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

We require additional capital and may be unable to raise such capital, which would force us to delay, reduce or eliminate our commercialization efforts and product development programs and commercialization efforts and could cause us to be unable to continue to operate as a going concern and cease operations.

We have experienced and may in the future experience delays in clinical trials of our product candidates. For example, to date, our NiyadNEPHRO CRRT clinical trial has had slower than expected site initiation and patient enrollment. Our FDA-required clinical trials for our product candidates could be delayed for a variety of reasons, including:

Nafamostat is being developed for use in both medical devices and drug indications. Although nafamostat is approved for certain uses in Japan, our ability to leverage that for an expedited development and approval pathway with the FDA may be limited, and we may be required to conduct additional unanticipated nonclinical studies and clinical trials in order to seek approval in the U.S. We are studying Niyad™ in the NEPHRO CRRT study under an investigational device exemption, or IDE. Niyad has received Breakthrough Device Designation from the FDA for regional anticoagulant for infusion into the extracorporeal circuit and is expected to be used during renal replacement therapy for acute kidney injury patients in the hospital and for end-stage renal disease patients receiving dialysis in outpatient clinics. We expect that Niyad will require approval of a PMA application for commercialization in the U.S., and as a company we have never submitted nor received approval for a PMA.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and other third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical products. There have been a number of legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions that could affect our or our partners’ ability to sell the products profitably. For example, the U.S. Department of Health and Human Services, or HHS, imposes rebates on many Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis. HHS has also been empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven (7) years covered under Medicare as part of the Medicare Drug Price Negotiation Program. Each year up to twenty (20) products will be selected by HHS for the Medicare Drug Price Negotiation Program. Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis. These legislative and/or regulatory changes may negatively impact the reimbursement for our products, following approval. The availability of numerous generic pain medications may also substantially reduce the likelihood of reimbursement for approved products in Europe and elsewhere. The application of user fees to generic drug products may expedite the approval of additional pain medication generic drugs. We would expect that our product candidates will experience pricing pressures in connection with the product sale due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. If we or our partners fail to successfully secure and maintain reimbursement coverage for our products or are significantly delayed in doing so, there may be difficulty achieving market acceptance of our products and our business will be harmed.

In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. Aggregate reductions of Medicare payments to providers went into effect on April 1, 2013, and due to subsequent legislative amendments to the statute will stay in effect until 2032, unless Congressional action is taken. The American Taxpayer Relief Act further reduced Medicare payments to several providers, including hospitals. Additionally, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, which began on January 1, 2024.

We rely on limited sources of supply for the active pharmaceutical ingredient, or API,ingredient and finished product of our nafamostat-based product candidates and any disruption in the chain of supply may cause a delay in developing our product candidates.

We currently have a single source of supply offor APIthe active ingredient and finished product for our nafamostat-based product candidates. If supply from those vendors is interrupted or discontinued, or if we are unable to negotiate commercial supply agreements with them, there could be a significant impact on our development activities for those product candidates.

In addition, our contract development and manufacturing organization, or CDMO, our sole-source for the finished goods of our nafamostat-based product candidates, is located in China,Asia, and we expect to rely on this supplier for the foreseeable future. Chinese biotechnologyBiotechnology companies and CDMOs based outside the U.S. may become subject to trade restrictions, sanctions, and other regulatory requirements by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting the supply of finished goods to us. In addition, in March 2025, the U.S. government has imposed tariffs on biopharmaceutical products imported from China,outside the U.S., which will increase our cost of doing business until we are able to source such products outside of China and any other jurisdictionjurisdictions subject to such tariffs. We have contracted with, or are in the process of pursuing contracts with, alternative suppliers or manufacturers outside of ChinaAsia for our finished goods for our nafamostat-based product candidates.candidates; however, any new CDMO would have to validate the manufacturing process at the new site which would require additional time and resources. In addition, we would need to obtain appropriate regulatory approvals before we could sell any product produced at that site. While we believe that our current manufacturing plan will provide us with alternative sources for such supplies, if supplies are interrupted, or the quality of finished goods provided by such alternative sources is not to our specification, it could cause delays in our supply chain and increase the cost of manufacturing our nafamostat-based product candidates, which could harm our business.

