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

Risks Related to Our Filing History

We have been delinquent in our public filing obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and there are no assurances that we will be successful in regaining compliance or, if regained, remaining current in our public filing obligations.

We were unable to file our Annual Reports on Form 10-K for the years ended December 31, 2023 and 2024 because we lacked sufficient financial resources. Since November 2023, when we made our last quarterly report filing on Form 10-Q for the quarter ended September 30, 2023, we have operated at reduced capacity and with limited personnel, including minimal staffing for our clinical, research and development and administrative and finance teams. Until August 2025, we had minimal access to capital and resources. Since August 2025, we have raised sufficient funds for us to conduct the audit of our consolidated financial statements for the years ended December 31, 2023, 2024 and 2025 and file this Annual Report, which we believe will allow us to regain compliance with our reporting obligations under the Exchange Act. The process of regaining and maintaining compliance with Exchange Act reporting requirements after being delinquent for a meaningful period of time is complex and costly, and there are limited examples of companies successfully completing such a process. There are no assurances that the Securities and Exchange Commission (the “SEC”) will agree with our approach toward regaining compliance with our Exchange Act reporting obligations or, if regained, that we will be able to continue to comply with such reporting obligations.

Our common stock is currently listed on the OTC Expert Market. The Nasdaq Stock Market LLC (“Nasdaq”) suspended trading in our common stock on the Nasdaq Capital Market as of October 16, 2023. Though we intend to seek an uplisting for our common stock to trade on the Nasdaq Capital Market, there are no assurances that we will be able to successfully uplist to the Nasdaq Capital Market or successfully maintain compliance with Nasdaq’s listing requirements.

On October 16, 2023, Nasdaq suspended trading in our common stock on the Nasdaq Capital Market because we were not compliant with Nasdaq Listing Rule 5550(b)(2), which requires a listed company to have at least $35 million in market value of listed securities. Following delisting, our common stock has been listed on the OTC Expert Market, which has limited our access to trading markets. In connection with regaining compliance with our Exchange Act filing obligations, we intend to seek an uplisting of our common stock to trade on the Nasdaq Capital Market, which will require us to meet the initial listing standards for the Nasdaq Capital Market. There are no assurances that we will be able to successfully satisfy the initial listing criteria or, if we are successful, to continue to meet the on-going listing requirements for the Nasdaq Capital Market. In particular, we may face heightened scrutiny from Nasdaq as a result of our history of being unable to meet Nasdaq’s listing requirements and having been a delinquent filer under the Exchange Act, which could delay an uplisting to the Nasdaq Capital Market or prevent us from achieving an uplisting. In addition, we may decide it is not in our stockholders’ best interests to uplist our common stock to the Nasdaq Capital Market once we are current with our SEC reporting requirements.

In addition, as a result of delisting from the Nasdaq Capital Market, we lost an active trading market for our common stock, and the trading market for our common stock on the OTC Expert Market is limited. We face significant material adverse consequences as a result of our common stock not being listed on a national securities exchange, including one or more of the following:

a limited availability of market quotations for our common stock;

significantly reduced liquidity and efficiency of the trading market for our common stock;

a decrease in the price of our common stock and greater volatility as a result of the loss of market efficiencies;

holders of our common stock may be unable to sell our common stock and buyers may be unable to purchase our common stock when they wish to do so;

we have lost the interest of institutional investors in our common stock;

a determination that our shares of common stock are considered a “penny stock,” which requires brokers trading in our common stock to adhere to more stringent rules and could possibly result in a reduced level of trading activity in the secondary trading market for our common stock;

limited amount or complete loss of media, news and analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future.

Further, the National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Our shares of common stock have ceased to qualify as covered securities under such statute because they are no longer listed on a national securities exchange. Accordingly, we and our common stock are subject to state regulation in each state in which we offer our common stock. Whether or not our shares of common stock are covered securities, the states have the power to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

Moreover, since being delisted from the Nasdaq Capital Market, we are no longer subject to certain rules and regulations of Nasdaq. As a result, an investment in our common stock may be riskier than an investment in securities of a company that is listed on a national securities exchange due to the reduced protections such rules and regulations provide stockholders.

Our failure to timely file periodic reports with the SEC could limit our access to the public markets to raise debt or equity capital.

We have filed this Annual Report in an effort to become current in our filing obligations under the Exchange Act. If we are unable to become current in our filings with the SEC, we will not be able to register the offer and sale of our securities on a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and will not be able to make public offerings of our securities, which will limit our ability to raise capital. Further, assuming we become current in our filing obligations, we will not be eligible to register the offer and sale of our securities using a shelf registration statement on Form S-3 until we have timely filed all periodic reports required under the Exchange Act for one year. As a result, during this one-year period, our transaction costs could increase and the amount of time required to complete a transaction could increase, making it more difficult to execute any such transaction successfully. We will also not be able to uplist our shares of common stock on the Nasdaq Capital Market or on any national securities exchange until we are current in our SEC reporting requirements. A failure to list our common stock on a national securities exchange could further limit our ability to raise capital. Limitations on our ability to raise capital could adversely affect our business, financial condition and results of operations.

