. There may also be companies who are actively engaged in the development of therapies or products for at least some of these same conditions. Many of these companies have substantially greater research and development capabilities as well as substantially greater marketing, financial and human resources than we do. In addition, many of these companies have significantly greater experience than us in undertaking pre-clinical testing, clinical trials and other regulatory approval procedures. Our competitors may develop technologies and products that are more effective than those we are researching and developing. Such developments could render our product candidates, if approved, less competitive or possibly obsolete. We are also competing with respect to marketing capabilities and manufacturing efficiency, areas in which we have no current capabilities and in which we have no experience as a company, although our executive officers do have pharmaceutical commercialization and launch experience. We have contracted with Innovation Partners, a large third-party commercial sales and marketing organization with an existing commercial infrastructure and product launch experienceexperience, and with EVERSANA, a large third-party provider of global commercialization services, to assist in our commercial efforts with for LYMPHIR. However, thisour prior experience and our third-party arrangements might not translate into the successful development and launch of LYMPHIR, or any of our future product candidates. Mergers, acquisitions, joint ventures and similar events may also significantly increase the competition we we face. In addition, new developments, including the development of other drug technologies and methods of preventing the incidence of disease, occur in the pharmaceutical and medical technology industries at a rapid pace. These developments may render LYMPHIR or any of our product candidates obsolete or noncompetitive. Compared to us, many of our potential competitors have substantially greater capital resources resources, as well as greater access to strategic partners.

As a result of these factors, our competitors may obtain regulatory approval of their products more rapidly than we can or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our product candidates. Our competitors might also develop products that are more effective, more useful and less costly than our products and might also be more successful in manufacturing and marketing their products. In addition, our competitors might be more effective than us in commercializing their products and as a result, our business and prospects might might be materially harmed.

If we or any of our current or future collaborators collaborators fail to renew or terminate any of theour collaboration or license agreements or if either party fails to satisfy their its obligations under any of theour collaboration or license agreements or complete them in a timely manner, we could have difficulty continuing marketing and sales completingefforts the commercialization offor LYMPHIR and the development and commercialization of any future product candidate and potentially lose significant sources of revenue, which could result in an adverse impact on our operations and financial condition as well as volatility in any future revenue. In addition, the agreements with our collaborators may have provisions that give rise to disputes regarding the rights and obligations of the parties. These and other possible disagreements could lead to termination of the agreement or delays in collaborative research, development, supply, or commercialization of LYMPHIR and any future product candidate, or could require or result in litigation or arbitration. Any such conflicts with the collaborators could reduce our ability to obtain future collaboration agreements and could have a negative impact on our relationship with existing collaborators, adversely affecting our business and revenues. Finally, any of our collaborations may prove to be unsuccessful.

We rely on the significant experience and specialized expertise of theour executive management and other key personnel and the loss of any of theour executive management or key personnel or our inability to successfully hire their successors could harm our business.

The Company’s performance is substantially dependent on the continued services and on the performance of our executive management and other key personnel through the A&R Shared Services Agreement with Citius Pharma, all who have extensive experience and specialized expertise in our business. Our Chief Executive Officer, Leonard Mazur, our Secretary and Director, Myron Holubiak, our Chief Financial Officer and Chief Business Officer, Jaime Bartushak, and our Chief Medical Officer, Myron Czuczman, in particular have significant experience in the running of pharmaceutical companies and/or drug development itself. This depth of experience is of significant benefit to us, especially given the small size of our management team and company. The loss of the services of any of Mr. Mazur, Mr. HolubiakHolubiak, or,Mr. Bartushak or Dr. Czuczman, as well as any other member of our executive management or any key employees could harm our ability to attract capital, commercialize LYMPHIR and develop any future product candidates. We do not have key man life insurance policies.