The facilities of any of our future manufacturers of Niyad must be approved by the FDA before commercial distribution from such manufacturers occurs. We do not fully control the manufacturing process and are completely dependent on these third-party manufacturing partners for compliance with the FDA or other foreign regulatory agency’sagencies’ requirements for manufacture. In addition, although our third-party manufacturers are well-established manufacturers, we are dependent on their continued adherence to cGMP manufacturing and acceptable changes to their processes. If our manufacturers do not meet the FDA or other foreign regulatory agency’sagencies’ strict regulatory requirements, they will not be able to secure FDA or other foreign regulatory agency approval for their manufacturing facilities. If the FDA or the relevant foreign regulatory agency does not approve these facilities for the commercial manufacture of Niyad, we will need to find alternative suppliers, which would result in significant delays in obtaining regulatory agency approval. These challenges may have a material adverse impact on our business, results of operations, financial condition and prospects.

We may not be able to establish additional sources of supply for Niyad. Such suppliers are subject to FDA and other foreign regulatory agency’sagencies’ regulations requiring that materials be produced under cGMPs or Quality Management System Regulations, or QSR.QMSR. Failure by any of our suppliers to comply with applicable regulations may result in delays.

We will utilize CROs for the development of our product candidates. We will rely on such CROs, as well as clinical trial sites, to ensure the proper and timely conduct of our clinical trials and document preparation. While we have agreements or will enter into such agreements governing their activities, we have limited influence over their actual performance. We have plans to rely upon CROs to monitor and manage data for post-approval clinical programs or any FDA-required clinical programs for our product candidates, as well as the execution of nonclinicalnon-clinical and clinical trials. We control only certain aspects of our CROs’ activities. Nevertheless, we are responsible for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.

Our CROs are not our employees, and we cannot control whether or not they devote sufficient time and resources to our ongoing clinical and nonclinicalnon-clinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug or medical device development activities which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may allow our potential competitors to access our proprietary technology. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates, if approved, would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

To protect our proprietary technology, we rely on patents as well as other intellectual property protections including trade secrets, nondisclosure agreements, and confidentiality provisions. We are pursuing a number of U.S. patent applications and foreign national applications directed to our product candidates. The patent applications that we have filed and have not yet been granted may fail to result in issued patents in the United States or in foreign countries. Even if the patents do successfully issue, third parties may challenge the patents. We have entered into the DSUVIA Agreement with Alora pursuant to which Alora acquired all patents and trademarks related to DSUVIA and DZUVEO. In addition, we and Alora entered into an intellectual property agreement pursuant to which Alora granted fully-paid, royalty-free and perpetual licenses to us under certain specified intellectual property rights acquired by Alora under the DSUVIA Agreement for, among other things, the development, manufacture, commercialization and exploitation of certain products, including Zalviso.

In addition, the stock market in general, and The Nasdaq Global Market, or Nasdaq, in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

Our common stock may be delisted from The Nasdaq GlobalCapital Market if we cannot regain compliance with Nasdaq’s continued listing requirements.

In order to maintain our listing on Nasdaq, we are required to comply with the Nasdaq requirements, which includes maintaining a minimum bid price of $1.00, a minimum public float and a minimum stockholders’ equity. In particular, we are required to maintain a minimum stockholders’ equity of at least $10 million or meet the alternative compliance standards relating to the market value of the listed securities or our total assets and revenue.$1.00. On NovemberMarch 27,11, 2024,2026, we received a notice from Nasdaq stating that we were not in compliance with Nasdaq Listing Rule 5450(b)(1)(A) based on our stockholders’ equity of $9.6 million as of September 30, 2024, as reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (the “Minimum Stockholder Equity Requirement”), and on December 6, 2024, we received a notice from Nasdaq stating that we were not in compliance with Nasdaq Listing Rule 54505550(a)(12) (the “Minimum Bid Price Rule”) because our common stock failed to maintain a minimum closing bid price of $1.00 for 30 consecutive business days. TheseThis noticesnotice had no immediate effect on the Nasdaq listing or trading of our common stock.