In addition, if we are unable to resolve the delinquency in our reporting obligations, we could be subject to an administrative hearing to revoke the registration of our securities under Section 12(g) of the Exchange Act. If the SEC brought an administrative action against us, it is likely that we would cease being a public company. In that event, our ability to raise capital would be severely affected and we may not be able to continue operations. As a result, holders of our securities might lose their entire investment in our Company.

Risks Related to Financial Position and Need for Additional Capital

We are a clinical stage biotechnology company and have incurred significant operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future. We may never achieve or maintain profitability.

Since our inception, we have incurred significant operating losses. Our net losses were $6.0 million, $3.1 million and $17.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $300.6 million. To date, we have financed our operations primarily through the sale of equity, license and collaboration agreements, debt securities and, to a lesser extent, grants. We have devoted substantially all of our financial resources and efforts to research and development. We expect that it may be several years, if ever, before we receive regulatory approval and have a product candidate ready for commercialization. We expect to continue to incur significant expenses and operating losses for the foreseeable future due to, among other things, costs related to research, development of our product candidates, conducting preclinical studies and clinical trials, and our administrative organization. A successful transition to profitable operations is dependent upon achieving a level of revenue adequate to support our cost structure. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses may increase if, and as, we:

advance exaluren and/or other product candidates further into clinical development;

experience delays in enrollment and completion of our clinical trials;

fund preclinical development of our research programs and advance candidates into clinical trials;

acquire or in-license other product candidates and technologies; and operate as a public company including costs associated with regaining and maintaining Nasdaq compliance.

We may never achieve profitability, and unless and until we do, we will continue to need to raise additional cash to fund our operations. We believe that our cash and cash equivalents as of the date of this Annual Report are not sufficient to maintain our current and planned operations for at least the next twelve months following the filing of this Annual Report. We will need to raise additional capital to finance our operations, which cannot be assured. We have concluded that these conditions, in aggregate, raise substantial doubt about our ability to continue as a going concern through one year after the date these consolidated financial statements are issued. Our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2025, has also expressed substantial doubt about our ability to continue as a going concern. The financial statements included elsewhere in this Annual Report have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Management intends to fund future operations through private or public debt or equity financing transactions and may seek additional capital through arrangements with strategic partners or from other sources, including licensing arrangements. The availability of sufficient funding to alleviate the conditions that raise substantial doubt is not within management’s control and cannot be assessed as being probable of occurring. If we are unable to obtain adequate financing, we will evaluate alternatives which may include curtailing expenses contemplated by our current operating plan, and we may be required to delay, limit, reduce or terminate our product development efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, which may have a material adverse effect on our operations and future prospects.

Prior to filing this Annual Report we did not file any quarterly or annual reports with the SEC since November 2023 as a result of a lack of funds. As described further below, in August 2025, we entered into a securities purchase agreement, as amended, for the offer and sale of up to $20 million of shares and/or pre-funded warrants. We have used the funds received so far to prepare the year-end consolidated financial statements for the years ended December 31, 2025, 2024, and 2023. A goal in this process is to regain compliance with our SEC filing obligations and uplist onto Nasdaq. We anticipate raising additional capital as part of this process.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue and initiate clinical trials of, and seek marketing approval for exaluren, and as we become obligated to make milestone payments pursuant to our outstanding license agreements. We do not have adequate funds to conduct any of our planned clinical trials. This means that if we are unable to raise sufficient funds, we will not be able to conduct our planned Phase 2b clinical trial of exaluren in patients with Alport syndrome (“AS”) or our planned Phase 2 clinical trial of exaluren in patients with nmADPKD. If these trials are significantly delayed or we are unable to conduct them at all due to a lack of funds, our business will be materially adversely affected. We will also require substantial funds to continue research and development, including for any future clinical trials. In addition, if we obtain marketing approval for any of our current or future product candidates, we expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution of the approved product. Our future capital requirements will depend on many factors, including:

the scope, progress, results and costs of drug discovery, clinical development, laboratory testing and clinical trials for exaluren and other product candidates;

the costs, timing and outcome of any regulatory review of exaluren and other product candidates;

Accordingly, despite our prior public equity offerings and debt financings, we will need substantial additional funding in connection with our continuing operations and to achieve our goals. However, our existing cash and cash equivalents are insufficient for these activities. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs, product portfolio expansion or future commercialization efforts. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, in the future, we may seek additional financing due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our operating plans. If we are unable to obtain adequate financing, we will evaluate options, which may include reducing or deferring operating expenses, including by downsizing our workforce and curtailing certain development programs, which could have a material adverse effect on our operations and financial results.

