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

We realized comprehensive loss of $7.2 million for the year ended December 31, 2025, compared to comprehensive loss of $9.3 million for the year ended December 31, 2024, compared to comprehensive loss of $1.3 million for the year ended December 31, 2023, and have historically operated at a loss due to substantial expenditures related to repayment of our outstanding indebtedness, commercialization of Endari®, pursuit of marketing authorization of Endari® outside the U.S., and general and administrative expenses. There is no assurance that we will be able to increase our Endari® sales or attain sustainable profitability or that we will have sufficient capital resources to fund our operations and repay our existing indebtedness until we are able to generate sufficient cash flow from operations.

The consolidated financial statements included in this Annual Report have been prepared on the basis that the company will continue as a going concern. We had cash and cash equivalents of $1.4$2.1 million and a working capital deficit of $56.8$61.3 million at December 31, 2024.2025. Management expects that the company’s current liabilities and operating expenses, including debt service on our existing indebtedness and the expected costs relating to the commercialization of Endari® in the MENA region and elsewhere, will exceed our existing cash balances and cash expected to be generated from operations for the foreseeable future. To meet the company’s current liabilities and operating expenses, we will need to restructure or refinance our existing indebtedness and raise additional funds through related-party loans, third-party loans, equity and debt financings or licensing or other strategic arrangements. In early 2024, we restructured a total of $11.1 million principal amount of convertible promissory notes outstanding as of December 31, 2023 to extend the maturity of the notes by one year and repay the notes in two equal installments of principal and accrued interest due July 2024 and on maturity on February 28, 2025. As of February 28, 2025, $11.0 million principal amount and accrued and unpaid interest became due and payable. We have no understanding or arrangement to further extend the maturity of the convertible promissory notes or to restructure or refinance our other existing indebtedness or for any additional financing, except for the factoredupfront accountsfee receivablecommitment arrangementunder oflicensing ouragreement Emmauswith Medical subsidiary.NIT. There can be no assurance that the company will be able to repay on maturity, restructure or refinance its existing indebtedness or complete any additional equity or debt financings on favorable terms, or at all, or enter into licensing or other strategic arrangements such as a merger or acquisition. If we are unable to do so, we may seek to restructure the company in bankruptcy, or otherwise. Due to the uncertainty of our ability to meet our current liabilities and operating expenses, there is substantial doubt about the company’s ability to continue as a going concern for 12 months from the date of issuance of the consolidated financial statements contained in this Annual Report, and the report of our independent public accounting firm on our consolidated financial statements as of and for the year ended December 31, 20242025 contains a going concern explanatory paragraph. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Our ability to become profitable will depend upon the commercial success of Endari®. In addition to the risks discussed elsewhere in this section, our ability to generate future revenues from Endari® sales or sales royalties will depend on a number of factors, including, but not limited to:

the effectiveness of our in-house commercialization teamNIT and our distribution partners and other efforts in successfully marketing and selling Endari®;

ourOur distributors’ ability to effectively work with physicians to ensure that their patients have access to Endari® and fill and refill prescriptions to adhere to their twice daily regimen;

ourEndari®'s ability to compete effectively against competing products, including hydroxyurea, ADAKVEO® (crizanlizumab), ANI Pharmaceuticals, Inc.’s L-Glutamine Oral Powder generic version of Endari® and other potential generic products;

Because of the numerous risks and uncertainties associated with our commercialization efforts, we are unable to predict the extent of revenues we will generate from Endari® sales or sales royalties or the timing for when or the extent to which we will become profitable, if ever. Even if we do achieve increased net revenues from Endari® sales and become profitable, we may not be able to sustain our revenues or maintain or increase our profitability on an ongoing basis.

WeEndari® facefaces intense competition from treatments of companies with greater resources than us, and if our competitors are successful in marketing or developdeveloping alternative treatments, our commercial opportunities may be reduced or eliminated.