We submitted a compliance plan to Nasdaq to regain compliance with the Minimum Stockholder Equity Requirement which Nasdaq accepted. Accordingly, we have a compliance period for the Minimum Stockholder Equity Requirement of 180 calendar days, or until May 26, 2025, in which to regain compliance. In addition, we have a compliance period for the Minimum Bid Price Rule of 180 calendar days, or until JuneSeptember 4,7, 2025,2026, in which to regain compliance, pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A). If, at any time before that date the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will notify us that we have achieved compliance with the Minimum Bid Price Rule.

If we do not achieve compliance with the Minimum Bid Price Rule during the initial 180 calendar day period, we may be eligible for an additional 180 calendar day compliance period. To qualify, we would need to transfer the listing of our common stock to the Nasdaq Capital Market, provided that it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards of the Nasdaq Capital Market, with the exception of the Minimum Bid Price Rule. In addition, we would also be required to notify Nasdaq of our intent to cure the minimum bid price deficiency, which may include, if necessary, implementing a reverse stock split. However, if it appears to Nasdaq that we will not be able to cure the deficiency, or if we do not meet the other listing standards, Nasdaq could provide notice that the common stock will become subject to delisting. In the event we receive notice that our common stock is being delisted, Nasdaq rules permit us to appeal any delisting determination by Nasdaq to a Hearings Panel, or the Panel. We expect that our common stock would remain listed pending the Panel's decision. However, there can be no assurance that, if we do appeal the delisting determination by Nasdaq to the Panel, that such appeal would be successful, or that we will be able to regain compliance with the Minimum Bid Price Rule or maintain compliance with the other listing requirements.

If we fail to effect a reverse stock split, thus regaining compliance with the Minimum Bid Price Rule, or we fail to regain compliance with the Minimum Stockholders Equity Requirement, our common stock may be delisted. Delisting from the Nasdaq GlobalCapital Market or any Nasdaq market could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, without a Nasdaq market listing, stockholders may have a difficult time getting a quote for the sale or purchase of our common stock, the sale or purchase of our common stock would likely be made more difficult and the trading volume and liquidity of our common stock could decline. Delisting from Nasdaq could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market. If our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB market, where an investor may find it more difficult to sell our common stock or obtain accurate quotations as to the market value of our common stock. We cannot assure you that our common stock, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation system. If our common stock is delisted, it may come within the definition of “penny stock” as defined in the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act. ThatRule Rule15g-9 imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, Rule 15g-9, if it were to become applicable, would affect the ability or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their securities in the public market. These additional procedures could also limit our ability to raise additional capital in the future.

We have been, are, and may in the future become, party to lawsuits including, without limitation, actions and proceedings in the ordinary course of business relating to our directors, officers, stockholders, intellectual property rights, employment matters and the safety or efficacy of our products, which will cause us to incur legal fees and other costs related thereto, including potential expenses for the reimbursement of legal fees of officers and directors under indemnification obligations. The expense of defending against such litigation may be significant and there can be no assurance that we will be successful in any defense. Further, the amount of time that may be required to resolve such lawsuits is unpredictable, and these actions may divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, results of operations, and cash flows. Our insurance carriers may deny coverage, may be inadequately capitalized to pay on valid claims, or our policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such award could have a material adverse effect on our consolidated operations, cash flows and financial position. Additionally, any such claims, whether or not successful, could damage our reputation and business. Litigation is subject to inherent uncertainties, and an adverse result in such matters that may arise from time to time could have a material adverse effect on our business, results of operations, and financial condition. Please see “Part II.—Item 8. Financial Statements and Supplementary Data—Note 8, Commitments and Contingencies—Litigation” in this Annual Report on Form 10-K for additional information about pending legal proceedings.

The stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices for the common stock of pharmaceutical companies. These broad market fluctuations may cause the market price of our common stock to decline. In addition, the market price of our common stock may vary significantly based on Talphera-specific events, such as receipt of Complete Response Letters, Warnings Letters, such as the Warning Letter we received from the FDA on February 11, 2021, negative clinical results, a negative vote or decision by an FDA advisory committee, or other negative feedback from the FDA, EMA, or other regulatory agencies.events. In the past, securities-related class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies often experience significant stock price volatility in connection with their investigational drug or medical device product candidate development programs and the FDA’s review of their NDAs. Following receipt of the FDA’s Warning Letter, a securities class action complaint was filed against us and two of our officers on June 8, 2021, in the United States District Court for the Northern District of California. The amended securities class action complaint, which was filed on March 7, 2022, named a third officer as a defendant. The Court granted three motions to dismiss plaintiffs’ complaint: the first on September 28, 2022, the second on November 28, 2022, and the third, with prejudice, on May 7, 2024. Judgment was entered for defendants on plaintiffs’ claims on May 7, 2024. On June 5, 2024, plaintiffs filed a notice of appeal in the United States Court of Appeals for the Ninth Circuit. Briefing on the appeal was complete on January 21, 2025. The Court has not yet scheduled a hearing on the appeal.

Under current law, federal net operating losses generated in tax years beginning prior to January 1, 2018 generally will expire 20 years after they were generated if not used prior thereto; federal net operating losses generated in tax years beginning after December 31, 2017, will carryforward indefinitely, but the deductibility of such federal net operating losses generally is limited to 80% of current year taxable income. Many states have similar laws. Our ability to use our federal and state net operating losses to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon our generation of future taxable income before the expiration dates of the net operating losses, and we cannot predict with certainty when, or whether, we will generate sufficient taxable income to use all of our net operating losses. Accordingly, our federal and state net operating losses could expire unused and be unavailable to offset future income tax liabilities. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. TheWe completioncompleted a new issuance of thecommon Julystock 2013totaling publicover equity50% offering,on togetherSeptember with10, our2025. public equity offering in December 2012, our initial public offering, private placements and other transactions that have occurred, haveThis triggered such an ownership change.change, causing our net operating losses and credits to be limited. We may experience additional ownership changes as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. Furthermore, our ability to utilize net operating losses of companies that we have acquired or may acquire in the future may be subject to limitations. In the future, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards or other tax attributes to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us and could adversely affect our business, results of operations, and cash flows.

We are subject to taxation in numerous U.S. federal, state, and local jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various jurisdictions that we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each jurisdiction. Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including changes in the mix of our profitability among the jurisdiction in which we operate, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and enactment of new tax laws.laws Oror changes in the interpretation and application of existing tax laws. New income, sales, use or other tax laws, rules, regulations, or ordinances could be enacted at any time. For example, recent legislation commonly referred to as the InflationOne ReductionBig Beautiful Bill Act imposeschanges ahow onecompanies percentcan excisedepreciate taxproperty, ondeduct shareinterest buybacksexpense, imposed on the corporation repurchasing such stock, effective for tax years beginning after December 31, 2022. Also, the Tax Act eliminated the option to currentlyand deduct research and development expenditurescosts. These changes don’t have a significant impact on our income taxes in the year incurred, and instead requires taxpayers to capitalize and amortize U.S.-based and non-U.S.-based research and development expenditures over five and fifteen years, respectively. Although there has been proposed legislation that would defer the capitalization requirement to later years, we have no assurance that the provision will be repealed, deferred, or otherwise modified.2025. Any of these factors could cause us to experienceowe anmore effectiveor less income tax rate significantly different from previous periods or our current expectations and may result in taxthe obligations in excess of amounts accrued in our financial statements.future.

We are a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings. Our product development portfolio features Niyad (a regional anticoagulant for the dialysis circuit),. LTX-608All (resources are currently focused on developing Niyad. In addition, we may develop LTX-608, a nafamostat formulation for direct IV infusion) that we intend to developinfusion, for one or more of the following indications: disseminated intravascular coagulation, or DIC, acute respiratory distress syndrome, or ARDS, acute pancreatitis, or as an anti-viral treatment,treatment. andWe have two ready-to-use pre-filled syringe product candidates (Fedsyrathat andhave phenylephrine).been explored but are being evaluated for discontinuation.