Pursuant to the A&R Shared Services Agreement entered into in connection with the closing of the Merger, we utilize the services of athe Citius Pharma clinical management team on a part-time part-time basis to assist us in managing the clinical and pre-clinical trials and intend to do so for future pre-clinical and clinical trials. Pursuant to the A&R Shared Services Agreement, we also utilize the services of Citius Pharma employees with expertise in product manufacturing manufacturing and commercialization for the plannedpost-launch launchsupport of LYMPHIR. While we believe these arrangements provide us with sufficient staffing for our current and future development efforts, we will need to hire or contract with additional qualified personnel with expertise in preclinical testing, clinical research and testing, government regulation, formulation and manufacturing and sales and marketing in connection with the continued development, regulatory approval and commercialization of our current and future product candidates. We compete for qualified individuals with numerous pharmaceutical and biopharmaceutical companies, universities, and other research institutions.

We will need to manage our anticipated growth and increased operational activity, including as a result of the plannedrecent commercialization of LYMPHIR and of any future product candidates. Our personnel, systems, and facilities currently in place may not be adequate to support this future growth. Our need to effectively execute theour growth strategy will require that we:

This planned future growth could place a strain on our administrative and operational infrastructure and may require our management to divert a disproportionate amount of our attention away from our day-to-day activities. We may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel, which may result in weaknesses in our infrastructure, and give rise to operational mistakes, loss of business opportunities, loss of employees and consultants and reduced productivity among remaining employees and consultants. We may not be able to make improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls. If our management is unable to effectively manage our expected growth, our expenses may increase more than expected, our ability to generate or increase our revenues could be reducedreduced, and we may not be able to implement our business strategy. Our future financial performance performance and our ability to compete effectively will depend, in part, on our ability to effectively manage any future growth.

There is typically a high rate of attrition from the failure of product candidates proceeding through clinical trials. In addition, certain subjects in clinical trials may respond positively to placebo treatment -– these subjects are commonly known as “placebo responders” -– making it more difficult to demonstrate demonstrate efficacy of the trial drug compared to placebo.

Risks Related to the Company’sOur Regulatory and Legal Environment

Following the approval by the FDA of LYMPHIR in August 2024, we remain required to comply with extensive regulations for product manufacturing, labeling, packaging, adverse event reporting, storage, distribution, advertising, promotion and record keeping. Such regulatory approval is also subject to significant limitations on the indicated uses or marketing of the products or to whom and how we may distribute the approved product.

Manufacturers of pharmaceutical products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Similar regulatory programs exist in foreign jurisdictions. Further, regulatory agencies must approve these manufacturing facilities before they can be used to manufacture ouran approved productsproduct and these facilities are subject to ongoing regulatory inspections. In addition, regulatory agencies subject aan approved pharmaceutical product, the product’sits manufacturer and the manufacturer’s facilities to continual review and inspections. The subsequent discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, may result in restrictions on the marketing of that product, up to and including, withdrawal of the product from the market. If the manufacturing facilities of our suppliers fail to comply with applicable regulatory requirements, it could result in regulatory action and additional costs to us. Failure to comply with applicable FDA and other regulatory requirements may subject us to administrative or judicially imposed sanctions, either before or after product approval, if any.

Citius Oncology is a specialty biopharmaceutical company focused on developing and commercializing innovative targeted oncology therapies. We are commercializing LYMPHIR (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. LYMPHIR was approved by the FDA in August 2024.2024 and commercially launched in the U.S. in December 2025.

Since inception, thewe Company hashave devoted substantially all of our efforts to business planning, research and development, and recruiting management and technical staff.staff Theand Companycommercially islaunching LYMPHIR. We are subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, our ability to obtain additional financing, risks related to the development by the Companyus or our competitors of research and development stage products, market acceptance of our approved products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to obtain additional financing and the Company’sour compliance with governmental and other regulations.

In September 2021, Citius Pharma entered into an asset purchase agreement with Dr. Reddy’s and a license agreement with Eisai to acquire an exclusive license forof E7777 (denileukin diftitox), a late-stagean oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. Citius Pharma assigned these agreements to us effective April 1, 2022. Citius Pharma renamed E7777 as I/ONTAK and also obtained the trade name LYMPHIRTM for the product. Denileukin diftitox is referred to in this annual report as E7777, I/ONTAK or LYMPHIR, depending on the period of time and context that is being discussed.

