Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included elsewhere in this Annual Report on Form 10-K. All dollar amounts in the below Management's Discussion and Analysis of Financial Condition and Results of Operations are presented in U.S. dollars, and all dollar and share amounts are presented in thousands, unless otherwise noted or the context otherwise provides.

Overview

BioXcel Therapeutics, Inc. (Nasdaq: BTAI, "the Company") is a biopharmaceutical company built on artificial intelligence ("AI") to develop transformative medicines in neuroscience. Our wholly owned subsidiary, OnkosXcel Therapeutics, is focused on the development of medicines in immuno-oncology. We have utilized cutting-edge technology and innovative research to develop high-value therapeutics aimed at transforming patients' lives. We developed a proprietary AI platform to reduce therapeutic development costs and potentially accelerate development timelines. Our approach leverages existing approved drugs and/or clinically evaluated product candidates together with big data and proprietary machine learning algorithms to identify new therapeutic indications. We believe this differentiated approach has proven its potential to reduce the expense and time associated with drug development in diseases with substantial unmet medical needs.

​

Our most advanced neuroscience candidate is BXCL501. In indications other than those approved by the U.S. Food and Drug Administration (FDA) as IGALMI^®, BXCL501 is an investigational, proprietary, orally dissolving sublingual film formulation of dexmedetomidine in development for the treatment of agitation associated with psychiatric and neurological disorders. Our most advanced immuno-oncology asset, BXCL701, is an investigational oral innate immune activator from OnkosXcel Therapeutics as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors.

​

On April 6, 2022, we announced that the FDA approved IGALMI^® (dexmedetomidine) sublingual film for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder in adults. IGALMI^® is approved to be self-administrated by patients under the supervision of a health care provider. On July 6, 2022, we announced that IGALMI^® was commercially available in doses of 120 and 180 micrograms ("mcg").

​

On August 27, 2025 we announced that the SERENITY At-Home Pivotal Phase 3 trial evaluating the safety of BXCL501, as an acute treatment for agitation associated with bipolar disorders or schizophrenia in the at-home setting, met its primary objective. The data from this successful study will form the basis of the sNDA submission for a label expansion of IGALMI^® into the at-home setting. The sNDA was filed with the FDA on January 14, 2026.

​

On September 10, 2025 we further announced positive topline exploratory efficacy data from the SERENITY At-Home Pivotal Phase 3 safety trial, which demonstrated BXCL501 had continued effects and consistent benefit with repeat dosing.

​

On October 10, 2025 we announced positive results from the correlation study related to exploratory efficacy outcomes from the SERENITY At-Home trial. The results demonstrated a strong correlation between the clinician assessments and the patient or caregiver (informant) assessments. The results, along with the data from the SERENITY At-Home trial, have been included in the sNDA filed with the FDA on January 14, 2026.

​

Our TRANQUILITY program is designed to evaluate BXCL501 as a potential treatment option for agitation associated with Alzheimer's dementia in the outpatient or at-home setting and in-care facilities. We have had several FDA meetings to discuss the development program, and the FDA has commented on the proposed protocol for our TRANQUILITY In-Care Phase 3 trial, which is designed to evaluate the efficacy and safety of a 60 mcg dose of BXCL501 for agitation associated with Alzheimer's dementia. The Company is advancing plans for initiation of the trial upon funding.

​

We have deprioritized the development of BXCL501 for certain other proposed indications.

​

Our most advanced immuno-oncology candidate, BXCL701, is an investigational oral innate immune activator from OnkosXcel Therapeutics as a potential therapy for the treatment of aggressive forms of prostate cancer, pancreatic cancer, and other solid and liquid tumors. Development of our BXCK701 programs continues to be deprioritized.

​

IGALMI^® Commercialization Strategy

​

We continue to support IGALMI^® in the hospital setting with minimal commercial support. On August 14, 2023, the Company announced it had implemented a shift in commercial strategy for IGALMI^® in the institutional setting, a reduction of in-hospital commercialization expenses, a suspension of programs no longer deemed core to the Company's business, and a shift to focus on the development of BXCL501 for use in the at-home and care facilities in the treatment of acute agitation in schizophrenia and bipolar disorders, and in the treatment of acute agitation (non-daily) associated with dementia due to probable Alzheimer's disease (collectively, the " Clinical Reprioritization").
​

Following the Clinical Reprioritization, a small Corporate Account Director ("CAD") team supported current customers and targeted Integrated Delivery Networks ("IDNs") with educational support and contracting opportunities, while our trade operation supported customers with drug supply. The goal of this approach was to help maintain current business and potentially broaden IGALMI^® utilization through volume contracting.

​

As part of the Clinical Reprioritization in September 2024, further workforce reductions were made, including 9 additional marketing and sales employees. The Clinical Reprioritization staff reductions may have had impacts on net revenue. IGALMI^® product sales decreased to $642 for the year ended December 31, 2025 from $2,266 for the year ended December 31, 2024.

​

We are currently seeking potential commercial partners. Our continued commercialization efforts for IGALMI^® are designed to build the foundation to launch additional potential follow-on indications, if any. If IGALMI^® would be approved outside the U.S., we would consider launching the product through collaborations with third parties.

Recent Developments

IGALMI® sNDA Submission for At-Home Use and Milestone

On January 20, 2026, we announced we submitted a supplemental New Drug Application, or sNDA, to the FDA for IGALMI® in the at-home use setting for the acute treatment of agitation associated with bipolar disorders or schizophrenia. This sNDA submission seeks to expand IGALMI's label to include the broader at home patient population where there are no FDA-approved options currently available.