The pharmaceutical industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on developing proprietary therapeutics. WeEndari® facefaces competition from a number of sources, some of which may target the same indication as Endari®, such as pharmaceutical companies, including generic drug companies, biotechnology companies, drug delivery companies and academic and research institutions, many of which have greater financial resources, marketing capabilities, including well-established sales forces, manufacturing capabilities, research and development capabilities, experience in obtaining regulatory approvals for product candidates than do we. For example, in late 20192019, the FDA approved a newbiological druglicense application, or NDA,BLA, submitted by Novartis,Novartis permitting thefor marketing of ADAKVEO® (crizanlizumab-tmca) to reduce the frequency of vaso-occlusive crises in adults and pediatric patients aged 16 years and older with SCD. ADAKVEO®, which is administered by intravenous infusion every four weeks, is a selectin blocker humanized IgG2 kappaIgG2k monoclonal antibody that binds to P-selectin. Also, in late 2019, Global Blood Therapeutics, Inc. which later acquired by Pfizer Inc., (“Pfizer”) announced that the FDA approved its NDA for Oxbryta™ (voxelotor) tablets for the treatment of SCD in adults and children 12 years of age and older. Oxbryta™ is an oral, once-a-day therapy intended to treat SCD by targeting hemoglobin polymerization. Pfizer has withdrawn Oxbryta™ from the market due to safety concerns. Novartis has far greater financial, sales and marketing resources than our company and there is no assurance that we will be able to compete effectively with ADAKVEO® as a stand-alone therapy or that Endari® will gain widespread use as an adjunct to the use of ADAKVEO®. In December 2023, Casgevy, a groundbreaking CRISPR-based gene editing therapy from Vertex Pharmaceuticals and CRISPR Therapeutics was approved for marketing by the FDA, and a second treatment using conventional gene therapy, Genetix Biotherapeutics' (formarly known as Bluebird Bio’sBio) lentiviral therapy, Lyfgenia, also washas recentlybeen approved for marketing by the FDA. If we and NIT and our distributors are unable to compete effectively or successfully position Endari® as a complement to alternative therapies, our Endari® sales and sales royalties and our results of operation may suffer, which could have a material, adverse effect on our financial condition. WeEndari® also facefaces competition from hydroxyurea, ANI Pharmaceuticals, Inc.’s L-Glutamine Oral Powder generic version of Endari® and other potential generic version of Endari®, and from non-prescription grade L-glutamine supplements. Non-prescription grade L-glutamine is manufactured in large quantities, primarily by a few large chemical companies, and processed and sold as a nutritional supplement. The sale of non-prescription grade L-glutamine nutritional supplements, or generic prescription-grade or non-prescription grade L-glutamine products,products or non-prescription grade L-glutamine nutritional supplements at prices lower than the prices that we charge for Endari® could have a material adverse effect on our future sales and net revenues and our results of operations and financial condition.

If we or NIT are unable to achieve and maintain adequate levels of coverage and reimbursement for Endari®, on reasonable pricing terms, its commercial success may be severely hindered.

Sales of Endari® depend on the availability of adequate coverage and reimbursement from third-party payors and governmental healthcare programs, such as Medicare and Medicaid in the U.S. and government payors in the MENA region. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payors to reimburse all or a significant part of the costs associated with their prescription drugs. Coverage determination depends on financial, clinical and economic outcomes that often disfavors new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Although Endari® currently is reimbursable by the Centers for Medicare and Medicaid Services, and every state provides coverage for Endari® for outpatient prescriptions to all eligible Medicaid enrollees within their state Medicaid programs, NIT may not be able to maintain Medicare and Medicaid coverage for Endari® and the reimbursement amounts are subject to change and may not be adequate and may require higher co-payments that patients find unacceptable. The Company also has negotiated reimbursement rates for Endari® in the MENA region which are comparable to Medicare and Medicaid reimbursement rates. Patients are unlikely to use Endari® unless reimbursement is adequate to cover a significant portion of the cost of Endari®. Future coverage and reimbursement rates will likely be subject to increased scrutiny from payors in the U.S. and perhaps government payors in the MENA region. Third-party coverage and reimbursement for Endari® may cease to be available or to be adequate, which could have a material adverse effect on our business, results of operations, financial condition, and prospects.

The market for Endari® also depends on access to third-party payors’ drug formularies, which are lists of medications for which third-party payors provide coverage and reimbursement. The competition in the industry to be included in such formularies may lead to downward pricing pressure on us. Also, third-party payors may refuse to include Endari® in their formularies or otherwise restrict patient access to Endari® if a less costly generic equivalent or other alternative treatment is available. In this regard, Medicare and Medicaid reimbursement rate for branded products such as Endari® are subject to decrease to the cost of comparable generic versions of the products such as ANI’s L-Glutamine Oral Powder or other generic versions of Endari®. InThe light of the recent launchintroduction of ANI’s L-Glutaminegeneric Oralproduct Powder,has weadversely expectaffected Endari® sales in the U.S. and is likely to reduceadversely affect the wholesalereimbursement acquisitionrates costthat Medicare, Medicaid and third-party payors are willing to pay for Endari®, which could have a material, adverse effect on future sales of Endari® by NIT and our results of operations. It is also possible that ANI or other generic maker will seek to addressintroduce thesegeneric reimbursementversions requirements.of Endari® in the MENA region.