For the year ended December 31, 2025, our net loss was $6.0 million and, as of December 31, 2025, we had an accumulated deficit of $300.6 million. We anticipate operating losses to continue for the foreseeable future due to, among other things, costs related to research and development of our product candidates, conducting preclinical studies and clinical trials, and our administrative organization. We will require substantial additional financing to fund our operations and to continue to execute our strategy, and we will pursue a range of options to secure additional capital. We believe that our cash and cash equivalents of $4.8 million as of December 31, 2025, along with the $5.0 million received by us in February 2026 and the $2.0 million received in March 2026 in the private placement of our pre-funded warrants, will not be sufficient to maintain our current and planned operations for at least the next twelve months from the date of the consolidated financial statements set forth in this Annual Report. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. However, based on our current working capital, anticipated operating expenses and net losses and the uncertainties surrounding our ability to raise additional capital as needed, as discussed below, we believe that these conditions, in aggregate, raise substantial doubt about our ability to continue as a going concern for one year after the date these consolidated financial statements were issued.

We are exploring various sources of funding such as equity and debt financings, as well as entering into new collaborations, strategic alliances and licensing arrangements. If we raise additional funds through strategic collaborations and alliances, which may include existing collaboration partners, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. To the extent that we raise additional capital through the sale of equity, the ownership interest of our existing stockholders will be diluted and other preferences may be necessary that adversely affect the rights of existing stockholders. If we are unable to raise sufficient capital through the transactions discussed above, we will not be able to execute our current operating plan, may need to curtail expenses, and may be required to delay, limit, reduce or terminate our product candidate development efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. If the foregoing plans are unsuccessful and we are unable to continue as a going concern, you could lose all or part of your investment in our Company.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financings, as well as entering into new collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity, or convertible debt securities, an investor’s ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that may adversely affect an investor’s rights as a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and may be secured by all or a portion of our assets. Any debt agreements we may enter into in the future may contain similar restrictions on funding. If we raise funds by entering into new collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our product candidate development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

If in the future we incur indebtedness to fund our operations or strategic initiatives, any future indebtedness could have significant negative consequences, including requiring the dedication of a substantial portion of our expected cash flow to service such indebtedness, thereby reducing the amount of our expected cash flow available for other purposes, limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete, and placing us at a competitive disadvantage compared to our competitors that have less debt. If we incur additional indebtedness in the future and are unable to generate sufficient cash to meet our obligations, we may have to delay or curtail research and development programs.

We have never declared or paid any dividends on our common stock and do not intend to pay any dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the operation of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors.

We currently have no products approved for sale. We have invested substantial efforts and financial resources primarily in the research and development of exaluren, which is currently our primary product candidate in clinical development. Exaluren has been evaluated in a Phase 2a trial in AS patients with nonsense mutations, and we plan to initiate a Phase 2b clinical trial in the first half of 2026 for exaluren in NMAS patients and anticipate topline data from the initial 16-week placebo-controlled part of the study by mid- 2027 with the final readout by the end of 2027. We also plan to initiate enrollment in a Phase 2 trial of exaluren for the treatment of nmADPKD in 2027 following protocol finalization and regulatory approval. We anticipate topline data from this trial by mid-2028. There can be no assurances of its success.

In addition, many of the factors that cause, or lead to, the termination, suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Any resulting delays to our clinical trials could shorten any period during which we may have the exclusive right to commercialize our product candidates. In such cases, our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects.

We are a clinical-stage biopharmaceutical company developing novel, small-molecule product candidates designed to modulate the ribosome and promote readthrough of premature stop codons induced by nonsense mutations (“NMs”) to enable the production of full-length proteins. Targeting ribosome subunits provides a therapeutic approach to addressing a number of genetic diseases. According to the Human Gene Mutation Database, NMs account for approximately 10% to 12% of patients with a given genetic disease. There are over 7,000 inherited genetic diseases that collectively affect 350 million people worldwide. Our immediate focus is to advance the clinical development of our lead product candidate, exaluren, for the treatment of rare kidney diseases and, through our collaboration with Almirall, S.A. (“Almirall”), ZKN-013 for the treatment of rare skin diseases.

We conducted a proof-of-concept Phase 2a open-label monotherapy trial in the United Kingdom in three patients with autosomal recessive AS and a NM in the COL4A4 gene. All three patients showed a reduction in podocyte foot process effacement (“FPE”), which is the flattening and loss of specialized kidney cell structures that form the filtration barrier and attach to the podocytes and GBM, in transmission electron microscopy (“TEM”) images. FPE is a hallmark of kidney diseases including AS and the severity of FPE has historically been associated with time to kidney failure. TEM images of biopsy samples also showed an improvement in the GBM width in all treated patients. FPE was also measured as a 50% increase in the filtration slit density (“FSD”). These results were consistent with exaluren’s proposed mechanism of functional full-length protein restoration as reflected by improvements in GBM architecture and FPE observed in kidney biopsies. We plan to initiate a Phase 2b clinical trial in the first half of 2026 for exaluren in NMAS patients and anticipate topline data from the initial 16-week placebo-controlled part of the study by mid- 2027 with the final readout by the end of 2027.

