Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, or Form 10-Q, and with the audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2025, or the Annual Report.

About Talphera, Inc.

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). All resources are currently focused on developing Niyad. In addition, we may develop LTX-608, a nafamostat formulation for direct IV infusion, 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. We have two pre-filled syringe product candidates that have been explored but are being evaluated for discontinuation.

Our strategy is focused on developing, obtaining approval, and commercializing Niyad. We intend to expand our portfolio to include additional acute care therapies for use in medically supervised settings.

To date, we have enrolled more than 75% of the planned 70 patients in the NEPHRO CRRT registrational trial. To support our goal of completing the study this year, we have submitted a briefing document to the FDA for a Sprint Discussion requesting an early close of enrollment based on the number of patients enrolled in the study as of December 31, 2026, even if fewer than the targeted 70 patients are enrolled. While the study remains blinded and open for enrollment, we believe the current enrollment is sufficient to support a premarket approval filing as it has over 80% statistical power for the primary endpoint.

General Trends and Outlook

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 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, the U.S. government has imposed tariffs on products imported from outside the United States, including specific tariffs on pharmaceutical products, which will likely increase our cost of doing business. We continue to monitor the effects of tariffs implemented by the Trump administration and the potential impact of modified or additional tariffs on our business.

Financial Overview

We have incurred net losses and generated negative cash flows from operations and expect to continue to incur losses in the future as we continue to fund any future research and development activities needed to support the FDA regulatory review of our product candidates.

Our net loss for the three and nine months ended September 30, 2026, was $4.0 million and $10.9 million, respectively, compared to $4.4 million and $10.5 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, we had an accumulated deficit of $482.4 million compared to $471.5 million at December 31, 2025. As of September 30, 2026, we had cash and cash equivalents and short-term investments totaling $14.2 million compared to $20.4 million as of December 31, 2025.

Critical Accounting Policies and Significant Accounting Estimates

The accompanying discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed 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. Our critical accounting policies and estimates are detailed in the Annual Report.

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

Recently Issued Accounting Pronouncements

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 2025-01 to clarify the effective date of ASU 2024-03. This authoritative guidance is effective for us beginning with our annual disclosures for 2027 and interim periods beginning in 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.

We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our unaudited condensed consolidated financial statements.

Results of Operations

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

Results of operations for any period may be unrelated to results of operations for any other period. In addition, historical results should not be viewed as indicative of future operating results.

Three and Nine Months Ended September 30, 2026 and 2025

Research and development expenses included the following:

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expenses incurred under agreements with contract research organizations and clinical trial sites;

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employee-related expenses, which include salaries, benefits and stock-based compensation;

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payments to third-party pharmaceutical and engineering development contractors;

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payments to third-party manufacturers;

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other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, and equipment and laboratory and other supply costs; and

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costs for equipment and laboratory and other supplies.

We expect to incur future research and development expenditures to support the FDA regulatory review of our product candidates and anticipated activities required for the development of our nafamostat product candidates.

We track external development expenses on a program-by-program basis. Our development resources are shared among all our programs. Compensation and benefits, facilities, depreciation, stock-based compensation, and development support services are not allocated specifically to projects and are considered research and development overhead.

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

		Three Months Ended September 30,																Nine Months Ended September 30,
		2026				2025				$ Change 2026 vs. 2025				% Change 2026 vs. 2025				2026				2025				$ Change 2026 vs. 2025				% Change 2026 vs. 2025
		(In thousands, except percentages)
Research and development expenses		$	2,189			$	1,803			$	386				21	%		$	5,529			$	4,472			$	1,057				24	%

Research and development expenses increased for the three and nine months ended September 30, 2026, as compared to 2025, primarily due to increased Niyad development project activities, and higher clinical trial expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits and stock-based compensation for personnel engaged in commercialization, administration, finance and business development activities. Other significant expenses included allocated facility costs and professional fees for general legal, audit and consulting services.