Inflation and Tariffs

We do not believe that inflation has had a material impact on our business or operating results during the periods presented. However, inflation, led by supply chain constraints, federal stimulus funding, increases to household savings, and the sudden macroeconomic shift in activity levels arising from the loosening or removal of many government restrictions, has had, and may continue to have, an impact on overhead costs and transportation costs andinflation may adversely affect our operating results in the future. In addition, increased inflation has had, and may continue to have, an effect on interest rates. Increased interest rates may adversely affect our borrowing rate and our ability to obtain, or the terms under which we can obtain, any potential additional funding. In addition, in March 2025, the U.S. government has imposed tariffs on biopharmaceutical products imported from China,outside the United States, including specific tariffs on pharmaceutical products, which will likely increase our cost of doing businessbusiness. untilWe we are ablecontinue to sourcemonitor suchthe products outsideeffects of Chinatariffs implemented by the Trump administration and anythe otherpotential jurisdictionimpact subjectof tomodified suchor tariffs.additional tariffs on our business.

Our net loss for 20242025 was $13.0$14.3 million and for 2023 it2024 was $18.4$13.0 million. As of December 31, 2024,2025, we had an accumulated deficit of $457.2$471.5 million. As of December 31, 2024,2025, we had cash, cash equivalents and short-term investments totaling $8.9$20.4 million compared to $9.4$8.9 million as of December 31, 2023.2024.

Critical Accounting Policies and Significant Accounting Estimates

The accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the related disclosures, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which 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 from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. Note 1, “Organization and Summary of Significant Accounting Policies” to theour consolidated financial statements in this Annual Report on Form 10-K describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: (i) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and (ii) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

We believe the following policies to be the most critical to an understanding of our financial condition and results of operations because they require us to make estimates, assumptions and judgments about matters that are inherently uncertain. Management has discussed the development, selection and disclosure of the following significant accounting estimates with the Audit Committee.

On January 12, 2024, we entered into the Purchase Agreement with XOMA to monetize a portion of our future payments for services performed to support sales of DSUVIA to the DoD by Alora under the Marketing Agreement, and sales milestones under the DSUVIA Agreement. Refer to Note 7,6, “Sale of Future Payments” to theour consolidated financial statements in this Annual Report on Form 10-K for further details on the Purchase Agreement and to Note 3, “Discontinued Operations” for further details on the Marketing Agreement.

We will periodically assess the amount and timing of expected payments using a combination of internal projections and historical data. To the extent our future estimates of future payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will adjust the amortization of the Sale of Future Payment Liability and prospectively recognize the related non-cash interest expense. In October 2024, Alora notified us that they arehad discontinuingdiscontinued their DSUVIA sales efforts to non-DoD customers. AtWe thiswere time,also wenotified arein uncertain2025 asthat Alora submitted a letter to the impactFDA to request the withdrawal of thisthe decisionDSUVIA onNDA. While we have continued our efforts to facilitate sales of the remaining DSUVIA inventory held by Alora to the DoD.DoD, we have not obtained any orders from the DoD to purchase the remaining product available. If there are no orders for DSUVIA purchases from the DoD we expect that Alora will destroy the remaining DSUVIA inventory. We attempted to facilitate a longer-term supply arrangement for DSUVIA but were unsuccessful and do not believe there are any prospective parties currently interested in producing DSUVIA for commercial or DoD use. As a result, we estimate that future payments under the Purchase Agreement will be less than the proceeds from the sale of such future payments.