Our pipeline also includes a preclinical program evaluating exaluren for the treatment of autosomal dominant polycystic kidney disease (“ADPKD”) in patients that have NMs (“nmADPKD”). ADPKD is the most common monogenic kidney disease based on genetic diagnosis, affecting approximately 160,000 to 200,000 patients in the United States. The PKD1 gene encodes polycystin-1 (“PC1”) and the PKD2 gene encodes polycystin-2 (“PC2”), these are proteins that regulate cell growth and fluid secretion in kidney tubules. Loss of functional PC1 or PC2 protein leads to uncontrolled cyst formation. Approximately 26% of ADPKD patients have NMs in the PKD1 and PKD2 genes resulting in a prevalence of approximately 40,000 to 50,000 patients in the United States. Patients experience hypertension, kidney stones, urinary tract infections, heart valve abnormalities, hematuria and increased probability of aortic aneurysm. Formation of these cysts eventually leads to nephromegaly (kidney enlargement) and end-stage renal disease. The only approved therapy for ADPKD, tolvaptan, does not address the underlying genetic cause and carries significant tolerability limitations. Preclinical organoid and cellular models have shown increased PC1 and PC2 gene expression following treatment with exaluren. We plan to initiate enrollment in a Phase 2 trial of exaluren for the treatment of nmADPKD in 2027 following protocol finalization and clearance of an Investigational New Drug application (“IND”) by the FDA. We anticipate topline data from this trial by mid-2028.

We are also developing ZKN-013, an oral ribosome modulating agent (“RMA”) with structural similarity to azithromycin that induces PTC readthrough. In March 2024, we entered into an exclusive global rights agreement with Almirall (the “Almirall License Agreement”) for Almirall to develop and commercialize ZKN-013 for the use in orphan dermatological diseases. Through this collaboration, we are developing ZKN-013 for the treatment of recessive dystrophic epidermolysis bullosa (“RDEB”) and junctional epidermolysis bullosa (“JEB”) with NMs. RDEB and JEB are rare skin diseases characterized by mutations in the Collagen VII (RDEB) and LAMB3 (JEB) proteins. We estimate that there are approximately 4,000 patients with NMs in these diseases in the major markets of the United States, Japan and Western Europe. Patients with these diseases suffer from severe skin bruising, wounds and internal lesions resulting in increased risk of skin cancer and severe malnourishment. Under the Almirall License Agreement, we received an upfront payment of $3 million and a development milestone payment of $3 million in 2024. Almirall is responsible for development and commercialization of ZKN-013 and we are eligible to receive up to approximately $470.0 million in additional development, regulatory and commercial milestone payments as well as tiered royalties based on global sales. The agreement may be terminated under specified circumstances, including for convenience by Almirall, in which case rights may revert to us.

For discussion of 2022 results and comparison with 2021 results, refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

License and service revenue

License and service revenue for 2024 was $6.4 million, of which $3.0 million related to the achievement of a development milestone as a result of the Almirall License Agreement that was entered into in March 2024. There was no license and service revenue during the years ended December 31, 2025 and 2023. In March 2025, Almirall informed us of its decision to not exercise the option for continued research and development services under the Almirall License Agreement, as permitted within the Almirall License Agreement, thereby relieving us of our remaining responsibilities under the Almirall License Agreement. We remain eligible to receive additional payments throughout the potential development phases, including development and sales milestones of up to approximately $470.0 million and tiered royalties based on any potential future global sales. No further license and service revenue is expected from the Almirall License Agreement unless and until the development and sales milestones are achieved, and the timing of the achievement of the development and sales milestones is uncertain.

Research and development expenses were $3.6 million for the year ended December 31, 2024 compared to $8.6 million for the year ended December 31, 2023, a decrease of $5.0 million. The decrease was primarily related to a $1.0 million decrease in clinical trial expenses related primarily to Alport related activities, a $2.2 million decrease in salaries and other personnel related costs, including a decrease in stock compensation expense of $0.5 million, and a decrease of $1.8 million in expenses related to subcontractors, advisors, and lab supplies in connection with preclinical research and development activities.

General and administrative expenses were $5.3 million for the year ended December 31, 2024 compared to $8.7 million for the year ended December 31, 2023, a decrease of $3.4 million. The decrease was primarily related to a $0.1 million decrease in salaries and other personnel related costs, a decrease of $1.9 million in expenses attributable to professional and consulting fees, a decrease of $0.9 million in stock-based compensation expense, and a $0.5 million decrease in facility and other general and administrative overhead costs.