Under the terms of thethese agreements, Citius Pharma acquired Dr. Reddy’s exclusive license forof E7777 from Eisai and other related assets owned by Dr. Reddy’s. The exclusive license includes rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally,Eisai we retain an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the India option),India, Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma paid Dr. Reddy’s a $40 million upfront payment which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s.acquired. Dr. Reddy’s is entitled to up to $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%), and up to $300 million for commercial sales milestones. We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10% to 15%). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. We will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of our obligations under these agreements.

At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $22.5$19.75 million remains due as of September 30, 2024. Pending further discussions with Dr. Reddy’s,2025. Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.

Under the license agreement, Eisai iswas to receivedue a $5.9 million milestone payment, upon FDA approvalapproval, of which is$2.9 includedmillion in licenseremains payable at September 30, 2024,2025, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22 million related to the achievement of net product sales thresholds. CitiusWe Pharma waswere also required to reimburse Eisai for up to $2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and CMC activities through the filing of the BLA for LYMPHIR with the FDA. TheWe Company will beare responsible for development costs associated with potential additional indications.

The term of the license agreement will continue until (i) March 30, 2026, if there has not been a commercial sale of a licensed product in the territory, the 10-year anniversary of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale of a licensed product in the territory withinby theMarch 10-year30, anniversary of the original license effective date,2026, the 10-year anniversary of the first commercial sale on a country-by-country basis. basis.We expect the first commercial sale to occur in the first quarter of 2026. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.

Also underUnder the purchase agreement agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) to complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.jurisdiction; the launch of LYMPHIR in December 2025 satisfied this requirement in the U.S.

For the year ended September 30, 2025, research and development expenses were $6,418,334 as compared to $4,925,001 for the year ended September 30, 2024, research and development expenses were $4,925,001 as compared to $4,240,451 for the year ended September 30, 2023, an increase of $684,550$1,493,333 dueprimarily related to developmentcosts activitiesassociated completedwith the expense of a drug substance batch needed for the resubmissionpre-license inspection of the BLA of LYMPHIR in January 2024 which were associated with CRL remediation.manufacturer.

For the year ended September 30, 2024,2025, stock-based compensation expense was $7,498,817$8,320,419 as compared to $1,965,500$7,498,817 for the year ended September 30, 2023.2024. The primary reasonreasons for the $5,533,317$821,602 increase in stock-based compensation expense waswere the amountsnew wereoptions realized over 12 monthsgranted in the year ended September 30,December 2024 as compared to three months post-plan adoption inand the yearrestricted endedstock awards granted in September 30, 2023.2025.

The CompanyWe recorded deferred income tax expense of $1,056,960 ofin the year ended September 30, 2025 as compared to $576,000 in each of the yearsyear ended September 30, 2024 and 2023 related to the amortization for taxable purposes of itsour in-process research and development asset.

CitiusWe Oncology hashave incurred operating losses since inception and incurred a net lossesloss of $21,148,747 and $12,697,241$24,761,369 for the yearsyear ended September 30, 20242025. and 2023, respectively. At September 30, 2024,2025, Citius Oncologywe had an accumulated deficit of $64,039,956. $39,278,587.We have had no revenue and have historically relied on funding from Citius Oncology’sPharma netto finance our operations. At September 30, 2025, we had $3,924,908 in cash provided by operations during the years ended September 30, 2024 and 2023a wasnegative $126,353working andcapital $-0-,of respectively.approximately $21.9 million.

During 2024, the Companyyear ended September 30, 2025, we paid $3 $5,000,000million to Eisai in connection with a partial milestone payments dueand underpaid its$2.75 assetmillion purchasein agreementconnection with partial milestone payments to Dr. Reddy’s.

In connection with closing of the Merger,Merger on August 12, 2024, Citius Pharma, made a contribution to the Company’sour capital in the amount of $33,180,961 representing the balance of the due to/due from related party account on the date of the Merger. Citius Pharma also made cash contributions to the Company’sour capital, pursuant to the terms of the Merger Agreement, in the amount of $3,827,944.