Sales of Endari® in the MENA region are subject to lengthy reimbursement terms compared to U.S. sales, and management expects that our accounts receivable aging will be adversely affected by such terms as sales in the MENA region increase compared to our U.S.historical sales.experience.

We sellsell, and NIT intends to continue to sell, Endari® to specialty distributors and specialty pharmacies which, in turn, resell Endari® to pharmacies, hospitals and other customers. Four of our distributors accounted for approximately 71%62% of Endari® sales in the year ended December 31, 2024.2025. The loss of any of these distributors or a material reduction in their Endari® purchases could have a material adverse effect on our business, results of operations, financial condition and prospects.

These limitations and any reductions in our expected protection, including other products that could be approved by FDA under the Orphan Drug Act, may subject Endari® to greater competition than we expect and could adversely affect our ability and the ability of NIT to generate revenue from Endari®, perhaps materially. These circumstances may also impair our ability to obtain license partners or other international commercialization opportunities on terms acceptable to us, if at all.

We are seeking regulatory approval for Endari® for SCD in the Kingdom of Saudi ArabiaArabia, or KSA, but may not be successful. For example, in May 2019, we announced that the European Medicines Agency’s, EMA’s, Committee for Medicinal Products for Human Use, or CHMP, had adopted a negative opinion regarding our application for marketing authorization, or MAA, based upon the CHMP’s position that our main clinical study did not conclusively support the efficacy of the treatment in SCD patients. In light of the CHMP’s opinion, we withdrew our MAA in September 2019. There is no assurance that we will be successful in obtaining marketing authorization in the Kingdom of Saudi ArabiaKSA or other jurisdictions outside the U.S. If we obtain marketing authorization, we expect that we will be subject to additional risks related to operating in foreign countries including:

We monitor our distributors’ inventories of Endari® using a combination of methods. However, our estimates of distributor inventories may differ significantly from actual inventory levels. Significant differences between actual and our estimated inventory levels may result in excessive production (requiring us to hold substantial quantities of unsold inventory which may result in the establishment of inventory reserves or actual write offs of expired inventory), inadequate supplies of products in distribution channels, insufficient product available at the retail level, and unexpected increases or decreases in orders from our specialty distributors. These changes may cause our revenues to fluctuate significantly from quarter to quarter, and in some cases may cause our operating results for a quarter to be below our expectations or the expectations of securities analysts or investors. In addition, historically we offerhave offered price discounts to our customers in advance of Endari® price increases or as an incentive for bulk or advance orders of Endari®. Such discounts may resulthave resulted in specialty distributor purchases exceeding current demand, resulting in reduced specialty distributor purchases in later periods and substantial fluctuations in our results of operations from period to period. If our financial results are below analysts’ or investors’ expectations or cannot be reliably estimated, the market price of our common stock may be adversely affected.

If the single manufacturer of prescription-grade L-glutamine or, as has happened recentlyin the past the single packager upon which we rely for our finished goods inventory of Endari®, fails to produce in the volumes and quality that we require on a timely basis or fails to comply with stringent regulations applicable to pharmaceutical manufacturers, we may face interruptions in sales of, or be unable to meet demand for, Endari®, including our obligation to supply Endari® to NIT under the exclusive supply agreement, and may lose potential revenues.

We do not currently have our own manufacturing capabilities and depend upon a single Japanese supplier, Ajinomoto Aminoscience, LLC, or Ajinomoto, for commercial supplies of Endari®. We intend to continue to rely on Ajinomoto to produce our PGLG, but we have not entered into, and may not be able to establish, long-term supply agreements with this key supplier on acceptable terms. If Ajinomoto were to experience any manufacturing or production difficulties producing PGLG, or we were unable to purchase sufficient quantities of PGLG on acceptable terms, it could interrupt sales of Endari® and our supply of Endari® to NIT under the exclusive supply agreement and have a material, adverse effect on our results of operations and financial condition.

We also rely upon a single packager of Endari®, with which we have no firm commitment to continue its services. The packager repeatedly delayed the scheduled packaging of Endari® beginning in December 2023, which resulted in a severe shortage of finished goods inventory and materially, adversely affected our Endari® sales in 2024. Although we believe we have sufficient finished goods inventory on hand for at least the first half of 2025,hand, we are seeking a new source of packaging to avoid similar problems in the future. There is no assurance that we can retain suitable packaging sources or, if we do, that we will not experience delays in the production of finished goods or future shortages of Endari®.