Other income, net, was $0.4 million for the year ended December 31, 2025 compared to $0.7 million in other expense, net, for the year ended December 31, 2024, a change of $1.1 million. The change was primarily related to the $1.2 million gain on extinguishment of the CFF 2021 award, the $0.2 million gain on conversion of debt and a change of $0.1 million in the fair value of derivative liabilities, partially offset by a change of $0.4 million in the fair value of warrant liabilities.

Other expense, net, was $0.7 million for the year ended December 31, 2024 compared to $0.2 million in other income, net, for the year ended December 31, 2023, a change of $0.9 million. The change was primarily related to a change of $1.2 million in the fair value of warrant liabilities and a decrease of $0.3 million in the gain on sale of fixed assets, partially offset by a decrease in the loss on extinguishment of debt of $0.4 million and a decrease of $0.2 million in the loss on issuance of common stock.

As described elsewhere in this Annual Report, prior to this filing we did not file any quarterly or annual reports with the SEC since November 2023 as a result of a lack of funds. As described further below, in August 2025, we entered into a securities purchase agreement, as amended, for the offer and sale of up to $20 million of shares and/or pre-funded warrants. We have used the funds received so far to prepare the year-end consolidated financial statements for the years ended December 31, 2025, 2024, and 2023. A goal in this process is to regain compliance with our SEC filing obligations and uplist onto Nasdaq. We anticipate raising additional capital as part of this process.

On September 30, 2021, we entered into a loan and security agreement (the “Hercules Loan Agreement”) with Hercules Capital, Inc., (“Hercules”). The Hercules Loan Agreement provided for term loans in an aggregate principal amount of up to $30.0 million, comprised of (i) a tranche 1 advance of $12.5 million (the “Tranche 1 Advance”), (ii) a tranche 2 advance of $7.5 million (the “Tranche 2 Advance”) and (iii) a tranche 3 advance of $10.0 million (the “Tranche 3 Advance”) (collectively, the “Term Loan Advances”). The Tranche 1 Advance under the Hercules Term Loan Agreement was funded on September 30, 2021. The Tranche 2 Advance was to be available at our election until August 15, 2022, subject to our achievement of certain milestone events relating to data from the clinical trials. We did not meet the requirements for the Tranche 2 Advance and such funding will, therefore, not be available to us. The Tranche 3 Advance was available subject to approval by the Hercules’ investment committee in its sole discretion up to April 1, 2023, and is also no longer available to us. The Hercules Loan Agreement included a prepayment charge and a charge equal to 6.55% of the original principal amount (the "End of Term Charge").

As security for its obligations, we granted Hercules a continuing security interest in substantially all of our assets, subject to certain customary exceptions, including for intellectual property.

Any outstanding principal on the Term Loan Advances will accrue interest at a floating rate equal to the greater of (i) 9.50% per annum and (ii) the sum of 6.25% plus the prime rate, as published in The Wall Street Journal.

On March 7, 2023, we entered into the first Hercules amendment (the "First Hercules Amendment") to repay $7.5 million of the $12.5 million in outstanding principal of the Hercules Term Loan, extend the interest only period until September 1, 2023, cancel the prepayment charge for the March principal repayment and any future early principal repayments, and reduce the minimum qualified cash balance plus accounts payable amount from $10.0 million to $2.25 million, effective as of March 7, 2023. In accordance with the First Hercules Amendment, we were required to make principal payments on the outstanding balance of the Term Loan Advances beginning on September 1, 2023, in 20 equal monthly installments, plus interest. Any amounts outstanding under the Term Loan Advances, if not repaid sooner, were initially due and payable on April 1, 2025 (but this date was later extended). The First Hercules Amendment also waived the End of Term Charge for the March 7, 2023 principal repayment.

On May 19, 2023, the Hercules Loan Agreement was amended (the "Second Hercules Amendment") to modify the definition of “Excluded Accounts” under the minimum qualified cash balance covenant to exclude additional accounts from the collateral and related obligations and, on November 10, 2023, the Hercules Loan Agreement was amended (the "Third Hercules Amendment") to temporarily reduce the minimum qualified cash balance amount to $2.25 million for the period from November 15, 2023 through December 15, 2023, unless extended by Hercules under the Hercules Loan Agreement in its sole discretion. After such period, the minimum level of qualified cash reverted to $2.25 million plus the amount of accounts payable that had not been paid within 180 days.