In-process research and development of $73,400,000$73.4 million represents the value of our September 2021 acquisition of an exclusive license for LYMPHIR (denileukin diftitox), a late-stagean oncology immunotherapy immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma and is expected to be amortized on a straight-line basis over a period of 12 years commencing upon revenue generation. In-process research and development consists of $40,000,000$40 million paid to Dr. Reddy’s Reddy’s from the asset purchase agreement and approval milestone fees of $27,500,000$27.5 million to Dr. Reddy’s and $5,900,000$5.9 million to Eisai.

TheWe Company reviewsreview intangible assets annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining remaining useful life of any intangible asset. If the carrying value of an asset exceeds its undiscounted cash flows, thewe Companywrite writes down the carrying value of the intangible asset to its fair value for the period identified. No impairments have occurred since the acquisitions of our intangible assets through September 30, 2024.2025.

TheWe Company recognizesrecognize compensation costs resulting from the issuance of stock-based awards to employees and directors as an expense in theour consolidated statement of operations over the requisite service service period based on the fair value for each stock award on the grant date. The fair value of each option grant is estimated as of the dateusing of grant using the Black-Scholes option pricing model. TheVolatility Companyis estimates volatilityestimated using the trading activity of itsCitius Pharma common stock.stock until such time as we have sufficient history. Because the Company’sour stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, the existing model may not necessarily provide a reliable single measure of the fair value of the Company’sour stock options.

The Company recognizes compensation costs resulting from the issuance of stock-based awards to non-employees as an expense in the consolidated statement of operations over the service period based on the measurement of fair value for each stock award and records forfeitures as they occur.

There have been no material changes to the Company’s risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the the SEC on December 23, 2025.2025, except as set forth below.

The following discussion and analysis of our financial condition and results of operations for the three and sixnine months ended MarchJune 31,30, 2026 and 2025 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Oncology, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2025, filed with the SEC on December 23, 2025. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report.

At the time of the FDA approval for LYMPHIR, a a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $17.65$15.65 million remains due as of MarchJune 31,30, 2026. Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.

On March 28, 2025, Citius Oncology and Eisai entered entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. We agreed to pay Eisai $2,535,318 on July 15, 2025, $2,350,000 on the 15th of each of the subsequent four four months, and make a final payment of $2,197,892 on or before December 15, 2025, in each case with interest on each obligation from its its original due date through the date of payment at the rate of 2% per annum. During the sixnine months ended MarchJune 31,30, 2026, we recorded $112,270 $78,872 in interest expense under the agreement. The parties released each other from any and all claims, losses, damages, costs and expenses expenses that arise from or related to our failure to pay the milestone payment or the other incurred costs under the license agreement except except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. On December 15, 2025, we paid Eisai the balance of the outstanding milestone approval fee and accumulated interest on the license fee. At MarchJune 31,30, 2026, we owe Eisai approximately $6.3 million for certain other unpaid invoices.

Three months ended MarchJune 31,30, 2026 compared with with the Three months ended MarchJune 31,30, 2025

Product revenues for the three months ended MarchJune 31,30, 2026 were $1,667,298,$1,493,788, as we began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the three months ended MarchJune 31,30, 2026 was approximately 80%.67%.

For the three months ended MarchJune 31,30, 2026, research and development expenses were $1,079,354,$218,496, as compared to $3,139,413$938,277 for the three months ended MarchJune 31,30, 2025. The decrease of $2,060,059$719,781 was was primarily related to expenselower regulatory expenses recognized in the three months ended MarchJune 31,30, 20252026, forrelated to a pre-licenserefund inspectionof batchFDA LymphirPDUFA previouslyfees manufactured.as well as a lower allocation of internal expense as both investigator-initiated trials have been completed.

Amortization of in-process research and development commenced upon revenue generation in December 2025. For the three months ended MarchJune 31,30, 2026, amortization was $1,720,312. In-process research and development is being amortized on a straight-line basis over the remaining FDA product exclusivity period, which ends in August 2036.

