SXTP 10-K & 10-Q changes, risk factors and insider trading
60 Degrees Pharmaceuticals, Inc. (also SXTPW) · Nasdaq · Pharmaceutical Preparations · CIK 1946563 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Removed heading “Research and Development”
Removed heading “General and Administrative Expenses”
Removed heading “Research and Development”
Removed heading “General and Administrative Expenses”
Removed heading “Interest Expense”
Removed heading “Derivative Expense”
Removed heading “Change in Fair Value of Derivative Liabilities”
Removed heading “Loss on Debt Extinguishment”
Removed heading “Change in Fair Value of Promissory Note”
Removed heading “Derivative Liabilities”
Largest changes
“Following our initial public offering in July 2023, our initial strategic priority was to conduct a Phase IIB study that would have evaluated the potential of the Arakoda regimen of Tafenoquine to accelerate disease recovery in COVID-19 patients with low risk of disease progression. In October 2023, we made a decision to suspend this study. This was a consequence of advice previously received from the U.S. …”see in full comparison
“In September 2025, the FASB issued ASU 2025-07, Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07 adds a new scope exception from derivative accounting under ASC 815 for certain non-exchange-traded contracts with customers with an underlying that is based on operations or activities specific to one of the parties to the contract. Further, ASU 2025-07 clarifies that an entity should apply the guidance in ASC 606 to a contract with stock-based noncash consideration. …”see in full comparison
“Cost of revenues was $384,765 for the year ended December 31, 2024, as compared to $474,550 for the year ended December 31, 2023. While net product sales increased over the same periods, the decrease in cost of goods sold is primarily attributable to the fixed part of cost of goods. As the sales volume has increased, the gross margin has improved as the variable cost of goods of each unit sold is substantially less than the sales price. …”see in full comparison
“In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. …”see in full comparison
Full comparison: every changed paragraph (51)
We are a specialty pharmaceutical company with
a goal of using cutting-edge biological science and applied research to further develop and commercialize new therapies for the prevention
and treatment of infectious diseases. We have successfully achieved regulatory approval of Arakoda® (“Arakoda”), a malaria
preventative treatment that has been on the market since late 2019. Currently, 60P’s pipeline under development covers development
programs for vector-borne, fungal, and viral diseases utilizing three of the Company’s future products: (i) new products that contain
the Arakoda regimen of Tafenoquine; (ii) new products that contain Tafenoquine; and (iii) Celgosivir.Celgosivir and/or botanical extracts from Australian Chestnut Trees.
Following our initial public offering in July
2023, our initial strategic priority was to conduct a Phase IIB study that would have evaluated the potential of the Arakoda regimen
of Tafenoquine to accelerate disease recovery in COVID-19 patients with low risk of disease progression. In October 2023, we made a decision
to suspend this study. This was a consequence of advice previously received from the U.S. Food and Drug Administration (FDA), which we
interpreted to mean that the agency would not have granted clearance for the study to proceed unless we redesigned it to (i) enroll a
patient population in which receipt of Paxlovid or Lagevrio would be medically contraindicated, or (ii) compare Tafenoquine to placebo
in patients taking a “standard of care” regimen (defined by the FDA as Lagevrio or Paxlovid). The FDA’s position was
somewhat surprising given that neither Paxlovid nor Lagevrio is indicated for treatment of COVID-19 in low-risk patients. We determined
that conducting our study in an alternate population in the United States would be unfeasible, and that conducting an add-on-to standard
of care study might not be Phase III enabling. Accordingly, we made a decision to pivot back to continue commercialization of Arakoda
for malaria, and further evaluation of the Arakoda regimen of Tafenoquine for babesiosis and other diseases. We believe such an approach
is both less risky and less expensive.
Moving forward, our general strategy to achieve
profitability and grow shareholder value has three facets: (i) increase sales of Arakoda; (ii) conduct clinical trials to expand the
number of patients who can use Tafenoquine for new indications in the future; and (iii) reposition small molecule therapeutics with good
clinical safety profiles for new indications.
We receive the majority of our product revenues
from sales of our Arakoda product to resellers in the U.S. and abroad. Foreign sales to both Australia and Europe arewere further subject
to profit sharing agreements for boxes sold to customers. Sales to resellers in the US are subject to considerable discounts and rebates
for services provided by our third-party logistics (“3PL”) partner and wholesalers and pharmacy benefit managers (“PBMs”).
Cost of Revenues, Gross Profit (Loss),Profit, and Gross Margin
Research and Development
Research and development costs for the periods
presented primarily consist of contracted R&D services and costs associated with preparation for and conducting our Babesiosis trial
in 2024 and, in 2023, related to our halted COVID-19 clinical trial. We expense all research and development costs in the period in which
they are incurred. Payments made prior to the receipt of goods or services to be used in research and development are recognized as prepaid
assets and expensed over the service period as the services are provided. We have also issued shares of our common stock to vendors in
exchange for research and development services.services Our general and administrative expenses primarily consist of salaries, advertising and promotion expenses, professional services fees, such as consulting, audit, accounting and legal fees, general corporate costs and allocated costs, including facilities, information technology and amortization of intangibles.
General and Administrative Expenses
Our general and administrative expenses primarily
consist of salaries, advertising and promotion expenses, professional services fees, such as consulting, audit, accounting and legal
fees, general corporate costs and allocated costs, including facilities, information technology and amortization of intangibles.
We earn interest income from cash invested in interest-bearing accounts, as well as cash equivalents and short-term investments consisting of certificates of deposits with original maturities ranging from three to six months. Interest expense for the periods presented is limited to a single $150,000 SBA loan that bears interest at 3.75%. Other components of other income (expense) include changes in the fair value of derivative liabilities and other miscellaneous income or expenses.
Prior to the IPO, our interest expense consisted
of interest accrued on our outstanding debt obligations and amortization of debt discounts and deferred issuance costs. Subsequently,
interest expense is mostly limited to a single, $150,000 SBA loan. Other components of other income and expense include changes in the
fair value of financial instruments, gains and losses on extinguishments of debt, and other miscellaneous income or expenses. We also
earn interest income from cash invested in interest-bearing accounts, as well as cash equivalents and short-term investments consisting
of certificates of deposits with original maturities ranging from three to six months.
Product Revenues - net of Discounts and Rebates, Cost of Revenues,
Gross Profit (Loss),Profit, and Gross Margin
Our product revenues - net of discounts and rebates
were $1,005,471 for the year ended December 31, 2025, as compared to $607,574 for the year ended December 31, 2024,2024. as compared to $253,573 forFor the year ended December 31, 2023. For the year ended
December 31, 2024,2025, our U.S. pharmaceutical distributor accounted for 95%92% of our total net product sales and Kodatef sales to our Australian
distributor accounted for 5%6% of total net product sales (72%95% and 21%5% for the year ended December 31, 2023,2024, respectively). DomesticDespite a shortage of Arakoda 16-ct boxes starting in April 2025, which resulted from a delay in completing commercial
validation of a new packaging format, domestic, commercial product sales are primarily driving increased sales volume during the period.period, primarily due to the combination of rising sales, price increases and fewer returns.