On December 15, 2023, we entered into the fourth Hercules amendment (the "Fourth Hercules Amendment”) to provide for a temporary reduction in the minimum qualified cash balance amount to $1.05 million for the period from December 15, 2023 through and including January 25, 2024, unless extended by Hercules in its sole discretion. After the expiration of such period, the minimum level of qualified cash reverted to $1.05 million plus the amount of accounts payable that had not been paid within 180 days. As a condition of effectiveness of the Fourth Hercules Amendment, we repaid $1.0 million of the outstanding principal, reducing the remaining outstanding principal of Term Loan Advances to $3.1 million. In accordance with the Fourth Amendment, the End of Term Charge was required to be paid on the earliest to occur of (i) April 1, 2025, (ii) the date we prepaid the outstanding secured obligations (other than any inchoate indemnity obligations and any other obligation which, by their terms, are to survive the termination of the Hercules Loan Agreement) in full, or (iii) the date that the secured obligations became due by acceleration of the secured obligations during an event of default pursuant to the Hercules Loan Agreement. The End of Term Charge was waived for the December 15, 2023 principal repayment.

On January 9, 2024, we entered into the fifth Hercules amendment (the “Fifth Hercules Amendment”) to bifurcate the remaining outstanding principal of the Tranche 1 Advance, which was $2.9 million, into a “Tranche 1A Advance”, for $0.9 million, and a “Tranche 1B Advance”, for $2.0 million. On January 9, 2024, the Tranche 1B Advance was assigned to SD MF 4 LLC, a Delaware limited liability company (“Domicilium”) and such assignment, the (“Assignment Transaction”). The Fifth Hercules Amendment provided that, following the Assignment Transaction, we were not required to comply with the financial covenant to maintain a minimum qualified cash balance under either the Tranche 1A Advance or the Tranche 1B Advance. The Fifth Amendment also provided for the ability to pay interest in-kind for the Tranche 1B Advance, deferral of principal payments under the Tranche 1B Advance, and a reduction in the End of Term Charge to $0.5 million upon consummation of the Assignment Transaction.

In connection with the Fifth Hercules Amendment, and to effectuate the Assignment Transaction, on January 9, 2024, Domicilium entered into an Assignment and Assumption Agreement with Hercules, under which Hercules assigned to Domicilium the Tranche 1B Advance.

On January 9, 2024, in connection with the Fifth Hercules Amendment, we also entered into a securities purchase agreement (the "Domicilium Securities Purchase Agreement") with Domicilium. The Domicilium Securities Purchase Agreement provided for the issuance by us of: (i) 157,138 shares of our common stock, $0.01 par value per share; (ii) a pre-funded warrant (the “January 2024 Pre-Funded Warrant”) to purchase up to 471,508 shares of common stock; and (iii) a common stock warrant (the “January 2024 Common Stock Warrant” and, together with the January 2024 Pre-Funded Warrant, the “January 2024 Warrants”) to purchase up to 150,000 shares of common stock.

The shares of our common stock and the January 2024 Warrants (the “Equity Issuance”) were issued on a combined basis in consideration for Domicilium’s assumption of the Tranche 1B Advance. The exercise price of the January 2024 Pre-Funded Warrant is $0.01 per underlying share. The exercise price of the January 2024 Common Stock Warrant is $1.18 per underlying share. We did not receive any proceeds in connection with the Equity Issuance. The shares and the January 2024 Warrants (and the shares of common stock issuable upon the exercise of the January 2024 Warrants) were not offered and sold pursuant to a registration statement and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) promulgated thereunder.

On July 10, 2024, we entered into the sixth Hercules Amendment (the “Sixth Hercules Amendment”).

The Sixth Hercules Amendment provided for additional borrowings in an aggregate amount of $3.2 million (the “Domicilium Tranche 2 Advance”), which was provided in multiple borrowings between July 5, 2024 and July 15, 2024. The Domicilium Tranche 2 Advance principal and any accrued interest was to be repaid by us as described below pursuant to the Royalty and Revenue Sharing Agreement.

Additionally, Domicilium provided us with a bridge loan advance of $0.3 million on May 31, 2024. The bridge loan advance accrued interest at a floating rate equal to the greater of (i) 9.50% per annum and (ii) the sum of 6.25% plus the prime rate, as published in The Wall Street Journal. As of December 31, 2025, 2024 and 2023, the interest rate was 13.00%, 13.75% and 14.75%, respectively.

If a qualified financing, as defined in the Sixth Hercules Amendment, of at least $7.0 million occurred prior to April 1, 2025, each of the Tranche 1A lenders and Tranche 1B lenders, as defined in the Sixth Hercules Amendment, had the option to convert all or part of the debt relating to such advance into fully paid and nonassessable shares of our stock issued in such qualified financing at the same price per share equal to the price per share paid by the other cash purchasers of our stock sold in the qualified financing.