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

		Three Months Ended September 30,																Nine Months Ended September 30,
		2026				2025				$ Change 2026 vs. 2025				% Change 2026 vs. 2025				2026				2025				$ Change 2026 vs. 2025				% Change 2026 vs. 2025
		(In thousands, except percentages)
Selling, general and administrative expenses		$	1,947			$	1,620			$	327				20	%		$	6,479			$	5,587			$	892				16	%

Selling, general and administrative expenses increased for the three months ended September 30, 2026, as compared to 2025, primarily due to a $0.2 million increase in expenses 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.

Selling, general and administrative expenses increased for the nine months ended September 30, 2026, as compared to 2025, primarily due to an approximate $0.7 million increase in expenses related to Niyad market research, a $0.3 million increase in compensation and related expenses largely due to an increase in non-cash stock based compensation, and a $0.3 million increase in board of director expenses as the board agreed to forego their cash compensation October 1, 2024 through September 30, 2025, partially offset by a $0.4 million decrease in legal fees.

Other Income (Expense), Net

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

		Three Months Ended September 30,																Nine Months Ended September 30,
		2026				2025				$ Change 2026 vs. 2025				% Change 2026 vs. 2025				2026				2025				$ Change 2026 vs. 2025				% Change 2026 vs. 2025
		(In thousands, except percentages)
Interest income and other income, net		$	138			$	81			$	57				70	%		$	479			$	233			$	246				106	%
(Loss) gain on change in fair value of warrant liability			(20	)			(1,095	)			1,075				(98	)%			643				(793	)			1,436				(181	)%
Total other income (expense), net		$	118			$	(1,014	)		$	1,132				(112	)%		$	1,122			$	(560	)		$	1,682				(300	)%

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

(Loss) gain on change in fair value of warrant liability for the three and nine months ended September 30, 2026 was due to a de minimis increase, and a $0.6 million decrease in the fair value of our warrant liability, respectively, as compared to increases of $1.1 million and $0.8 million in the fair value of our warrant liability, for the three and nine months ended September 30, 2025, respectively, primarily due to changes in our stock price in all periods.

Liquidity and Capital Resources

Liquidity and Going Concern

As of September 30, 2026, we had cash, cash equivalents and investments totaling $14.2 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 nine months ended September 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.

We may seek to raise such additional capital through public or private equity offerings, the issuance of debt securities, a new debt facility, or entering into product development, license or distribution agreements with third parties. Our existing capital resources will not be sufficient to fund our operations until such time as we may be able to generate sufficient revenues to sustain our operations.

While we believe our plans to raise additional funds will alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, these plans are not entirely within our control and cannot be assessed as being probable of occurring. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to further reduce our workforce, delay, reduce the scope of, or cease, the development of our product candidates in advance of the date on which our cash resources are exhausted to ensure that we have sufficient capital to meet our obligations and continue on a path designed to preserve stockholder value. In addition, if we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish rights to our technologies, future revenue streams or product candidates, or to grant licenses on terms that may not be favorable to us.

Nasdaq Compliance

In March 2026, the Listing Qualifications Staff, or the Staff, of the Nasdaq Stock Market, or Nasdaq, notified us that the bid price for our common stock had closed below $1.00 per share for 30 consecutive trading days and, as a result, we no longer satisfied Nasdaq's minimum bid price requirement. On July 9, 2026, the Staff notified us that we had regained compliance with the minimum price requirement, as the closing bid price of our common stock had been at least $1.00 per share for a minimum of 10 consecutive trading days ending July 7, 2026, and that the matter relating to our previous failure to meet such requirement had been closed.

Cash Flows

		Nine Months Ended September 30,
		2026				2025
Net cash used in operating activities		$	(10,358	)		$	(8,928	)
Net cash provided by (used in) investing activities			11,310				(17,815	)
Net cash provided by financing activities			3,814				21,337

The discussion of our cash flows that follows includes the impact of discontinued operations. For additional information, see Note 3, "Discontinued Operations" to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Cash Flows from Operating Activities

The primary use of cash for our operating activities during these periods was to support our product development efforts for our product candidates. Our cash used in operating activities also reflects changes in our working capital, net of adjustments for non-cash charges, such as changes in the fair value of our warrant liability and stock-based compensation.