We offer discounts and rebates to the civilian
U.S. supply chain distribution channel. We record sales when our 3PL partner transfers boxes into their title model. Discounts and rebates
offered to our 3PL partner amount to 12% (lower rates available upon reaching larger revenue tiers) along with a $5,500 fixed monthly
fee that started in 2023.fee. The product is then transferred usually to one of the three large U.S. pharmaceutical distributors where rebates
are 10%. Lastly, we have relationships with several large pharmacy benefit managers (“PBMs”) that allow patients to purchase
Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. For the
year ended December 31, 2024,2025, discounts and rebates were $476,218$476,430 compared to $216,031$476,218 for the year ended December 31, 2023.2024.
Arakoda entered the U.S. civilian supply chain
in the third quarter of 2019. Since the introduction of the new 8-ct bottle in June 2025, we will be reporting Arakoda unit sales in terms of 16-ct box equivalents. For the year ended December 31, 2023,2024, 1,6325,119 boxes16-ct box equivalents were sold to pharmacies and dispensaries. Sales volume
increased by 214%12% to 5,1195,724 boxes16-ct box equivalents sold to pharmacies and dispensaries for the year ended December 31, 2024. Based on IQVIA data, this
growth in sales volume appears to be driven primarily by organic growth in the Lyme disease community, whose prescribers utilize Arakoda
for treatment of babesiosis.2025.
Kodatef sales to our distributor Biocelect in
Australia for the year ended December 31, 20242025 were $30,652$57,058 ($53,718$30,652 for the year ended December 31, 20232024). SalesA historical portion of sales to Biocelect areremained currently
subject to a profit share distribution once the original transfer price has been recouped. The most recent saleAs of boxesDecember 31, 2025, Biocelect has no inventory left that remains subject to Biocelect
reached profit shareshare. atBiocelect, which acts as a distributor in the endAustralian and New Zealand markets, reported year-over-year growth of Q1<1%, 2024.with Biocelect reported approximately 105% year-over-year growth, the equivalent of 1,8501,854 boxes
sold for the year ended December 31, 2024,2025, compared to 9031,850 boxes for the year ended December 31, 2023.2024. Additionally, under a new agreement executed during 2025, Biocelect began to purchase from the latest manufactured lot of Kodatef at $49.50 AUD per box which are not subject to historical profit share. As of December 31, 2024,2025, Biocelect’s
unsoldno inventoryreceivables that remains subject to profit share was the equivalent of 385 boxes. While growth in Australia is similarly positive
to that in the US, Biocelect has achieved that growth by competing directly with Malarone in terms of price in their market for the approved
antimalarial prophylaxis indication. As of December 31, 2024, $9,444 of profit share waswere due to us ($0$9,444 as of December 31, 20232024).
Arakoda sales volume is also showing signs of
sales growth in Europe.Europe continues to grow. We first shipped Arakoda to our distributor Scandinavian Biopharma (“SB”) in September 2022. For
the year ended December 31, 2024,2025, SB reported 147353 boxes sold (0147 for the year ended December 31, 20232024). According to our distributor,
this is due to greater interest in treating babesiosis. Additionally, we recorded $22,500 in European sales for the year ended December 31, 2025 ($0 for the year ended December 31, 2024).
Cost of Revenues, Gross Profit (Loss),Profit, and
Gross Margin
Cost of revenues was $781,695 for the year ended December 31, 2025, as compared to $384,765 for the year ended December 31, 2024. The increase in cost of revenues was, in part, due to higher product sales during the year, as well as higher write-offs of inventory not expected to be sold prior to its expiration date. Write-offs for expiring inventory were $445,181 during the year ended December 31, 2025, as compared to $22,046 during the year ended December 31, 2024. The excess inventory resulted from our strategic decision to validate a new, larger-scale production method with then soon to be expiring raw materials (API), with the offsetting assistance from our USAMMDA grant. The development proved successful but the dating on the produced inventory is already considered in the industry to be short-dated and will have to be replaced by the beginning of the second quarter of 2026. The temporary increase in inventory write-offs was a necessary step in scaling our operations and is not expected to be recurring. Our new larger-scale production processes are expected to help keep inventory costs lower than otherwise. Due to these factors, the Gross Margin % decreased from 36.67% for the year ended December 31, 2024 to 22.26% for the year ended December 31, 2025.
Cost of revenues was $384,765 for the year ended
December 31, 2024, as compared to $474,550 for the year ended December 31, 2023. While net product sales increased over the same periods,
the decrease in cost of goods sold is primarily attributable to the fixed part of cost of goods. As the sales volume has increased, the
gross margin has improved as the variable cost of goods of each unit sold is substantially less than the sales price. Additionally, write-downs
for expired inventory were significantly higher during the year ended December 31, 2023 at $191,111, as compared to $22,046 during the
year ended December 31, 2024. Due to these factors, the Gross Margin % increased significantly from (87.15%) for the year ended December
31, 2023 to 37.78% for the year ended December 31, 2024.
The research revenues earned by us were $403,624 for the year ended December 31, 2025, as compared to $73,771 for the year ended December 31, 2024. The increase in research revenues is due to the new USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda and the contract we signed with the University of Kentucky for tafenoquine clinical trial supply. We recognized research revenues of $298,868 related to the USAMMDA grant for the year ended December 31, 2025 ($12,994 for the year ended December 31, 2024). We recognized research revenues of $89,302 from the University of Kentucky for the year ended December 31, 2025 ($0 for the year ended December 31, 2024). Other research revenues were $15,454 for the year ended December 31, 2025 ($60,777 for the year ended December 31, 2024).
The research revenues earned by us were $73,771
for the year ended December 31, 2024, as compared to $0 for the year ended December 31, 2023. Our research revenues for the year ended
December 31, 2024 primarily relate to research revenues earned from the Australian Tax Authority for research expenses conducted in Australia,
and we earned $55,395 during the year ended December 31, 2024 ($0 during the year ended December 31, 2023). We did not earn research
revenues from the Australian Tax Authority in 2023 due to the cancellation of our COVID-19 trial, after which we made the decision not
to file for the research rebate. In 2024, we also began to recognize research revenues related to the new USAMMDA contract we were awarded
in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda.
Research and Development
Research and development costs increaseddecreased by $2,880,370 during
the year ended December 31, 20242025 when compared to the year ended December 31, 2023.2024. ResearchThe anddecline developmentis costsprimarily incurred during the
year ended December 31, 2023 consisted of initiation costs relatedattributable to ournon-cash Phasecharges IIBtotaling COVID-19$3,225,000 clinicalrecognized trial, which was later suspended
in the fourth quarter of 2023. Direct COVID-19-related trial costs represent less than 1% of the total research and development costs
forduring the year ended December 31, 2024 at $16,247 and 83% of the costs for the year ended December 31, 2023 at $574,609. During the year
ended December 31, 2024, $3,225,000, or 65% of the total research and development costs, relaterelated to share-based payments grantedissued to two
vendors in January 2023,2023 as advance consideration, which payments were initially deferred and capitalized. Kentucky Technology, Inc. delivered us a report on the
potential development of SJ733 + tafenoquine in the second quarter of 2024 and Trevally completed the synthesis of 8.8 kilograms of castanospermine
in the third quarter of 2024, resulting in $2,625,000 and $600,000, respectively, of research and development expense recognized for the
year ended December 31, 2024. WeOtherwise, alsoresearch and development costs incurred $1,359,532during inthe years ended December 31, 2025 and 2024 primarily consisted of costs related to our babesiosis trial for tafenoquinetafenoquine. duringDirect trial-related costs represent 71% of the yeartotal ended
Decemberresearch 31,and 2024development ($0costs at $1,496,148 during the year ended December 31, 2023).2025, compared to 27% of the costs at $1,359,532 during the year ended December 31, 2024. We also recorded $153,198 in research and development expenses related to commercial validation and packaging of Arakoda, for which a majority qualifies for reimbursement under the USAMMDA grant discussed above.