Under the relevant accounting guidance, because of our significant continuing involvement, the XOMA Agreement is accounted for as a liability that is amortized using the effective interest method over the life of the arrangement. In order to determine the amortization of the liability related to the sale of future payments, we are required to estimate the total amount of future payments to XOMA over the life of the Purchase Agreement. As mentioned above, in October 2024, Alora notified us that they arehad discontinuingdiscontinued their DSUVIA sales efforts to non-DoD customers. We were also notified in 2025 that Alora submitted a letter to the FDA to request the withdrawal of the DSUVIA NDA. Accordingly, we estimate that future payments under the Purchase Agreement will be less than the proceeds from the sale of such future payments and we will not recognize any further related non-cash interest expense. When the expected payments under the sale of future payments are lower than the gross proceeds received, we defer recognition of any probable contingent gain until we have met our obligations under the liability related to the sale of future payments.

We apply the two-class method to compute both basic and diluted net income or loss per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders (including pre-funded warrants). Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for the purposes of computing net loss per share because the shares may be issued for little or no consideration and are exercisable after the original issuance date. In addition, we are required to calculate diluted net income or loss per share under the two-class method if the effect is more dilutive than the application of another dilutive method of calculating diluted EPS (i.e., the treasury stock, if-converted, or contingently issuable share method). In periods where there is a net loss, no allocation of undistributed net loss to the participating securities is performed if the holders of these securities are not contractually obligated to participate in our losses. Our participating securities include the November 2021 Financing Warrants, December 2022 Common Stock Warrants, the Series A and Series B common stock warrants, the placement agent Series A and Series B common stock warrants (see Note 9,8, “Stockholders’ Equity” and Note 10,9, “Warrants” to theour consolidated financial statements in this Annual Report on Form 10-K for additional information).

For additional information regarding the net income (loss) per share, see Note 12,11, “Net Loss per Share of Common Stock” to theour consolidated financial statements in this Annual Report on Form 10-K.

Our DSUVIA business met the definition of a discontinued operation as of March 31, 2023. Accordingly, we have classified the results of the DSUVIA business as discontinued operations in our consolidated statements of operations for all periods presented. All assets and liabilities associated with the DSUVIA business were classified as assets and liabilities of discontinued operations in the consolidated balance sheets for the periods presented. All amounts included in the notes to the consolidated financial statements relate to continuing operations unless otherwise noted. For additional information, see Note 3, “Discontinued Operations” to theour consolidated financial statements in this Annual Report on Form 10-K.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, or ASU 2024-03, which is intended to enhance transparency into the nature and function of expenses, primarily through additional disclosures on certain cost and expenses. Additionally, in January 2025, the FASB issued ASU 2024-032025-01 to clarify the effective date of ASU 2024-03. This authoritative guidance is effective for us beginning with our annual reportingdisclosures for 2027 and interim periods beginning afterin December 15, 2026, and interim reporting periods beginning after December 15, 2027.2028. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. We are in the process of evaluating the impact of this new guidance on our disclosures.

Our consolidated results of operations are presented for the years ended December 31, 20242025 and 2023.2024. Certain financial results (revenues and expenses) relating to the divestment of our DSUVIA/DZUVEO business are reflected in discontinued operations. See Note 3, “Discontinued Operations” to theour consolidated financial statements in this Annual Report on Form 10-K for additional information. Unless otherwise noted, the discussion below, and the revenue and expense amounts discussed below, are based on and relate to our continuing operations.

Research and development expenses decreased during 2024 increased2025 as compared to 2023,2024, primarily due to ana increasedecrease in costs associated with Niyad development.

Selling, general and administrative expenses decreased for 20242025 as compared to 2023,2024, primarily due to the divestment of DSUVIA. More specifically, the decrease for 2024 compared to 2023 was attributed to a $1.2$0.4 million reduction in employeeconsulting compensation and related expenses due tofees, a reduction in headcount, a $0.7$0.2 million reduction in legalboard fees,of director expenses as the board agreed to forego their cash compensation through September 30, 2025, a $0.6$0.2 million decrease in stock-basedmarket compensationresearch-related expense, a $0.4 million decrease in audit and consulting services,expenses and a net decreasereduction in other selling, general and administrative expenses of $0.6$0.3 million.