In addition, all manufacturers, packagers, distributors and suppliers of pharmaceutical products must comply with applicable cGMP regulations for the manufacture of pharmaceutical products, which are enforced by the FDA through its facilities inspection program. If our manufacturers and key suppliers are not in compliance with cGMP requirements, it may result in a delay of approval for products undergoing regulatory review or the inability to meet market demands for any approved products, particularly if these sites supply single source ingredients required for the manufacture of any potential product. Furthermore, each manufacturing facility used to manufacture drug or biological products is subject to FDA inspection and must meet cGMP requirements. As a result, if one of the manufacturers that we rely on shifts production from one facility to another, the new facility must undergo a preapproval inspection and, for biological products, must be licensed by regulatory authorities prior to being used for commercial supply. A failure to comply with any applicable manufacturing requirements, including cGMP requirements, could delay or prevent the promotion, marketing or sale of our products. If the FDA or any other applicable regulatory authorities do not approve the facilities for the manufacture of Endari® or if they withdraw any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to commercially supply Endari®. to NIT under the exclusive supply agreement or to our distributors in the MENA region.

In addition to seeking patents for our intellectual property, we alsoWe rely on trade secrets, including unpatented know-how, technology and other proprietary information, in our business. We seek to protect our trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and remedies thereunder may not be adequate. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. Some courts inside and outside the U.S. are less willing or unwilling to protect trade secrets. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.

We and NIT are subject to ongoing FDA obligations and continued regulatory review with respect to the manufacturing, processing, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for Endari®. These requirements include submission of safety and other post-marketing information and reports, as well as continued compliance with good clinical practices and good laboratory practices or cGMPs. In addition, our product advertising and promotion are subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription drug products. In particular, a drug product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling, although the FDA does not regulate the prescribing practices of physicians.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This may reduce demand for Endari® or put pressure on our productEndari® pricing, which could negatively affect our business, results of operations, financial condition and prospects.

We are a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sale of innovative treatmentstreatment and therapies, primarily for rare and orphan diseases. Our only product, Endari® (prescription grade L-glutamine oral powder), is approved by the U.S. Food and Drug Administration, or FDA, to reduce the acute complications of sickle cell disease (“SCD”) in adult and pediatric patients five years of age and older. In April 2022, Endari® was approved byfor the Ministry of Health and Preventionmarketing in the United Arab Emirates, or U.A.E, in adultsQatar, Kuwait, Bahrain, and pediatric patients five years of age and older. In November and December of 2022, we received marketing authorizations for Endari® in Qatar and Kuwait, respectively. In May 2023, we received approval for marketing of Endari to treat SCD from the Bahrain National Health Regulatory Authority. In July 2023, we received marketing approval for Endari® in Oman. ApplicationOur application for marketing authorization in the Kingdom of Saudi Arabia, or KSA is pending. While the application is pending, the FDA approval of Endari® can be referenced to allow access to Endari® in the KSA on a named-patient basis. In January 2025, Endari® was afforded market exclusivity in the KSA by the KSA’s unified purchasing system which extends to all KSA government institutions, including hospitals under the Ministry of Health, Military Hospitals, the National Guard, the Security Forces, and King Faisal Specialty Hospitals and Research Centers.

Endari® is sold in the U.S. through our nonexclusive distributors. Until August 2024, Endari® was marketed and sold in the U.S. by our internal commercial sales team. In August 2024, we reduced our internal sales team and in October terminated the employment of our Chief Commercialization Officer. Endari® is reimbursable by the Centers for Medicare and Medicaid Services, and every state provides coverage for Endari® for outpatient prescriptions to all eligible Medicaid enrollees within their state Medicaid programs. Endari® is also reimbursable by many commercial payors. We have agreements in place with the nation’s leading distributors, as well as physician group purchasing organizations and pharmacy benefits managers, making Endari® available at selected retail and specialty pharmacies nationwide.nationwide which are expected to be assigned and assumed by NIT in connection with the Effective Date of the License Agreement. Following the Effective Date of the License Agreement with NIT, our revenues from U.S. operations will depend upon sales of Endari® to NIT under the exclusive supply agreement and on royalties from NIT’s sales of Endari® in the territory.

As of December 31, 2024,2025, our accumulated deficit was $262.6$270.1 million, and we had cash and cash equivalents of $1.4$2.1 million. Until we can generate sufficient net revenues from Endari® sales,sales or sales royalties, our future cash requirements are expected to be financed through loans from related parties, third-party loans, public or private equity or debt financings or possible corporate collaboration and licensing arrangements. We are unable to predict if or when we will become profitable.