General and Administrative Expenses
For the year ended December 31, 2024,2025, our general
and administrative expenses increased by 18.46%24.97% or $783,149$1,254,588 from the year ended December 31, 2023.2024. During the year ended December 31,
2024, 2025, we recorded higherlower compensation expenses including $275,114$11,791 of bonus expense and $662,951$728,829 of salaries, taxes, and benefits expense,
respectively (compared to $0$275,114 and $492,780$662,951 for the year ended December 31, 2023,2024, respectively) due to certain sales and performance bonuses
payable awarded to our executives, and higher salaries due to hiring of our new Chief Commercial Officerexecutives in February 2024. Additionally,However, during
the year ended December 31, 2024,2025, we incurred $410,016$518,150 in legal and professional fees, $549,912$1,217,826 of insurance expenses, $1,019,111 of
investor outreach expenses, and $433,884$1,401,529 of sales advisory, advertising and promotion expenses (up from $268,611,$410,016, $304,581, $668,639,$1,019,111, and $172,551 for
the year ended December 31, 2023, respectively). These were partially offset by a significant decrease in stock-based compensation, which
decreased from $528,926$433,884 for the year ended December 31, 20232024, torespectively). Additionally, we recognized higher stock-based compensation costs, from $32,767 for the year ended December 31, 2024.2024 Theto decrease$279,873 is,for the year ended December 31, 2025. This increase was in part,
part due to anew decreasepartially vested option grants awarded to two executives in theJanuary average2025 grant date fair value of stock-based awards granted in 2024 as compared to 2023, as well asand certain
fully vested stock-based awards granted to our directors on the closing date of our IPO, and to our executives at the end of 2023.2025, as well as the ongoing quarterly expense recognized for additional stock options granted in the third quarter of 2024.
Interest Expense
For the year ended December 31, 2024,2025, we recognized
$7,912 $7,805 of interest expense ($2,286,637$7,912 for the year ended December 31, 20232024). The decrease inOur interest expense isfor the resultperiods ofpresented relates primarily to our single outstanding loan from the settlement
or conversion of a majority of our outstanding debt obligations upon the closing of our IPO on July 14, 2023.SBA. Cash paid for interest
was $8,772 and $179,117$8,772 for the years ended December 31, 20242025 and December 31, 2023,2024, respectively.
Derivative Expense
For the year ended December 31, 2023, we recognized
$399,725 of derivative expense in connection with the raising of $555,000 in net proceeds from our bridge funding in May 2023. We record
derivative expense when the initial fair value of the related derivative liabilities exceeds the cash proceeds received. We did not record
derivative expense for the year ended December 31, 2024 as we did not complete any debt financing transactions during the period.
Change in Fair Value of Derivative Liabilities
For the year ended December 31, 2024,2025, we recognized a net gain on the
change in fair value of derivative liabilities of $1,665,966$266,089 compared to a net lossgain of $37,278$1,665,966 for the year ended December 31, 2023.2024. During
the yearyears ended December 31, 2025 and December 31, 2024, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of
Arakoda or a Change of Control. The fair value of the contingent milestone payment is inversely related to the net present value of future
investments in the Company and anticipated timing to profitability within our budget models. During the year ended December 31, 2023,
derivative liabilities consisted of bridge shares, certain warrants, and embedded conversion features in our convertible notes, which
were each converted or reclassified to equity upon the closing of our IPO. We use a probability-weighted expected return method or a Monte
Carlo simulation model to estimate the fair value of thesethis instruments.derivative liability.
Loss on Debt Extinguishment
For the year ended December 31, 2024, we did
not recognize a gain or loss on debt extinguishment ($1,231,480 loss recognized during the year ended December 31, 2023). The decrease
is related, in part to the conversion of the cumulative outstanding debt pursuant to the Knight Debt Conversion Agreement in January
2023, which was accounted for as a debt extinguishment, as well as losses recognized upon extinguishment of our interim bridge financing
notes, all of which were settled or converted upon our IPO in July 2023. The net amount for the year ended December 31, 2023 was partially
offset by a debt extinguishment gain of $223,077 recognized on conversion of the Xu Yu promissory note on the date of our IPO.
Change in Fair Value of Promissory Note
For the year ended December 31, 2023, we recognized
a net gain of $5,379,269 related to the change in the fair value of the Convertible Knight Loan, which was held at fair value beginning
on the modification date in January 2023. The gain relates to the mark to market adjustment recognized immediately prior to the automatic
conversion of the outstanding debt obligation into our equity shares upon the closing of our IPO. We no longer have any debt obligations
measured at fair value on a recurring basis, hence we recorded a $0 change in fair value for the year ended December 31, 2024.
For the year ended December 31, 2025, we recognized $131,970 in other income compared to $101,464 in other income for the year ended December 31, 2024. We recognized interest income of $104,360 during the year ended December 31, 2025 ($103,299 during the year ended December 31, 2024). Other income for the year ended December 31, 2024 also included $10,789 of storage revenue recognized in association with final payment under the legacy contract with the USAMMDA for storing Arakoda purchases. We did not recognize storage revenue for the year ended December 31, 2025.
For the year ended December 31, 2024, we recognized
$101,464 in other income compared to $83,116 in other expense for the year ended December 31, 2023. As a result of the IPO as well as
additional equity financing transactions completed in 2024, we have earned higher interest income from investing certain cash proceeds
in interest-bearing accounts and short-term certificates of deposit. We recognized interest income of $103,299 during the year ended
December 31, 2024 ($19,985 during the year ended December 31, 2023). Additionally, during the year ended December 31, 2024, we recognized
$10,789 in service revenue in association with the final payment from the USAMMDA for storing Arakoda purchases ($0 for the year ended
December 31, 2023), upon the final resolution of storage fees payable from the USAMMDA under the original development contract entered
into in 2014. As the development contract ended on August 31, 2022, additional storage revenue is not expected in the near future. Other
expense during the year ended December 31, 2023, was primarily related to net foreign exchange transaction losses as well as a one-time
write off of an uncollectible receivable from our 3PL for an uninvoiced return of $48,236.
As of December 31, 2024,2025, we had cash and cash
equivalents of $1,659,353$1,510,065 ($2,142,485$1,659,353 as of December 31, 20232024). For the year ended December 31, 20242025 and 2023,2024, our net cash used in operating
activities was $5,648,088$6,849,022 and $4,542,910,$5,648,088, respectively. To date, we have financed our operations primarily through the issuance of common
stock, warrants to purchase common stock, and proceeds from the issuance of convertible debt and promissory notes. Based on current internal
projections, taking into consideration the net proceeds of approximately $1.9$4.3 million received under the ATM Agreement, an additional
$5.127 million in cumulative net proceeds received from the September,July 20242025 Privatepublic Placementoffering, and approximately $4.0 million in gross proceeds received through the 2025 offerings,ATM Agreement between October 15, 2026 and recentMarch growth25, in
Arakoda sales,2026, we estimate that we will have sufficient funds to remain viable through AugustSeptember 31,30, 2025, excluding the additional costs
of conducting the expanded access study for chronic babesiosis patients (currently being planned), and2026, assuming no additional capital
raises. We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash
balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than
recently experienced. We may need to raise additional capital in the future. However, we cannot assure you that we will be able to raise
additional capital on acceptable terms, or at all.