For the three months ended MarchJune 31,30, 2026, general and administrative expenses were $23,625,639,$4,219,163, as compared to $2,243,327$1,881,447 for the three months ended MarchJune 31,30, 2025. The increase of $21,382,312$2,337,716 was primarily related to athe noticeexpansion of terminationour from a contract manufacturingcommercial organization receivedto insupport Februarythe 2026.continued Inlaunch March 2026, we recorded a contract cancellation feeeffort of $19,733,307.LYMPHIR.

For the three months ended MarchJune 31,30, 2026, stock-based compensation expense was $3,526,710,$3,560,791, as compared to $2,088,572$2,125,237 for the three months ended MarchJune 31,30, 2025. The increase of $1,438,138$1,435,554 in in stock-based compensation expense was primarily related to the restricted stock unit awardsunits granted in September 2025.

For the three months ended MarchJune 31,30, 2026, interest income was $43,721,$96,848, as compared to $0 for the three months ended MarchJune 31,30, 2025. We have invested some of the proceeds of our recent equity equity offerings in a money market account.

For the three months ended MarchJune 31,30, 2026, interest expense was $33,031,$231,732, as compared to $0$160,755 for the three months ended MarchJune 31,30, 2025.2025, Interest expense wasprimarily related to theour Marchnew 28,loan 2025 letter agreement with Eisai.agreement.

The Company recorded a deferred income tax benefit benefit of $231,210$107,347 in the three months ended MarchJune 31,30, 2026 and a deferred income tax expense of 264,240$264,240 in the three months ended March 31,June 30, 2025. Deferred income tax expense or benefit is related to the difference in amortization for taxable purposes of our in-process research and development asset and the financial statement amortization.

For the three months ended MarchJune 31,30, 2026, we incurred incurred a net loss of $26,609,695,$8,923,846, as compared to a net loss of $7,735,552$5,369,956 for the three months ended MarchJune 31,30, 2025. The increase of $3,553,890 $18,874,143in inthe net loss was primarily due to the increase of $22,480,703$4,773,801 in operating expenses offset by the increase in gross profit of $1,338,420, the increase in other income of $1,772,690 and the decrease in income tax expense of $495,450.$1,001,945.

SixNine months ended MarchJune 31,30, 2026 compared with the SixNine months ended MarchJune 31,30, 2025

Product revenues for the sixnine months ended MarchJune 31,30, 2026 were $5,611,409,$7,105,197, as we began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the sixnine months ended MarchJune 31,30, 2026 was approximately 80%.77%.

For the sixnine months ended MarchJune 31,30, 2026, research and development expenses were $2,097,706,$2,316,202, as compared to $4,403,921$5,342,198 for the sixnine months ended MarchJune 31,30, 2025. The decrease of $2,306,215$3,025,996 was primarily related to was primarily related toadditional expense recognized in the threenine months ended MarchJune 31,30, 2025 for a pre-license inspection batch of LYMPHIR and previouslylower manufactured.regulatory expenses for the refund of FDA PDUFA fees recognized in the nine months ended June 30, 2026, as well as lower internal allocation of expense as both investigator-initiated trials have been completed.

Amortization of in-process research and development commenced upon revenue generation in December 2025. For the sixnine months ended MarchJune 31,30, 2026, amortization was $2,293,750.$4,014,062. In-process research research and development is being amortized on a straight-line basis over the remaining FDA product exclusivity period, which ends in August 2036.

For the sixnine months ended MarchJune 31,30, 2026, general and administrative expenses were $26,484,978,$30,704,141, as compared to $5,565,306$7,446,753 for the sixnine months ended MarchJune 31,30, 2025. The increase of $20,919,672$23,257,388 was primarily related to a notice of termination from a contract manufacturing organization received in February 2026. In March 2026, we recorded a contract cancellation fee of $19,733,307.

For the sixnine months ended MarchJune 31,30, 2026, stock-based compensation expense was $7,482,760,$11,043,551, as compared to $3,897,050$6,022,287 for the sixnine months ended MarchJune 31,30, 2025. The increase of $3,585,710$5,021,264 in stock-based compensation expense was primarily related to the restricted stock unit awardsunits granted in September 2025.