Cash used in operating activities of $10.4 million during the nine months ended September 30, 2026, reflected a net loss of $10.9 million. Significant non-cash adjustments included $0.7 million in stock-based compensation expense and a $0.6 million decrease in the fair value of our warrant liability. The net change in our operating assets and liabilities was primarily due to a $0.7 million increase in accrued liabilities.

Cash used in operating activities of $8.9 million during the nine months ended September 30, 2025, reflected a net loss of $10.5 million, and included an approximate $0.3 million net change in our operating assets and liabilities. Significant non-cash adjustments included $0.5 million in stock-based compensation expense, and a $0.8 million increase in the fair value of our warrant liability. The net change in our operating assets and liabilities was primarily due to a $0.1 million increase in prepaid expenses and other current assets, a $0.3 million decrease in accounts payable and a $0.7 million increase in accrued liabilities.

Cash Flows from Investing Activities

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

During the nine months ended September 30, 2026, cash provided by investing activities of $11.3 million was primarily the net result of $33.1 million in proceeds from sales and maturities of investments and $21.8 million in purchases of investments.

During the nine months ended September 30, 2025, cash used in investing activities of $17.8 million was due to the purchase of investments.

Cash Flows from Financing Activities

Cash flows from financing activities primarily reflect proceeds from the sale of our securities.

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

During the nine months ended September 30, 2025, cash provided by financing activities of $21.3 million was primarily due to net proceeds from the April 2025 and September 2025 Private Placements.

Capital Commitments and Capital Resources

Our current operating plan includes expenditures related to the development of our product candidates. Our operating plan includes anticipated activities required for the development and supply of our nafamostat product candidates. These assumptions may change as a result of many factors. We will continue to evaluate the work necessary to gain approval of our product candidates in the United States and intend to update our cash forecasts accordingly. 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 for at least the next twelve months.

Our future capital requirements may vary materially from our expectations based on numerous factors, including, but not limited to, the following:

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the ability to timely and successfully complete our clinical trial for the Niyad product candidate;

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the outcome, timing and cost of the development of our other nafamostat product candidates;

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expenditures related to drafting and submission of new drug or device regulatory applications with the FDA for our developmental product candidates and payment of statutory filing fees and related application prosecution costs arising from such submissions;

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costs associated with business development activities and licensing transactions;

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the outcome and timing of the regulatory submissions for our product candidates and any approvals for our product candidates;

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expenditures related to the potential commercialization of our product candidates, if approved;

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the initiation, progress, timing and completion of any post-approval clinical trials for our product candidates, if approved;

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changes in the focus and direction of our business strategy and/or research and development programs;

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delays that may be caused by changing regulatory requirements;

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the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;

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the timing and terms of future in-licensing and out-licensing transactions;

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the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;

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the potential impact of trade laws and regulations of the United States associated with the use of our contract development and manufacturing organization, or CDMO, for nafamostat-based finished goods located in China;

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the cost of procuring clinical supplies of our product candidates, and commercial supplies, if approved;

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the cost of establishing new supply chains and related third-party logistics to support our developmental product candidates;

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the extent to which we acquire or invest in businesses, products and product candidates or technologies; and

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the expenses associated with litigation.

In the long term, our existing capital resources will not be sufficient to fund our operations until such time as we may be able to generate sufficient revenues to sustain our operations. We will have to raise additional funds through the sale of our equity securities, monetization of current and future assets, issuance of debt or debt-like securities or from development and licensing arrangements to sustain our operations and continue our development programs.

Please see "Part II., Item 1A. Risk Factors-Risks Related to Our Financial Condition and Need for Additional Capital."