Other (Expense) Income

Total other (expense) income for 20242025 and 20232024 was as follows (in thousands, except percentages):

Interest income and other income, net, for 20242025 and 2023,2024, primarily consisted of interest earned on our investmentsinvestments, andwhich includeddecreased aprimarily $0.7due millionto gainlower average cash balances in 2025, in addition to lower rates of return on thethose satisfaction of the contingency related to the liability for the Lowell holdback shares issued in June 2023.investments.

Gain on sale of future payments for 2024 consisted of $1.2 million in other income related to the XOMA Purchase Agreement (see Note 7,6, “Sale of Future Payments” to theour consolidated financial statements in this Annual Report on Form 10-K for additional information).

Change(Loss) gain on change in fair value of warrant liability for 20242025 included a $1.3 million increase in the fair value of our warrant liability as compared to a $0.7 million decrease in the fair value of our warrant liability as compared to a $5.3 million decrease in the fair value of our warrant liability for 20232024 (see Note 2, “Investments and Fair Value Measurements” to theour consolidated financial statements in this Annual Report on Form 10-K for additional information).

The non-cash interest expense on the liability related to the sale of future payments is attributable to the XOMA Purchase Agreement (see Note 7,6, “Sale of Future Payments” to theour consolidated financial statements in this Annual Report on Form 10-K for additional information).

To date, we have incurred losses and generated negative cash flows from operations and we expect to incur significant losses in 20252026 and may incur significant losses and negative cash flows from operations in the future. Although we raised additional capital in Marchduring 2025 (see Note 17, “Subsequent Event” tothrough the consolidatedsale financialof statementscommon stock, pre-funded warrants and common stock purchase warrants in thisprivate Annual Report on Form 10-K for additional information),placements, considering our current cash resources and current and expected levels of operating expenses for the next twelve months, we expect to need additional capital to fund our planned operations prior to the twelve-month anniversary of the filing date of this Annual Report on Form 10-K. See Note 8, “Stockholders’ Equity” and Note 9, “Warrants” to our consolidated financial statements in this Annual Report on Form 10-K for information regarding private placements of our securities during 2024 and 2025.

In January 2024, we entered into the Purchase Agreement with XOMA in exchange for $8.0 million for the sale of our right, title and interest in and to amounts payable to us pursuant to the DSUVIA Agreement with Alora until the XOMA Threshold is attained, after which time we may share in certain future payments from AloraAlora. (Please see Note 7,6, “Sale of Future Payments” to theour consolidated financial statements in this Annual Report on Form 10-K for additional information).information.

The discussion of our cash flows that follows includes the impact of discontinued operations. For additional information, see Note 3, “Discontinued Operations” to theour consolidated financial statements in this Annual Report on Form 10-K.

The primary use of cash for our continuing operating activities during these periods was to support our product development efforts for our product candidates while the primary use of cash for discontinued operations was to fund commercial activities for DSUVIA.candidates. Our cash used in operating activities also reflectedreflects changes in our working capital, net of adjustments for non-cash charges, such as stock-basedchanges compensation,in depreciationthe andfair amortizationvalue of our fixedwarrant assets, non-cash interest expense related to the sale of future paymentsliability and intereststock-based expense related to our debt financings.compensation.

The unaudited condensed consolidated financial statements for the three and six months ended MarchJune 31,30, 2026, were prepared on the basis of a going concern, which contemplates that we will be able to realize our assets and discharge liabilities in the normal course of business. These financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

The Niyad NEPHRO CRRT registrational trial is ongoing with enrollment completion expected in 2026.

Our net loss for eachthe ofthree and six months ended June 30, 2026, was $4.3 million and $6.9 million, respectively, compared to $3.5 million and $6.1 million for the three-monththree periodsand six months ended MarchJune 31, 2026 and30, 2025, was $2.6 million.respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $474.1$478.4 million compared to $471.5 million at December 31, 2025. As of MarchJune 31,30, 2026, we had cash and cash equivalents and short-term investments totaling $21.1$17.1 million compared to $20.4 million as of December 31, 2025.

There have been no significant changes to our critical accounting policies or significant judgements and estimates for the three and six months ended MarchJune 31,30, 2026, from those previously disclosed in the Annual Report.