If a qualified financing occurred on or prior to April 1, 2025, then the mandatory conversion obligations (composed of all principal and interest accrued on the Bridge Loan Advance and Domicilium Tranche 2 Advance, but excluding $0.1 million of the Domicilium Tranche 2 Advance) shall automatically have been converted into fully paid and nonassessable shares of the Company's common stock issued in such qualified financing at the same price per share paid by the other cash purchasers in the qualified financing.

On July 10, 2024, as a condition of Domicilium’s entry into the Sixth Hercules Amendment and in consideration of the Domicilium Tranche 2 Advance, we and the borrowers entered into a Royalty and Revenue Sharing Agreement, as amended on March 2, 2026 (the “Royalty Agreement”) with Domicilium. Capitalized terms under this heading “Royalty and Revenue Sharing Agreement” not otherwise defined herein have the definitions ascribed to them in the Royalty Agreement.

Under the Royalty Agreement, we agreed to pay to Domicilium an amount equal to (i) (x) a low-mid-double-digit percentage of the Development and Launch Milestone Payments for the three next occurring Development and Launch Milestone Events (as defined in the Almirall License Agreement) minus (y) the amounts required to be paid by us pursuant to certain vendors as defined in the Royalty Agreement, and (ii) (x) a low-mid-double-digit percentage of (1) each subsequent Development and Launch Milestone Payment plus (2) any Priority Review Voucher Income (as defined in the Almirall License Agreement) realized by Eloxx, less (y) any amount of such Development and Launch Milestone Payments which are due to Harvard University pursuant to the Harvard License Agreement, provided the aggregate amount paid to Domicilium shall not exceed $53.0 million. Each Milestone Sharing Payment shall be applied as a repayment or prepayment, as applicable, of the Loans (as defined in the Amended Loan Agreement) (including all interest and fees thereon) owed to Domicilium, if any such Loans remain outstanding.

The Royalty Agreement provides for an amount based on a percentage of the aggregate of (without duplication) the net sales, royalties and any other income or revenue realized by us solely related to or arising from the exaluren compound or any exaluren product, calculated in accordance with U.S. GAAP (collectively, the “exaluren Revenue”) (the “exaluren Revenue-Based Payment”). The exaluren Revenue-Based Payment with respect to each fiscal quarter shall be less than one percent of exaluren Revenue during the applicable fiscal quarter. Commencing on the ZKN-013 royalty commencement date, we promise to pay to Domicilium an amount based on a percentage of the aggregate of (without duplication) the net sales, royalties and any other income or revenue realized by us solely related to or arising from the ZKN-013 compound, calculated in accordance with U.S. GAAP (collectively, the “ZKN-013 Revenue”). The ZKN-013 revenue-based payment with respect to each fiscal quarter shall be less than one percent of ZKN-013 Revenue during the applicable fiscal quarter.

Our loan agreements contain customary affirmative and negative covenants which, among other things, require us to maintain at all times a minimum qualified cash balance plus qualified accounts payable (defined as invoices that have not been paid within 180 days from the invoice date) and limit our ability to (i) incur additional indebtedness, (ii) pay dividends or make certain distributions, (iii) dispose of our assets, grant liens or encumber our assets or (iv) fundamentally alter the nature of our business. These covenants, which are subject to a number of exceptions and qualifications, have been amended, as discussed above. In addition, as discussed above, the Fifth Amendment provided that, following the Assignment Transaction, we were not required to comply with the financial covenant to maintain a minimum qualified cash balance under either the Tranche 1A Advance or the Tranche 1B Advance. We were in compliance with all debt covenants as of December 31, 2025.

Our loan agreements also contain customary events of default, including our failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events or a breach of the covenants. Upon the occurrence of an event of default, the lenders may, among other things, accelerate our obligations under the loan agreements.

In December 2024, we entered into bridge loans with Domicilium for a total of $0.3 million. Interest on the bridge loans accrued at 3.0%. On January 3, 2025, we repaid the bridge loans, including accrued interest.

On May 12, 2025, Hercules resigned as agent under the Hercules Loan Agreement and assigned all of its rights, responsibilities, powers, privileges, duties and obligations in its capacity under the Hercules Loan Agreement to Domicilium.

Our immediate focus is to advance the clinical development of our product candidate, exaluren, for the treatment of rare kidney diseases. We have also exclusively licensed our product candidate, ZKN-013, to Almirall, S.A. (“Almirall”), who is developing it for the treatment of rare skin diseases.

These results were consistent with exaluren’s proposed mechanism of functional full-length protein restoration as reflected by improvements in GBM architecture and FPE observed in kidney biopsies. At the end of treatment, UPCR had decreased for one patient and increased for two patients. We received clearance to proceed with a Phase 2b clinical trial for exaluren in NMAS patients (without kidney biopsies in U.S. pediatric patients) under an IND from the FDA and we plan to initiate this trial in the third quarter of 2026.