Net cash used in operating activities was $5,648,088
for the year ended December 31, 2024, as compared to $4,542,910$6,849,022 for the year ended December 31, 2023.2025, as compared to $5,648,088 for the year ended December 31, 2024. Our net cash used in operating
activities increased, in part due to higher general and administrative expenses of $5,024,985$6,279,823 for the year ended December 31, 2025 ($5,025,235 for the year ended December 31, 2024 ($4,241,836
for the year ended December 31, 2023) primarily due to higher cash compensation and related expenses, legal and professional fees, insurance
expenses, investor outreach expenses, and advertising and promotion expenses, as discussed above. In addition, we incurred $1,304,183
$1,496,148 in costs related to our planned babesiosis trial for tafenoquine during the year ended December 31, 20242025 ($0$1,304,183 during the year ended December
31, 20232024).
Cash Provided by (Used in) Investing Activities
Net cash usedprovided inby investing activities was $1,889,114
for the year ended December 31, 2024, as compared to $115,888$254,916 for the year ended December 31, 2023.2025, as compared to cash used in investing activities of $1,889,114 for the year ended December 31, 2024. The increasedecrease in cash used in investing
activities is primarily driven by purchases of short-term certificates of deposit for a total cost of $1,708,000 during the year ended
December 31, 2024 ($0$1,235,000 during the year ended December 31, 20232025 ($1,708,000 during the year ended December 31, 2024), purchased for the purposes of earning interest income. Additionally,
purchases of computer and lab equipment totaled $139,881 during the year ended December 31, 2025 ($103,773 during the year ended December 31, 2024 ($57,623 during the year ended December
31, 2023), and capitalized website development costs and patent costs totaled $25,374$22,670 and $51,967,$55,533, respectively, for the year ended December
31, 2024 ($18,283 and $39,982 for the year ended December 31, 2023,2025 ($25,374 and $51,967 for the year ended December 31, 2024, respectively).
Net cash provided by financing activities was
$6,437,691 for the year ended December 31, 2025, as compared to $7,053,571 for the year ended December 31, 2024, as compared to $6,474,565 for the year ended December 31, 2023.2024. The increasedecrease in net
cash provided by financing activities is primarily attributable to (i) net proceeds ofaggregating $1,914,513to $7,042,608 received forin theconnection salewith ofour common stock
and warrantswarrant offering in January 2024, (ii) net proceeds of $1,790,670 from the sale of common stock pursuant to the At-the-Market Sales Agreement
in July and August 2024, and (iii) $3,439,502 received from the sale of warrants in our Private Placement offering that closed in September
2024, inwhich each case partially offset by payment of deferred offering costs. Cash provided by financing activities forexceeded the year ended December
31, 2023 related toaggregate net proceeds of $6,454,325$6,452,887 generatedreceived fromin connection with our IPO,common whichstock closedand onwarrant offerings completed in January, February, and July 14,2025 2023, as well as $1,131,771 received
fromand the exercisesale of warrants,common butstock partiallypursuant offsetto bythe repaymentsAt-the-Market ofSales certain of our outstanding debt obligationsAgreement in JulyOctober 2023.and December 2025.
We also received lower proceeds from the exercise of warrants at $2,804 for the year ended December 31, 2025, compared to $10,963 for the year ended December 31, 2024. Additionally, for the year ended December 31, 2025, we withheld shares valued at $18,000 to cover tax withholdings for net share settlement of certain 2024 performance bonuses awarded to our executives ($0 for the year ended December 31, 2024).
We record U.S. commercial revenues as a receivable
when our American distributor transfers shipped product to their title model for 60P. Foreign sales to both Australia and Europe are
recognized as a receivable at the point product is shipped to distributor. The shipments to Australia and Europe arewere further subject
to profit sharing agreements for boxes sold to customers.
Inventory
We report inventories at the lower of cost or net realizable value. Cost is comprised of direct materials and, where applicable, costs we incur in bringing the inventories to their present location and condition. We use the Specific Identification method per lot. A box or a bottle price is calculated per lot number and sales are recognized by their lot number.
Derivative Liabilities
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (ASC 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) which requires disaggregated information
about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 iswas effective
for fiscalus yearsfor beginningour afterannual period ending December 15,31, 2024,2025. withThe earlyimpact of the adoption permitted.is Welimited are currently evaluating the impact that ASU 2023-09
will have onto our financial statement disclosures.disclosures, which are presented on a prospective basis. See Note 9 to the accompanying consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. The ASU is effective for all entities for interim and annual periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact that ASU 2025-06 will have on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07, Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07 adds a new scope exception from derivative accounting under ASC 815 for certain non-exchange-traded contracts with customers with an underlying that is based on operations or activities specific to one of the parties to the contract. Further, ASU 2025-07 clarifies that an entity should apply the guidance in ASC 606 to a contract with stock-based noncash consideration. The ASU is effective for annual periods beginning after December 15, 2026 and interim periods within those annual periods, with early adoption permitted. We are currently evaluating the impact that ASU 2025-06 will have on our consolidated financial statements.
What changed in the latest 10-Q
Risk Factors
Largest changes
“In addition, Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain a minimum of $2,500,000 in stockholders’ equity. As of June 30, 2026, our stockholders’ equity attributable to 60 Degrees Pharmaceuticals, Inc. was approximately $2,614,185. We have incurred net losses in each quarter since our inception, and we expect to continue to incur losses for the foreseeable future. If we are unable to raise additional capital or reduce our operating losses, our stockholders’ equity may fall below the $2,500,000 minimum required by Nasdaq, which could result in delisting proceedings. …”see in full comparison
“Further, in 2026, Nasdaq proposed a new listing rule that would require companies listed on The Nasdaq Capital Market to maintain a minimum market value of listed securities of $5,000,000. Although this proposed rule has been stayed and is not currently in effect, there can be no assurance that it will not be adopted or reinstated in the future. If such a rule becomes effective, we cannot guarantee that we will be able to maintain compliance with this requirement, particularly given the recent declines in our stock price and limited trading volume. …”see in full comparison
Full comparison: every changed paragraph (2)
In addition, Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain a minimum of $2,500,000 in stockholders’ equity. As of June 30, 2026, our stockholders’ equity attributable to 60 Degrees Pharmaceuticals, Inc. was approximately $2,614,185. We have incurred net losses in each quarter since our inception, and we expect to continue to incur losses for the foreseeable future. If we are unable to raise additional capital or reduce our operating losses, our stockholders’ equity may fall below the $2,500,000 minimum required by Nasdaq, which could result in delisting proceedings. A delisting of our common stock would adversely affect the liquidity and market price of our shares and could impair our ability to raise capital on acceptable terms, or at all.