WeIn realizethe period covered by this Annual Report, we realized net revenues primarily from sales of Endari® to our distributors and specialty pharmacy providers. Distributors resell our products to other pharmacy and specialty pharmacy providers, health care providers, hospitals, and clinics. In addition to agreements with these distributors, we have contractual arrangements with specialty pharmacy providers, in-office dispensing providers, physician group purchasing organizations, pharmacy benefits managers and government entities that provide for government-mandated or privately negotiated rebates, chargebacks and discounts with respect to the purchase of our products. These various discounts, rebates, and chargebacks are referred to as “variable consideration.” Revenue from product sales is recorded net of variable consideration.

ManagementRevenue from product sales is recorded at the transaction price, net of estimates for variable consideration consisting of sales discounts, returns, government rebates, chargebacks and commercial discounts. Variable consideration is estimated using the expected-value amount method, which is the sum of probability-weighted amounts in a range of possible transaction prices. Actual variable consideration may differ from our estimates. If actual results vary from the estimates, we adjust the variable consideration in the period such variances become known, which adjustments are reflected in net revenues in that period. The following are our significant categories of variable consideration:

We recognize compensation expense for share‑based compensation awards during the service term of the recipients of the awards. The fair value of share‑based awardscompensation is calculated using the Black‑Scholes‑Merton pricing model. The Black‑Scholes‑Merton model requires subjective assumptions regarding future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term of awards granted is calculated using the simplified method allowed under the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin Nos. 107 and 110. The risk‑free rate used to value an award is based on the U.S. Treasury rate ason of thegrant date of the award that corresponds to the vestingexpected periodterm of the award. The expected volatility was adjusted using the historical volatility of our common stock.

We define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in accordance with Accounting Standards Codification ("ASC") 820.Topic 820 - Fair value Measurements. We measure fair value under a framework that provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

The investment in convertible bond, the convertible features on convertible debt instrumentsbond and certain outstanding warrants that contain price adjustment provision are remeasured at fair value on a recurring basis using Level 3 inputs. The level 3 inputs in the valuation and valuation methods used are discussed in Note 5, 7 and 8. There are no other assets or liabilities measured at fair value on a recurring basis.

We evaluate its financial instruments including convertible notes to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. We apply significant judgment to identify and evaluate terms and conditions in these contracts and agreements to determine whether embedded derivative exists. If all the requirements for bifurcation are met, embedded derivatives are separately measured from the host contract. Bifurcated embedded derivatives are initially recorded at fair value and then remeasure at each reporting period, with change in fair value recognized in the consolidated statements of operations. Bifurcated embedded derivative are classified as separate liability in the consolidated balance sheets. Our derivative liability related to the conversion feature embedded in the convertible promissory notes. See note 7 for further details.

For a discussion of related party transactions, refer to Note 5,6,7,8,5, 6, 7, 11, and 12 of the Notes to Consolidated Financial Statement included elsewhere in this Annual Report, which information is incorporated herein by reference.

Net Loss. Net loss increased by $2.7$1.0 million, or 73%,16%, to $6.0$7.5 million for the year ended December 31, 20242025 compared to net loss of $3.7$6.5 million for the year ended December 31, 2023.2024. The increase was due primarily to aan $12.8increase of $3.2 million decrease in grossother profitexpenses partially offset by decreasesan increase of $7.4$2.1 million in operatingincome expensesfrom and $2.8 million in other expenses.operation. As of December 31, 2024,2025, we had an accumulated deficit of approximately $262.6$270.1 million.

Revenues, Net. Net revenues decreased by $12.9$4.2 million, or 44%,25%, to $16.7$12.5 million for the year ended December 31, 20242025 compared to $29.6$16.7 million in 20232024 due to acompetition shortage of finished goods inventory during the first half of 2024 and the introduction offrom a generic version of L-glutamineL-Glutamine oral powder followingintroduced theinto expirationU.S. of the orphan drug exclusivity for Endari®market in themid-2024 U.S. as discussednoted below.

Cost of Goods Sold. Cost of goods sold decreased by $0.1$0.3 million, or 11%,29%, to $1.2$0.9 million for the year ended December 31, 20242025 compared to $1.3$1.2 million in 2023.2024. This decrease was primarily due to athe decrease in netsales revenues,discussed partially offset by higher unit cost.above.

Research and Development Expenses. Research and development expenses decreased by $0.5$0.3 million, or 45%,52%, to $0.7$0.3 million for the year ended December 31, 20242025 compared to $1.2$0.7 million in 2023.2024. The decrease was primarily due to oura suspensiondecrease of substantially$0.4 allmillion in payroll expenses from a reduction in headcount, partially offset by an increase of $0.1 million in research and development activities in late 2023.expenses.