For the sixnine months ended MarchJune 31,30, 2026, interest income was $72,009,$168,857, as compared to $0 for the sixnine months ended MarchJune 31,30, 2025. We have invested some of the proceeds of our recent equity offerings in a money market account.

We recognized a gain of $1,762,000 for the sixnine months ended MarchJune 31,30, 2026, in connection with the sale of certain New Jersey income tax net operating losses to a third party under the the New Jersey Technology Business Tax Certificate Transfer Program.

For the sixnine months ended MarchJune 31,30, 2026, interest expense was $78,872,$310,604, as compared to $0$160,755 for the sixnine months ended MarchJune 31,30, 2025.2025, Interest expense wasprimarily related to theour Marchnew 28,loan 2025 letter agreement with Eisai.agreement.

The Company recorded a deferred income tax expensebenefit of $33,030$74,317 for the sixnine months ended MarchJune 31,30, 2026 and a deferred income tax expense of $528,480$792,720 for the sixnine months ended MarchJune 31,30, 2025. Deferred income tax expense or benefit is related to the difference in amortization for taxable purposes of our in-process research and development asset and the financial statement amortization.

For the sixnine months ended MarchJune 31,30, 2026, we incurred a net loss of $32,143,764,$41,067,610, as compared to a net loss of $14,394,757$19,764,713 for the sixnine months ended MarchJune 31,30, 2025. The increase of $17,749,007$21,302,897 in net loss was due to the increase of $24,492,917$29,266,718 in operating expenses offset by the increase in gross profit of $4,493,323,$5,495,268, the increase in other income of $1,755,137$1,601,516 and the decrease in income tax expense of $495,450.$867,037.

Citius Oncology has incurred operating losses since inception and incurred a net loss of $32,143,764$41,067,610 for the sixnine months ended MarchJune 31,30, 2026. At MarchJune 31,30, 2026, we had an accumulated deficit of $131.4$105.1 million. The Company has had limited revenue commencing in December 2025 and hashad historically relied on funding from Citius Pharma to finance our operations. At MarchJune 31,30, 2026, we had accrued$16.6 expenses related to LYMPHIR of $XXXXX and other accrued expenses of $YYY. At March 31, 2026, we had $2,632,634million in cash and a negative working capital of approximately $29.4 $16.1 million.

On May 5, 2026, Citius Oncology received grossnet proceeds proceeds of approximately $11.5$9.7 million from the exercise of certain warrants.

InOn addition,May 5, 2026 the CompanyCompany, entered into a term loan agreement with two lenders (the “Lenders”) for up to $25.0 million,million (the “Loan Agreement”), with $10.0 million funded on May 6, 2026, up to $7.0 million available onbetween theOctober later1 ofand (A)December the31, date on2026, whichif certain net revenue and liquidity milestones are achieved and(“Tranche (B2”), October 1, 2026, and continuing through December 31, 2026, and up to $8.0 million available beginningbetween onJanuary the1 laterand ofMarch (A)31, the2027, date on whichif certain additional net revenue milestones are achieved and (B) January 1, 2027, and continuinga throughloan Marchwas drawn between October 1 and December 31, 2027.2026 (“Tranche 3”). The loans bear interest at the greater of the prime rate plus 6% or 12.75%. The loans are secured by an interest in all of the Company’s assets, including intellectual property, subject to agreed exceptions. exceptions. The maturity date of the loans is November 1, 2029.

In order to satisfy our outstanding milestone milestone payment obligations, as well as meet minimum purchase commitments under our agreements for the manufacture and supply of our drug product, in addition to generating income from the sale of LYMPHIR, we need to obtain substantial additional financing and cannot be sure that any additional funding will be available on terms favorable to us, or at all. As of MarchJune 31,30, 2026, our outstanding milestone payments and purchase commitments include:

During the sixnine months ended MarchJune 31,30, 2026, we paid the final $2,900,000 due to Eisai in connection with the LYMPHIR approval milestone and paid $2,100,000$4,100,000 in connection with the milestone payment due to Dr. Reddy’s. At MarchJune 31,30, 2026, we owe Dr. Reddy’s $17,650,000$15,650,000 representing the balance of the approval milestone.