Further, in 2026, Nasdaq proposed a new listing rule that would require companies listed on The Nasdaq Capital Market to maintain a minimum market value of listed securities of $5,000,000. Although this proposed rule has been stayed and is not currently in effect, there can be no assurance that it will not be adopted or reinstated in the future. If such a rule becomes effective, we cannot guarantee that we will be able to maintain compliance with this requirement, particularly given the recent declines in our stock price and limited trading volume. Failure to comply with any such requirement, if adopted, could result in delisting of our common stock from The Nasdaq Capital Market.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the Six Months Ended June 30, 2026, and 2025”
New heading “Product Revenues - net of Discounts and Rebates, Cost of Revenues, Gross Profit, and Gross Margin”
New heading “Product Revenues - net of Discounts and Rebates”
New heading “Cost of Revenues, Gross Profit, and Gross Margin”
New heading “Other Operating Revenues”
New heading “Operating Expenses”
New heading “Interest and Other Income, net”
Largest changes
“Product Revenues - net of Discounts and Rebates, Cost of Revenues, Gross Profit, and Gross Margin”see in full comparison
“For the six months ended June 30, 2026, we recognized a net loss on the change in fair value of derivative liabilities of $10,232 compared to $135,342 for the six months ended June 30, 2025. During the periods presented, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of Arakoda or a Change of Control. We use a probability-weighted expected return method to estimate the fair value of this derivative liability. …”see in full comparison
“We offer discounts and rebates to the civilian U.S. supply chain distribution channel. Our 3PL partner receives a distribution rebate of 10% of amounts invoiced and a 2% discount conditional on prompt payment, and we pay our 3PL partner a fixed fee of $5,500 per month together with data fees incurred in connection with serialization and distribution requirements. The product is then transferred usually to one of the three large U.S. pharmaceutical wholesalers or to IA, where rebates are 10% of their purchases from 3PL. …”see in full comparison
Full comparison: every changed paragraph (54)
The following highlights significant business developments in our business during the quarter ended MarchJune 31,30, 2026:
Due to the decline in our stock price, as of MarchJune 31,30, 2026, we did not have available capacity to sell additional shares under the 2025 ATM Agreement and related prospectus supplements based on the limitations of General Instruction I.B.6 of Form S-3, which restricts the aggregate market value of securities we may sell during any 12-month period to one-third of our public float. Our ability to resume sales under the 2025 ATM Agreement and related prospectus supplements will depend on future increases in our stock price or the passage of time such that prior sales are no longer counted within the trailing 12-month measurement period.
As of MarchJune 31,30, 2026, we had cash and cash equivalents of $3,337,760$1,022,606 ($1,510,065 as of December 31, 2025). For the threesix months ended MarchJune 31,30, 2026 and 2025, our net cash used in operating activities was $2,741,559$4,973,280 and $1,597,366,$3,047,494, respectively. To date, we have financed our operations primarily through the issuance of common stock, warrants to purchase common stock, and proceeds from the issuance of convertible debt and promissory notes. Based on current internal projections, taking into consideration the net proceeds of approximately $4.3$0.7 million received from the July 20252026 PIPE public offering andfollowing approximately $3.8 million in net proceeds received through the 2025 ATM Agreement and related prospectus supplements between October 2025 and March 2026, and excluding licensing and supply chain costs contingent on possible non-objection by FDA to our New Dietary Notification for Australian Chestnut Extract, we estimate that we will have sufficient funds to remain viable through mid-September,early-October 2026, assuming no additional capital raises.2026. However, based on our cash forecasts and planned operating expenditures, we do not currently have sufficient cash and cash equivalents to fund our operating plan for at least the next 12 months from the date of issuance of these financial statements, which raises substantial doubt about our ability to continue as a going concern. Our plans to address these conditions, which include additional equity financings and potential business development transactions, are not currently sufficient to alleviate this substantial doubt. We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the near future. However, we cannot assure you that we will be able to raise additional capital on acceptable terms, or at all.
The following table summarizes our contractual obligations as of MarchJune 31,30, 2026:
In addition, the Company has non-cancelable purchase obligations totaling $468,960, payable to its manufacturer Piramal, contingent upon the vendor meeting certain manufacturing milestones. $228,960 is expected to be payable around December 2026, with the remaining $240,000 is expected in March 2027. These amounts are not recognized on the consolidated balance sheet, as payment is contingent upon achievement of future events.
We receive the majority of our product revenues from sales of our Arakoda product to resellers in the U.S. and abroad. Foreign sales to both Australia and Europe are further subject to profit sharing agreements for boxes sold to customers. Sales to resellers in the US are subject to considerable discounts and rebates for services provided by our third-party logistics (“3PL”) partner and wholesalers and pharmacy benefit managers (“PBMs”). We recognize revenue when control of Arakoda transfers to our U.S. distributor or 3PL partner, which generally occurs upon shipment. We record product revenue net of estimated discounts, rebates, chargebacks and product returns in accordance with ASC 606. We estimate these forms of variable consideration using the expected value method and constrain estimates to amounts for which it is probable that a significant reversal of cumulative revenue will not occur when the related uncertainties are resolved.
Other operating revenues for the periods presented include research revenue earned from the Australian Tax Authority for research activities conducted in Australia. In 2025, other operating revenues also included research revenues associated with our contract with the United States Army Medical Material Development Activity (USAMMDA) for Arakoda supply chain upgrade support. We recognized research revenue related to the USAMMDA contract over time as qualifying costs were incurred, up to the maximum contractual funding amount. All funded activities under this contract were completed and fully reimbursed by December 31, 2025, and no additional amounts are expected to be earned under the arrangement. Currently, we are not engaging in research activity that would lead directly and immediately to research revenue.
Research and development costs for the periods presented primarily consist of contracted research and development services and costs associated with preparation for and conducting our Babesiosis trial. We expense all research and development costs in the period in which they are incurred. Payments made prior to the receipt of goods or services to be used in research and development are recognized as prepaid assets and expensed over the service period as the services are provided. We have also issued shares of our common stock to vendors in exchange for research and development services.
We earn interest income from cash invested in interest-bearing accounts, as well as cash equivalents and short-term investments consisting of certificates of deposits with original maturities ranging from three to six months. Interest expense for the periods presented is limited to a single $150,000$150,030 SBA loan that bears interest at 3.75%. Other components of other income (loss) include changes in the fair value of derivative liabilities and other miscellaneous income or expenses.
Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025
For the three months ended June 30, 2026, product revenues – net of discounts and rebates were $207,898, compared to $100,932 for the same period in 2025, an increase of $106,966, or 105.98%. The increase was attributable to two factors. First, the prior-year period was affected by a shortage of Arakoda 16-ct boxes, as previously disclosed, while new product lots underwent commercial validation at our secondary packager. Second, during the current period our third-party logistics partner (“3PL”) agreed to carry higher inventory levels on a continuing basis, after deliveries to wholesalers and pharmacies were delayed at prior inventory levels. As a result, shipments to our 3PL in the current period exceeded sell-through to pharmacies by approximately $200,000. We do not expect this increase in channel inventory to recur, and revenue for the current period is not indicative of future quarterly revenue.