Selling Expenses. Selling expenses decreased by $2.6$3.1 million, or 30%,52%, to $6.0$2.9 million for the year ended December 31, 20242025 compared to $8.6$6.0 million in 2023.2024. The decrease was due to decreases of $1.6$1.4 million in consulting fee, $1.1 million in payroll expense,expenses, $0.5$0.4 million in promotional expenses, and $0.4$0.2 million in travel expenses. We expect that our selling expenses will continue to decrease in the U.S. as our exclusivity in Endari® expired but increase in other regions as we expandentered Endari®into marketingexclusive anddistribution saleslicensing activities.agreement with NIT discussed above.

General and Administrative Expenses. General and administrative expenses decreased by $4.2$2.5 million, or 28%,23%, to $10.7$8.2 million for the year ended December 31, 20242025 compared to $14.9$10.7 million in 2023.2024. The decrease was primarily due to $1.5decreases of $1.2 million in payroll related expenses, including shared-based compensation, $0.7$1.0 million in transactionprofessional cost,services, and $0.6 million in rent expense, partially offset by an increase of $0.5 million in factoring fee, $0.3 million in settlement fee and $0.3 million in travel expenses.fee.

Other Expense. Other expense decreasedincreased by $2.8$3.2 million, or 38%,70%, to $4.5$7.7 million for the year ended December 31, 20242025 compared to $7.3$4.5 million in 2023.2024. The decreaseincrease was primarily due to anincreases increaseof $1.4 million in loss on debt extinguishment and $1.6 in interest expense, and a decrease of $1.0 million in gain on restructured debt and decreases of $1.9 million in interest expenses, $1.7 million in net loss on equity method investment and $1.6 million in foreign exchange loss,debt, partially offset by aan $2.5 million change in fair valueincrease of conversion feature derivative liability and $1.1$0.9 million in changegain inon fairlease value of warrant derivative liabilities.modification.

Income Tax Provision (Benefit).Provision. Income tax provision increaseddecreased by $88,000$20 thousand or 149%,69%, to income tax expense of $29,000$9 thousand for the year ended December 31, 20242025 compared to income$29 tax benefit of $59,000thousand in 2023.2024. A valuation allowance for net deferred tax assets recorded when it is more likely than not that we will not realize these assets through future operations. The valuation allowance decreasedincreased by approximately $4.1$0.5 million and $1.2decreased by $4.1 million for the year ended December 31, 20242025 and December 31, 2023,2024, respectively. As of December 31, 2024,2025, and 2023,2024, we had no unrecognized tax benefits or position which in the opinion of management would be reversed if challenged by a tax authority.

We realized a net loss of $6.5$7.5 million for the year ended December 31, 20242025 and anticipate that we will continue to incur net losses for the foreseeable future and until we can generate increased net revenues from Endari® sales.sales or sales royalties. There is no assurance that we or NIT or our distributors will be able to increase our Endari® sales or that will attain sustainable profitability or that we will have sufficient capital resources repay our existing indebtedness or to fund our operations until we are able to generate sufficient cash flow from operations.

Liquidity represents our ability to pay our liabilities when they become due, fund our business operations and meet our contractual obligations, including repayment of our indebtedness and the purchase of API under our supply arrangements with Telcon, and execute our business plan.indebtedness. Our primary sources of liquidity are our cash balances at the beginning of each period, sales of future receipts to third parties, proceeds from related-party loans and other financing activities. Our short-term and long-term cash requirements consist primarily of working capital requirements, general corporate needs, our contractual obligations to purchase API from Telconneeds and debt service under our outstanding notes payable.

As of December 31, 2024,2025, we had outstanding $16.1$13.5 million in principal amount of convertible promissory notes and $10.6$11.3 million in principal amount of other notes payable that are due withinon a year.demand. Our minimum lease payment obligations were $3.2$1.8 million,million as of December 31, 2025, of which $2.4$0.3 million was payable within 12 months.

Our API supply agreement with Telcon provides for an annual API purchase target of $5$5.0 million and a target “profit” (i.e., gross margin) to Telcon of $2.5 million. To the extent these targets are not met, Telcon may be entitled to payment of the shortfall or to offset the shortfall against the Telcon convertible bond and proceeds thereof that are pledged as collateral to secure our obligations. With our consent, in April 2023 Telcon retained cash collateral and made offsets against the outstanding balance of our Telcon convertible bond for target shortfalls under the API supply agreement for 2022. A similar target shortfall for 2024 and 2023 was offset in April 2024.2025 and April 2024, respectively.