Preclinical organoid and cellular models have shown increased PC1 and PC2 gene expression following treatment with exaluren. We plan to initiate enrollment in a Phase 2 trial of exaluren for the treatment of nmADPKD in 2027 following protocol finalization and clearance of an investogational new drug application by the FDA. In July 2026, the European Commission granted orphan medicinal product designation in the European Union for exaluren for the treatment of autosomal dominant polycystic kidney disease (ADPKD) (EU/3/26/3273), in addition to the orphan drug designation previously granted to exaluren by the FDA for the treatment of AS.

In May 2026, we effected a one-for-eleven reverse stock split of our common stock. All share and per share amounts for all periods presented have been retroactively adjusted to reflect the reverse stock split. No fractional shares were issued in connection with the reverse stock split. Stockholders who otherwise would have been entitled to receive a fractional share received cash in lieu of such fractional share based on the fair market value of our common stock as specified in the reverse stock split provisions. A proportionate adjustment was also made to the maximum number of shares issuable under the 2018 Plan.

In May 2026, we reduced the number of shares authorized from 500,000,000 shares authorized of common stock, $0.01 par value, to 100,000,000 shares authorized of common stock, $0.01 par value.

In June 2026, we completed an uplisting to the Nasdaq Capital Market, alongside a public offering. Net proceeds from the public offering were $58.3 million. Our common stock was previously listed on the OTC Pink Limited Market.

Research and development expenses were $4.5 million for the six months ended June 30, 2026, compared to $1.4 million for the same period in 2025, an increase of $3.1 million. The increase was primarily related to an increase of $2.4 million in clinical trial expenses, a $0.4 million increase in salaries and other personnel costs, and a $0.3 million increase in expenses related to subcontractors, advisors, and laboratory supplies in connection with preclinical research and development activities.

General and administrative expenses were $3.7 million for the six months ended June 30, 2026, compared to $1.4 million for the same period in 2025, an increase of $2.3 million. The increase was primarily related to a $1.8 million increase in expenses attributable to professional and consulting fees, including legal costs and audit and tax fees, a $0.3 million increase in facility and other general and administrative overhead costs, and a $0.2 million increase in salaries and other personnel costs.

Other (income) expense, net

Other expense, net, was less than $0.1 million for the six months ended June 30, 2026, compared to $0.8 million in other expense, net, for the same period in 2025, a change of $0.8 million. The change was primarily related to a decrease in interest expense of $0.6 million due to the majority of our outstanding debt being exchanged for pre-funded warrants in 2025 and the $0.1 million in imputed interest recorded during the six months ended June 30, 2025, partially offset by a change of $0.1 million in the fair value of warrant liabilities.

In April 2026, we amended certain pre-funded warrants held by Coastlands and Domicilium to increase the beneficial ownership limitation to 19.99% and permit shares issued upon exercise to be converted back into pre-funded warrants at the holder’s election. Following the amendments, Coastlands and Domicilium exercised a portion of their pre-funded warrants for 113,636 shares each, for a total of 227,272 shares of our common stock, at an exercise price of $0.11 per share, for proceeds of less than $0.1 million.

In May 2026, Coastlands and Domicilium each converted the 113,636 shares of common stock into pre-funded warrants pursuant to the terms of the pre-funded warrant for a total aggregate amount of 227,272 shares of common stock converted into pre-funded warrants, with no proceeds being exchanged.

In June 2026, in connection with our uplisting and public offering, we amended certain pre-funded warrants held by Domicilium to increase the beneficial ownership limitation to 19.99% and permit shares issued upon exercise to be converted back into pre-funded warrants at the holder’s election. The amendments facilitated the issuance of additional shares of common stock in the offering to satisfy Nasdaq listing requirements. Following the amendments, Domicilium exercised a portion of their pre-funded warrants for 600,000 shares of our common stock, at an exercise price of $0.11 per share, for proceeds of approximately $0.1 million. We accounted for the amendments under ASC 815, “Derivatives and Hedging” as a modification of a freestanding equity-classified written call option that remained equity-classified after the modification. As the modification was directly attributable to the uplisting and public offering, we measured the incremental fair value using a Black-Scholes valuation model and determined the impact of the modification to be immaterial to the consolidated financial statements.

In June 2026, in conjunction with the uplisting, we offered 2,975,000 shares of common stock, $0.01 par value per share, at a public offering price of $11.00 per share. In addition, we offered, to certain investors, in lieu of common stock, pre-funded warrants to purchase up to 3,025,000 shares of our common stock at an offering price of $10.99 per underlying share, which was equal to the public offering price for the common stock in the offering, minus the $0.01 exercise price. Net proceeds from the public offering were $58.3 million. Each pre-funded warrant is exercisable for one share of our common stock and has an exercise price of $0.01 per share. The pre-funded warrants are exercisable at any time after the date of issuance, subject to ownership limitations, as described therein.