For the three months ended June 30, 2026, our 3PL, which purchases product from us and resells it to three large U.S. pharmaceutical wholesalers and to a compounding pharmacy, Infuserve America (“IA”), accounted for 92% of total net product sales of Arakoda (compared to 21% in the prior-year period), IA accounted for 0% (compared to 78%), and Kodatef sales to our Australian distributor accounted for 8% (compared to 1% in the prior-year period). During the shortage described above, we imported Kodatef from Australia under a temporary FDA authorization that facilitated patient access, and sold it directly to IA, which dispensed it to patients. That authorization has expired, and IA has since resumed purchasing through our 3PL.
We recognize revenue on transfer of control of product to our 3PL, which generally occurs upon shipment. Unit volumes described below as sold to pharmacies and dispensaries, and volumes reported by our distributors in Australia and Europe, represent sell-through to their respective customers and are not directly correlated to the revenue we recognize in any period.
For the three months ended March 31, 2026, product revenues – net of discounts and rebates were $162,092, compared to $163,552 for the same period in 2025, a decrease of $1,460, or 0.89%. For the three months ended March 31, 2026, our U.S. pharmaceutical distributor accounted for 90% of total net product sales of Arakoda (compared to 85% in the prior-year period), Infuserve America accounted for 0% (compared to 6%), and Kodatef sales to our Australian distributor accounted for 10% (compared to 9% in the prior-year period). Total net product revenues experienced a slight decline, primarily due to returns associated with expiring product lots during the period.
We offer discounts and rebates to the civilian U.S. supply chain distribution channel. DiscountsOur 3PL partner receives a distribution rebate of 10% of amounts invoiced and rebatesa offered2% todiscount conditional on prompt payment, and we pay our 3PL partner amounta tofixed 12%fee (lowerof rates$5,500 availableper uponmonth reaching larger revenue tiers) alongtogether with adata $5,500fees fixedincurred monthlyin fee.connection with serialization and distribution requirements. The product is then transferred usually to one of the three large U.S. pharmaceutical distributorswholesalers or to IA, where rebates are 10%.10% Additionally,of intheir thepurchases currentfrom quarter,3PL. weUnder implemented a newour partnership with GoodRxGoodRx, wherewhich commenced on February 2, 2026, eligible patients canmay acquireobtain asavings discountof up to 30% on theirArakoda; purchase.amounts recorded under that program, including associated program fees, were $13,294 for the three months ended June 30, 2026. Lastly, we have relationships with several large pharmacy benefit managers (“PBMs”) that allow patients to purchase Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. Because rebates payable to wholesalers and PBMs are paid to parties that are not our customers, we account for them as variable consideration rather than as trade discounts. We estimate these forms of variable consideration using the expected value method and constrain estimates to amounts for which it is probable that a significant reversal of cumulative revenue will not occur when the related uncertainties are resolved. Total discounts and rebates for the three months ended MarchJune 31,30, 2026 were $96,857,$162,350, an increase of $5,456,$79,546, or 6%,96%, from $91,401$82,804 in the prior-year period. As a percentage of gross product sales, discounts and rebates were 29.6% and 45.4% in the current and prior-year periods, respectively. The decrease reflects the conclusion of the temporary IA arrangement, under which a substantially higher proportion of sales were subject to PBM rebates.
Product returns for the three months ended June 30, 2026 were $178,659, compared to a net credit of $1,232 in the prior-year period. Returns consist of authorized returns of expired product from our 3PL and returns from wholesalers and pharmacies processed through a third-party administrator for destruction. The increase was primarily attributable to the expiration of product lots held in the distribution channel. As a percentage of gross product sales, returns were 32.6% in the current period.
Arakoda entered the U.S. civilian supply chain in the third quarter of 2019. Since the introduction of the new 8-ct bottle in June 2025, we will be reporting Arakoda unit sales in terms of 16-ct box equivalents. For the three months ended MarchJune 31,30, 2026, the equivalent of 1,2761,287 16-ct boxes were sold to U.S. pharmacies and dispensaries. Sales volume decreasedsold through increased by 19% from 1,5791,082 16-ct box equivalents sold to U.S. pharmacies and dispensaries for the three months ended MarchJune 31,30, 2025. As previously disclosed, we report Arakoda unit sales in 16-ct box equivalents following the introduction of the 8-ct bottle in June 2025.
Kodatef sales to our distributor Biocelect in Australia for the three months ended MarchJune 31,30, 2026 were $15,470$15,808 ($12,066$1,219 for the three months ended MarchJune 31,30, 2025). A historical portion of sales to Biocelect remained subject to a profit share distribution once the original transfer price has been recouped. Biocelect, which acts as a distributor in the Australian and New Zealand markets, reported ana 8%26% quarter-over-quarteryear-over-year decrease,increase in sell-through, with 354497 boxes sold to its customers for the three months ended MarchJune 31,30, 2026, compared to 386396 boxes for the three months ended MarchJune 31,30, 2025. As of MarchJune 31, 2026, Biocelect has no inventory left that remains subject to profit share. Beginning in the first quarter of 2025, Biocelect began to purchase from the latest manufactured lot of Kodatef at $49.50 AUD per box which are not subject to historical profit share. As of March 31,30, 2026, no receivables were due tofrom usBiocelet (none as of December 31, 2025).
We ship Arakoda to our European distributor, Scandinavian Biopharma (“SB”), periodically rather than each quarter, and did not recognize revenue on shipments to SB during either period presented. SB reported 103 boxes sold during the three months ended June 30, 2026, representing a 6% decrease from the 110 boxes sold during the three months ended June 30, 2025.
Arakoda sales volume in Europe continues to grow. We first shipped Arakoda to our distributor Scandinavian Biopharma (“SB”) in September 2022. SB reported 77 boxes sold during the three months ended March 31, 2026, representing a 5% increase from the 73 boxes sold during the three months ended March 31, 2025.
Cost of revenues was $85,715$151,100 for the three months ended MarchJune 31,30, 2026, as compared to $73,272$50,051 for the three months ended MarchJune 31,30, 2025. TheIn increase in2025, total cost of revenues was primarilyuniquely drivenlow byas higherthe quarterlyFDA storageallowed costsus withto ourimport U.S.-basedand packager.sell Onlower cost per unit Kodatef on a per-unittemporary basis, however, cost of revenues declinedbasis due to thestock introductionout of the bottle format, which has reduced packaging costs.Arakoda. As a result of theseno factors,longer selling Kodatef in the US in 2026, gross margin % decreased to 47.12%27.32% for the three months ended MarchJune 31,30, 2026, from 55.20%50.41% in the prior-year period. Thus,Still, our gross profit declinedincreased by $13,903$5,917 to $76,377$56,798 for the three months ended MarchJune 31,30, 2026, from $90,280$50,881 in the prior-year period. Inventory write‑downs for expired product were not a primary driver of the gross margin decline period over period.
The research revenues earned by us were none for the three months ended MarchJune 31,30, 2026, as compared to $92,731$206,939 for the three months ended MarchJune 31,30, 2025. The decrease in research revenues is primarily due to the USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda, which was fully utilized by the end of 2025. We recognized research revenues of $77,966$116,948 related to the USAMMDA grant for the three months ended MarchJune 31,30, 2025, compared to none for the three months ended MarchJune 31,30, 2026. Research revenues for the three months ended MarchJune 31,30, 2025 also included $5,138$954 earned from the Australian Tax Authority for qualifying research activities conducted in Australia. We recognized research revenue related to the USAMMDA contract over time as qualifying costs were incurred, up to the maximum contractual funding amount. All funded activities under this contract were completed and fully reimbursed by December 31, 2025, and no additional amounts are expected to be earned under the arrangement.