Net cash provided by (used in) investing activities

Net cash provided by investing activities increaseddecreased by $2.9$0.3 million, or 679%,13%, to $ 2.52.2 million for the year ended December 31, 20242025 from $0.4$2.5 million net cash used in investing activities for the year ended December 31, 2023.2024. The increasedecrease was primarily due to a $2.6$0.3 million decrease in loans to equity method investee, partially offset by increase of $0.3 million in proceeds from the deemed sale of a portion of the Telcon convertible bond from the offset of target shortfalls discussed above.

Endari® is sold in the U.S. through our nonexclusive distributors and in the Middle East North Africa, or MENA, region through exclusive arrangements with local distributors. In December 2025, we entered into a License and Exclusive Distribution Agreement, or License Agreement, with NeoImmuneTech, Inc., or NIT, pursuant to which we granted NIT,NIT subject to the occurrence ofon the "Effective Date" of theMay License15, Agreement,2026 an exclusive license to our rights to market, sell, and distribute Endari® and any generic equivalents we may develop in sickle cell disease, or the Field, in the U.S. and its territories and possessionpossessions and Canada, or the Territory, in exchange for an upfront cash payment, a double digit percentage royalty on NIT’s sales of the licensed products and a double digit percentage of any NIT sublicenses of rights to the products. Of the upfront payment, somewhat less than half was paid in cash upon execution of the License Agreement, with the balance payable in cash upon the “Effective Date” of the License Agreement. The upfront cash payment is refundable by us under certain circumstances described in the License Agreement. We agreeagreed in the License Agreement to use a$1.0 portionmillion of the upfront payment payablepaid uponon the Effective Date to subscribe to purchase shares of NIT capital stock.

In connection with the License Agreement, we and NIT recently entered into an Exclusive Supply Agreement pursuant to which we agree to supply exclusively to NIT, and NIT agrees, subject to the occurrence of the Effective Date of the License Agreement and certain exceptions, to purchase exclusively from us all NIT’s requirements for the Products in the Field in the Territory at a purchase price based upon our cost of production plus a specified double digit percentage margin.

PendingPrior to the Effective Date, NIT has hired selected members of our U.S. sales force and we have entered into a sales services agreement under which NIT renders to us sales and marketing services for Endari® in the Field in the Territory in exchange for our payment of quarterly fees in the low-to-mid six figures. We will continuecontinued to realize all revenues from sales of the Endari® in the Territory pendingprior to the Effective Date.

If the Effective Date does not occur, we will consider alternative strategies for marketing and selling Endari® and any generic equivalents we may develop in the U.S. and other markets in the Territory. NIT has no experience isin marketing brand name or generic pharmaceuticals in the U.S. or elsewhere, and if the Effective Date occurs there is no assurance that it will be able to successfully market and distribute Endari® or other licensed products.

As of MarchJune 31,30, 2026, our accumulated deficit was $273.4$272.1 million, and we had cash and cash equivalents of $1.1$2.8 million. Until we can generate sufficient net revenues from Endari® sales or enter into one or more strategic transactions, our future cash requirements are expected to be financed through loans from related parties, third-party loans, public or private equity or debt financings or possible corporate collaboration and licensing arrangements. We are unable to predict if or when we may generate increased net revenues or accomplish strategic transactions.

Three months ended MarchJune 31,30, 2026 and 2025

Net Revenues. Net revenues decreasedincreased by $0.4$3.5 million, or 18%,124%, to $2.0$6.3 million for the three months ended MarchJune 31,30, 2026, compared to $2.4$2.8 million for the three months ended MarchJune 31,30, 2025 mainly due to the recognition of $4.8 million of revenue from the upfront fee and royalties under the License Agreement with NIT, partially offset by a decrease of U.S.direct sales,Endari® which management attributes to competition from a generic version of L-Glutamine oral powder introduced into U.S. market in mid-2024 as discussed below, partially offset by an increase of sales in the MENA region.sales.

Cost of Goods Sold. Cost of goods sold decreasedincreased by $57,000$0.2 million, or 25%,129%, to $168,000$0.3 million for the three months ended MarchJune 31,30, 2026, compared to $225,000$0.2 million for the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily due to the decrease in U.Shigher sales discussedvolume, above.including the deemed sales of 3,000 cartons transferred to NIT upon the Effective Date.