Our unaudited condensed consolidated results of operations are presented for the three and six months ended MarchJune 31,30, 2026 and 2025.

Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Below is a summary of our research and development expenses for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands, except percentages):

Research and development expenses increased for the three and six months ended MarchJune 31,30, 2026, as compared to 2025, primarily due to higher Niyad development expenses, reflecting increased enrollment.

Total selling, general and administrative expenses for the three and six months ended MarchJune 31,30, 2026 and 2025, were as follows (in thousands, except percentages):

Selling, general and administrative expenses increased for the three months ended MarchJune 31,30, 2026, as compared to 2025, primarily due to a $0.3 million increase in compensation and related expenses largely due to an increase in estimated bonuses, a $0.1 million increase in consulting fees primarily related to Niyad market research, and a $0.1 million increase in board of director expenses as the board agreed to forego their cash compensation October 1, 2024 through September 30, 2025.2025, and a net increase in other selling, general and administrative expenses of $0.1 million, partially offset by a $0.5 million decrease in legal fees.

Other Income(Expense) Income, Net

Total other income(expense) income, net for the three and six months ended MarchJune 31,30, 2026 and 2025, was as follows (in thousands, except percentages):

Interest income and other income, net, for the three and six months ended MarchJune 31,30, 2026 and 2025, primarily consisted of interest earned on our investments.investments, which increased primarily due to higher average investment balances in 2026.

Gain(Loss) gain on change in fair value of warrant liability for the three and six months ended MarchJune 31,30, 2026 includedwas due to a $1.2$0.6 million increase and $0.7 million decrease in the fair value of our warrant liability, respectively, as compared to adecreases $0.2of $0.1 million decreaseand $0.3 million in the fair value of our warrant liability, for the firstthree quarterand ofsix months ended June 30, 2025, respectively, primarily due to a declinechanges in our stock price in bothall periods.

As of MarchJune 31,30, 2026, we had cash, cash equivalents and investments totaling $21.1$17.1 million, compared to $20.4 million as of December 31, 2025. Our cash and investment balances are held in a variety of interest-bearing instruments. Cash in excess of immediate requirements is invested with a view toward capital preservation and liquidity.

To date, we have incurred losses and generated negative cash flows from operations and we expect to incur significant losses in 2026 and may incur significant losses and negative cash flows from operations in the future. Although we raised additional capital during the threesix months ended MarchJune 31,30, 2026 through the sale of common stock and pre-funded warrants in the third closing of our April 2025 private placement (see Note 6, “Stockholders’ Equity” and Note 7, “Warrants” to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional information), considering our current cash resources and current and expected levels of operating expenses for the next twelve months, we expect to need additional capital to fund our planned operations prior to the twelve-month anniversary of the filing date of this Quarterly Report on Form 10-Q.

Cash used in operating activities of $3.5$7.3 million during the threesix months ended MarchJune 31,30, 2025,2026, reflected a net loss of $2.6$6.9 million, and included an approximate $0.9 million net change in our operating assets and liabilities.million. Significant non-cash adjustments included $0.2$0.5 million in stock-based compensation expense,expense and a $0.2$0.7 million decrease in the fair value of our warrant liability. The net change in our operating assets and liabilities was primarily due to a $0.2$0.4 million increase in prepaid expenses and other current assets, a $0.3$0.2 million decrease in accounts payable and a $0.3$0.5 million decreaseincrease in accrued liabilities.

Our investing activities have consisted primarily of our capital expenditures and purchases and sales and maturities of our available-for-sale investments.

During the threesix months ended MarchJune 31,30, 2026, cash used in investing activities of $2.7$1.6 million was primarily the net result of $17.2 million in purchases of investments and $14.5$15.6 million in proceeds from maturitysales and maturities of investments.

Cash flows from financing activities primarily reflect proceeds from the sale of our securities and payments made on debt financings, including the sale of future payments.securities.

During the threesix months ended MarchJune 31,30, 2026, cash provided by financing activities of $4.0$3.8 million was primarily due to cash received from the third closing of the April 2025 private placement.