Research and development costs decreasedincreased by $89,349$366,741 for the three months ended MarchJune 31,30, 2026 when compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease was partiallyprimarily driven by $63,015an ofearlier packagingstart validationto the tick season which increased costs recognizedfor inour thehospitalization prior-year period, with no comparable costs in the current period following the completion of the USAMMDA-funded activities.study. Otherwise, research and development costs incurred for the three months ended MarchJune 31,30, 2026 and 2025 primarily consisted of costs related to our babesiosis trials for tafenoquine. Direct trial-related costs represent 68%69% of the total research and development costs at $191,391$413,424 for the three months ended MarchJune 31,30, 2026, compared to 74%76% of the costs at $275,633$176,892 for the three months ended MarchJune 31,30, 2025.
For the three months ended MarchJune 31,30, 2026, our general and administrative expenses increased by approximately 9.68%5.94% or $166,738$97,011 from the three months ended MarchJune 31,30, 2025. The increase was driven by: (1) higher sales, advertising, and promotion expenses ($521,178$571,231 vs. $285,287$395,097), and (2) higher audit, legal, and professional fees ($248,152 vs. $220,793). These increases were partially offset by lower investor outreach expenses ($197,232$226,702 vs. $393,687) and reduced stock-based compensation ($79,524 vs. $142,645$365,523). The decrease in stock-based compensation expense is attributable to two partially vested option grants awarded to executives in January 2025.
For the three months ended MarchJune 31,30, 2026, we recognized $1,389$1,403 of interest expense ($1,790$1,221 for the three months ended MarchJune 31,30, 2025). Our interest expense for the periods presented primarily relates to our single outstanding loan from the SBA. Cash paid for interest expense was $2,193$2,197 and $2,193 for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.
For the three months ended MarchJune 31,30, 2026, we recognized a net (loss) gain on the change in fair value of derivative liabilities of $(4,567)$5,665 compared to $5,105$140,447 for the three months ended MarchJune 31,30, 2025. During the periods presented, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of Arakoda or a Change of Control. We use a probability-weighted expected return method to estimate the fair value of this derivative liability. This method requires significant judgment and is sensitive to changes in assumptions related to the expected timing of payment, the likelihood of potential exit scenarios, and the selected discount rate. The gains and losses recognized during the periods presented are non‑cash in nature and do not impact our liquidity or cash flows.
For the three months ended MarchJune 31,30, 2026, we recognized $10,762$12,584 in other income compared to $30,322$13,066 for the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026, we recognized interest income from cash invested in interest-bearing accounts and investments in certificates of deposit of $11,210$12,584 ($31,897$15,687 for the three months ended MarchJune 31,30, 2025).
Comparison of the Six Months Ended June 30, 2026, and 2025
Product Revenues - net of Discounts and Rebates, Cost of Revenues, Gross Profit, and Gross Margin
Product Revenues - net of Discounts and Rebates
Our product revenues - net of discounts and rebates were $369,990 for the six months ended June 30, 2026, as compared to $264,484 for the six months ended June 30, 2025, an increase of $105,506, or 39.89%. Sell-through volume to pharmacies and dispensaries declined 4% over the same period, from 2,661 to 2,563 16-ct box equivalents. Revenue increased notwithstanding lower sell-through volume because the prior-year period was affected by a shortage of Arakoda 16-ct boxes, as previously disclosed, and because shipments in the current period exceeded sell-through as our 3PL moved to higher inventory levels. Revenue for the current period is not indicative of future results.
For the six months ended June 30, 2026, our third-party logistics partner (“3PL”), which purchases product from us and resells it to three large U.S. pharmaceutical wholesalers and to a compounding pharmacy, Infuserve America (“IA”), and IA accounted for 92% and 0% of our total net product sales of Arakoda, respectively, and Kodatef sales to our Australian distributor accounted for 8% of total net product sales (61%, 34%, and 5% for the six months ended June 30, 2025, respectively). During the shortage described above, we imported Kodatef from Australia under a temporary FDA authorization that facilitated patient access, and sold it directly to IA, which dispensed it to patients. That authorization has expired, and IA has since resumed purchasing through our 3PL. The introduction of a new 8-ct Arakoda bottle into the commercial supply chain in June 2025 also mitigated the shortage.
We recognize revenue on transfer of control of product to our 3PL, which generally occurs upon shipment. Unit volumes described as sold to pharmacies and dispensaries, and volumes reported by our distributors in Australia and Europe, represent sell-through to their respective customers and are not directly correlated to the revenue we recognize in any period.
We offer discounts and rebates to the civilian U.S. supply chain distribution channel. Our 3PL partner receives a distribution rebate of 10% of amounts invoiced and a 2% discount conditional on prompt payment, and we pay our 3PL partner a fixed fee of $5,500 per month together with data fees incurred in connection with serialization and distribution requirements. The product is then transferred usually to one of the three large U.S. pharmaceutical wholesalers or to IA, where rebates are 10% of their purchases from 3PL. Under our partnership with GoodRx, which commenced on February 2, 2026, eligible patients may obtain savings of up to 30% on Arakoda; amounts recorded under that program, including associated program fees, were $23,219 for the six months ended June 30, 2026. Lastly, we have relationships with several large pharmacy benefit managers (“PBMs”) that allow patients to purchase Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. Because rebates payable to wholesalers and PBMs are paid to parties that are not our customers, we account for them as variable consideration rather than as trade discounts. We estimate these forms of variable consideration using the expected value method and constrain estimates to amounts for which it is probable that a significant reversal of cumulative revenue will not occur when the related uncertainties are resolved. For the six months ended June 30, 2026, discounts and rebates were $259,207 compared to $174,205 for the six months ended June 30, 2025. The increase reflects higher gross sales volume; as a percentage of gross U.S. product sales, discounts and rebates decreased period over period, reflecting the conclusion of the temporary IA arrangement, under which a substantially higher proportion of sales were subject to PBM rebates.
Product returns for the six months ended June 30, 2026 were $211,346, compared to a net credit of $18,025 for the six months ended June 30, 2025. Returns consist of authorized returns of expired product from our 3PL and returns from wholesalers and pharmacies processed through a third-party administrator for destruction. The increase was primarily attributable to the expiration of product lots held in the distribution channel.
Kodatef sales to our distributor Biocelect in Australia for the six months ended June 30, 2026 were $31,278 ($13,285 for the six months ended June 30, 2025). Biocelect, which acts as a distributor in the Australian and New Zealand market, reported a 9% year-over-year increase, the equivalent of 851 boxes sold for the six months ended June 30, 2026, compared to 782 boxes for the six months ended June 30, 2025. For the six months ended June 30, 2026, 900 boxes of Kodatef were sold to Biocelect (200 boxes for the six months ended June 30, 2025). Amounts we recognize as revenue reflect shipments to Biocelect, which are made periodically to replenish its inventory.