Selling Expenses. Selling expenses increaseddecreased by $0.1$0.2 million, or 16%,27%, to $0.5 million for the three months ended June 30, 2026, compared to $0.7 million for the three months ended MarchJune 31, 2026, compared to $0.6 million for the three months ended March 31,30, 2025. The increasedecrease was mainly due to an increase of $0.3 million in consulting fee partially offset by a decrease of $0.2 million of payroll expense $0.2 million as we transferred our sales force to and entered into a sales service agreement with NIT as a part of the exclusive distribution and licensing agreement discussed above.arrangement. The sales service agreement will bewas terminated upon the Effective Date,Date. managementManagement expects the USU.S. selling expenses to decrease in the future.

General and Administrative Expenses. General and administrative expenses decreased by $0.5$0.7 million, or 21%,32%, to $1.9$1.6 million for the three months ended MarchJune 31,30, 2026, compared to $2.3 million for the three months ended MarchJune 31,30, 2025. The decrease was due to decreases of $0.2 million in rent expenses attributable to the modification of office lease, $0.1 million in payroll expenses attributable to the reduction in headcount, $0.1$0.2 million in productprofessional testingservices fee,expenses, and $0.1$0.3 million in one-time settlement fee.

Other Expense. Total other expenses increased by $1.2$1.1 million, or 86%,81%, to $2.5 million for the three months ended MarchJune 31,30, 2026, compared to $1.3$1.4 million for the three months ended MarchJune 31,30, 2025. The increase was primarily due to increasesdecreases of $0.9 million in interestgain expenseon lease modification and $0.2$0.4 million in change in fair value of conversioninvestments featurein derivative.equity security.

Net Loss.Income (Loss). Net lossincome was $3.3$1.3 million and $2.3net loss $1.1 million for three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in 2026net income was due to an increase in otherincome expensefrom operations partially offset by aan decreaseincrease in lossother from operations.expense.

Based on our losses to date, current liabilities and anticipated future net revenues, operating expenses andexpenses, debt repayment obligations, and cash and cash equivalents of $1.1$2.8 million as of MarchJune 31,30, 2026, we do not have sufficient operating capital for our business without raising additional capital. We realized a net loss of $3.3$2.0 million for the threesix months ended MarchJune 31,30, 2026 and we may continue to incur net losses for the foreseeable future and until we can generate increased net revenues from Endari® sales. There is no assurance that we will be able to increase our Endari® sales or attain sustainable profitability, or that we will have sufficient capital resources to fund our operations until we are able to generate sufficient cash flow from operations or accomplish a strategic transaction.

As of MarchJune 31,30, 2026, we had outstanding $13.5$13.4 million principal amount of convertible promissory notes and $10.8$9.3 million principal amount of other notes payable reflected in our current liabilities. Our minimum lease payment obligations were $1.7 million, of which $0.3$0.4 million was payable within 12 months.

Our API supply agreement with Telcon provides for an annual API purchase target of $5 million and a target “profit” (i.e., gross margin) to Telcon of $2.5 million. To the extent these targets are not met, Telcon may be entitled to payment of the shortfall or to offset the shortfall against the Telcon convertible bond and proceeds thereof that are pledged as collateral to secure our obligations. With our consent, in April 2025, Telcon offset KRW3.1 billion, or approximately $2.1 million, against the principal amount of the Telcon convertible bond and we released KRW49 million, or approximately $34,000, in cash proceeds to Telcon in satisfaction the target shortfall for the year ended 2024. In April 2026, Telcon offset KRW 3.8 billion, or approximately $2.6 million, against the principal amount of the Company's Telcon convertible bond and the Company released KRW297.1KRW1,281 million, or approximately $202,000,$870,000, in cash proceeds to Telcon in satisfaction of the target shortfall for the year ended December 31, 2025.

Cash flows for the three months ended MarchJune 31,30, 2026 and MarchJune 3130 2025

Net cash provided (used) in operating activities

Net cash used in financing activities increased by $0.4$2.2 million, or 103%,million to $0.7$2.2 million for the threesix months ended MarchJune 31,30, 2026 from $0.3$0.1 million for the threesix months ended MarchJune 31,30, 2026.2025. The increase was mainly due to ana increasereduction of $2.1 million in repaymentsproceeds offrom promissorynote notespayable and convertible notes.issued.

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of certain assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including but not limited to those relating to revenue recognition on product sales, the variables used to calculate the valuation of investment in convertible bond, conversion feature, stock options and warrants. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the present circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

Refer to “Critical Accounting Estimates and Accounting Policies” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report for ouradditional critical accounting policies.information. There have been no material changes in any of our critical accounting policiesestimates during the threesix months ended MarchJune 31,30, 2026.