Arakoda sales volume in Europe has been flat. We ship Arakoda to our European distributor, Scandinavian Biopharma (“SB”), periodically rather than each quarter, and did not recognize revenue on shipments to SB during either period presented. For the six months ended June 30, 2026, SB reported 180 boxes sold (183 boxes sold for the six months ended June 30, 2025).
Cost of Revenues, Gross Profit, and Gross Margin
Cost of revenues was $236,815 for the six months ended June 30, 2026, as compared to $123,323 for the six months ended June 30, 2025. The increase reflects higher unit volumes shipped together with a higher cost per unit. Cost of revenues in the prior-year period was uniquely low for three reasons: a substantial portion of product sold consisted of imported Kodatef, which does not require the child-resistant packaging applied to Arakoda in the United States and therefore carried a significantly lower cost per unit; the prior-year period included a higher proportion of 8-ct bottles, which carry a lower packaging cost per box equivalent; and product sold in the prior-year period was manufactured using active pharmaceutical ingredient acquired in 2018 at a lower cost per kilogram than the material used in current lots. Cost of revenues in the current period also included yield losses incurred during tableting, blistering and final packaging of new product lots, higher storage costs charged by our secondary packager, and the destruction of product lots that expired during the period. Yield losses are incurred only in periods in which new lots are produced. The Gross Margin % decreased from 53.37% for the six months ended June 30, 2025 to 35.99% for the six months ended June 30, 2026.
Other Operating Revenues
The research revenues earned by us were $0 for the six months ended June 30, 2026, as compared to $299,670 for the six months ended June 30, 2025. The decrease in research revenues is primarily due to the USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda and the contract we signed with the University of Kentucky for tafenoquine clinical trial supply. We recognized research revenues of $0 related to the USAMMDA grant for the six months ended June 30, 2026 ($194,914 for the six months ended June 30, 2025). We recognized research revenues of $0 from the University of Kentucky for the six months ended June 30, 2026 ($89,302 for the six months ended June 30, 2025). Other research revenues were $0 for the six months ended June 30, 2026 ($15,454 for the six months ended June 30, 2025).
Operating Expenses
Research and development costs increased by $277,392 for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. The increase is primarily attributable to having three Babesiosis trials fully active for the first time. Direct trial-related costs represent 73% of the total research and development costs at $638,959 for the six months ended June 30, 2026, compared to 75% of the costs at $452,525 for the six months ended June 30, 2025.
For the six months ended June 30, 2026, our general and administrative expenses increased by approximately 7.86% or $263,749 from the six months ended June 30, 2025. For the six months ended June 30, 2026, we incurred significantly higher sales, advertising and promotion expenses at $1,092,408, up from $680,384 for the six months ended June 30, 2025. This was partially offset by decreased investor outreach expenses of $423,934 for the six months ended June 30, 2026, as compared to $759,211 for the six months ended June 30, 2025.
Interest and Other Income, net
For the six months ended June 30, 2026, we recognized $2,792 of interest expense ($3,011 for the six months ended June 30, 2025). Our interest expense for the periods presented primarily relates to our single outstanding loan from the SBA. Cash paid for interest expense was $4,390 and $4,386 for the six months ended June 30, 2026 and June 30, 2025, respectively.
For the six months ended June 30, 2026, we recognized a net loss on the change in fair value of derivative liabilities of $10,232 compared to $135,342 for the six months ended June 30, 2025. During the periods presented, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of Arakoda or a Change of Control. We use a probability-weighted expected return method to estimate the fair value of this derivative liability. This method requires significant judgment and is sensitive to changes in assumptions related to the expected timing of payment, the likelihood of potential exit scenarios, and the selected discount rate. The losses recognized during the periods presented are non‑cash in nature and do not impact our liquidity or cash flows.
For the six months ended June 30, 2026, we recognized $23,346 in other income compared to $43,388 for the six months ended June 30, 2025. For the six months ended June 30, 2026, we recognized interest income from cash invested in interest-bearing accounts and investments in certificates of deposit of $23,794 ($47,584 for the six months ended June 30, 2025).
Net cash used in operating activities was $2,741,559$4,973,280 for the threesix months ended MarchJune 31,30, 2026, as compared to $1,597,366$3,047,494 for the threesix months ended MarchJune 31,30, 2025. Our net cash used in operating activities increased primarily due to higher general and administrative expenses at $1,889,874$3,619,121 for the threesix months ended MarchJune 31,30, 2026 ($1,723,136$3,355,372 for the threesix months ended MarchJune 31,30, 2025), as a result of higher sales, advertising and promotion costs and audit, legal and professional fees,costs, as discussed above. In addition, cash outflows increased due to higher levels of vendor prepayments primarily due to initiating new API production at Piramal during the threesix months ended MarchJune 31,30, 2026 when compared to the threesix months ended MarchJune 31,30, 2025.
Net cash provided by investing activities was $1,193,560$1,107,576 for the threesix months ended MarchJune 31,30, 2026, as compared to $1,702,518$1,650,834 for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, we received proceeds of $1,235,000 from maturities of certain short-term investments in certificates of deposit ($1,708,000 for the threesix months ended MarchJune 31,30, 2025). The cash proceeds are partially offset by fixed asset purchases of $30,000 for the threesix months ended MarchJune 31,30, 2026 ($2,678$50,001 for the threesix months ended MarchJune 31,30, 2025). Additionally, for the threesix months ended MarchJune 31,30, 2026, we paid cash of $11,440$64,376 for capitalized website development costs associated with enhancements to the functionality of our corporate website. We did not have any cash outflows for capitalized website development costs for the threesix months ended MarchJune 31,30, 2025.
Net cash provided by financing activities was $3,369,752 for the threesix months ended MarchJune 31,30, 2026, as compared to $1,696,899 for the threesix months ended MarchJune 31,30, 2025. The increase in net cash provided by financing activities is attributable to higher net proceeds from the sale of common stock under our At-the-Market (ATM) Sales Agreement between January and March 2026, which exceeded the aggregate net proceeds of $1,712,973 received from our common stock and warrant offerings completed in January and February 2025.
The increase was partially offset by lower proceeds from warrant exercises, which were $0 for the threesix months ended MarchJune 31,30, 2026, compared to $1,926 for the threesix months ended MarchJune 31,30, 2025. In addition, during the threesix months ended MarchJune 31,30, 2025, we withheld shares valued at $18,000 to cover tax withholdings associated with the net share settlement of certain 2024 performance bonuses awarded to our executives. No such share withholding or net share settlement activity occurred during the threesix months ended MarchJune 31,30, 2026.
Our foreign operations were small relative to U.S. operations for the threesix months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, thus effects of foreign currency translation have been minor.
We assess the classification of our derivative financial instruments each reporting period, and determined that such instruments initially qualified for treatment as derivative liabilities as they met the criteria for liability classification under ASC 815. As of MarchJune 31,30, 2026, our derivative liabilities consist of contingent payment arrangements.
SXTP insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 7,350 shares, about $10.1K) and open-market sales in 0 filings. Net open-market shares: 7,350 (purchases minus sales); net value about $10.1K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-12 | Dow Geoffrey S |
Open-market purchase | 7,350 | $1.38 | $10.1K |
Well-known investors holding SXTP (13F)
None of the 59 investors we track reported a position in their latest 13F.