​

March 2026 Offering and Warrant Amendment

​

On March 10, 2026, we entered into a securities purchase agreement (the "March 2026 Offering") with the purchaser named therein (the "Purchaser"). Pursuant to the March 2026 Offering, we agreed to issue and sell to the Purchaser and the Purchaser agreed to buy in a registered direct offering (i) an aggregate of 2,480 shares (the "Shares") of common stock, par value $0.001 per share ("Common Stock") and accompanying warrants to purchase up to 2,480 shares of Common Stock at a combined offering price of $1.739 per Share and accompanying warrant, and (ii) Pre-Funded warrants to purchase up to 2,020 shares of Common Stock and accompanying warrants to purchase up to 2,020 shares of Common Stock, at a combined offering price of $1.738 per share underlying the Pre-Funded Warrants and accompanying warrant, which equals the offering price per Share and accompanying warrant less the $0.001 exercise price per share of the Pre-Funded Warrants, pursuant to our effective registration statement on Form S-3 (File No. 333-275261), including the base prospectus included therein, and a prospectus supplement filed with the Securities and Exchange Commission on March 10, 2026. The accompanying warrants have an exercise price of $1.614 per share, are immediately exercisable upon issuance, and will expire on the five-year anniversary of the date of issuance.

The March 2026 Offering closed on March 11, 2026. We received aggregate gross proceeds of approximately $7,825, before deducting placement agent fees and estimated offering expenses payable by us.

Rodman & Renshaw LLC (the "Placement Agent") acted as our exclusive placement agent in connection with the March 2026 Offering. As compensation in connection with the March 2026 Offering, we agreed to pay the Placement Agent a cash fee equal to 6.0% of the gross proceeds from the March 2026 Offering, and issue to the Placement Agent or its designees warrants to purchase a number of shares of Common Stock equal to 4.0% of the aggregate number of shares placed in the Registered Direct Offering (180,031 shares), at an exercise price equal to 125% of the offering price per share (or $2.0175 per share), with a term of five years from the commencement of the Registered Direct Offering (the "Placement Agent Warrants"). We also agreed to reimburse the Placement Agent for certain expenses in an amount of up to $75 and to pay up to $16 for clearing and closing expenses.

In connection with the March 2026 Offering, pursuant to the terms of a Warrant Amendment Agreement, dated as of March 10, 2026 (the "Warrant Amendment Agreement"), the exercise price of certain outstanding warrants issued on March 27, 2024 and November 25, 2024 to purchase up to an aggregate of 1,385 shares of Common Stock held by the Purchaser was reduced to $1.614 per share, equal to the exercise price of the Accompanying Warrants issued in the March 2026 Offering, and the term of such warrants was extended to five years following the closing date of the March 2026 Offering. The investor paid approximately $173 in exchange for the reduction in exercise price and the extension of the term of these warrants. We paid the Placement Agent a cash fee of 6.0% of the gross proceeds paid for the warrant amendment.

​

Our Neuroscience Clinical Programs

​

The following is a summary of the status of our major clinical development programs as of the date of this Annual Report on Form 10-K:

For additional information regarding our pipeline candidates, see Part I, Item 1, "Business" in this Annual Report on Form 10-K.

Basis of Presentation

The Company's consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").

Components of Our Results of Operations

Product Revenue, Net

Revenue relates to sales of IGALMI^® and reflects limited market access since commercial launch in July 2022. The revenues are net of rebates, chargebacks, discounts, and other adjustments. During the fourth quarter of 2022, we began contracting directly with intermediaries such as GPOs.

Operating Costs and Expenses

Cost of Goods Sold

Cost of goods sold primarily relates to the costs of producing, packaging, and delivering our product to customers as well as costs related to excess or obsolete inventory.

Research and Development

Our research and development expenses reflect costs associated with the identification of our preclinical and clinical product candidates. Expenditures primarily consist of salary, benefits and non-cash stock-based compensation for our research and development personnel, costs incurred under agreements with contract research organizations and sites that conduct our non-clinical studies and clinical trials, costs of outside consultants engaged in research and development activities, travel expenses, the cost of acquiring, developing and manufacturing preclinical and clinical trial materials and lab supplies, and depreciation and other expenses. Payments to BioXcel LLC are also included in research and development expenses. Costs associated with third parties that provide non-clinical services such as toxicology, pharmacology, research and discovery, biomarker studies and similar services are included in the professional fees category of research and development expenses.

We expense research and development costs as incurred.

Our research and development costs by program for the years ended December 31, 2025 and 2024 were as follows:

​

Selling, General and Administrative

Selling, general and administrative expenses primarily consist of salaries, benefits and non-cash stock-based compensation for our sales, executive and administrative personnel. Selling, general and administrative expenses also include legal expenses to pursue patent protection of our intellectual property and other corporate matters, professional fees for audit and tax services and insurance charges. We may also incur increased costs to comply with corporate governance, internal controls, investor relations and disclosures and similar requirements applicable to public companies.

As a result of our restructuring activities completed during 2024, we expect that our selling, general and administrative expenses will decline due to IGALMI^®'s restructured commercialization plan and reduced personnel costs. However, we may also experience increased selling, general and administrative expenses due to higher fees for outside consultants, attorneys, and accountants.

Restructuring Costs

2023 Clinical Reprioritization

​

On August 8, 2023, our Board of Directors approved a broad-based strategic reprioritization (the "Clinical Reprioritization"). We determined to take actions to reduce certain operational and workforce expenses no longer deemed core to ongoing operations to extend its cash runway and drive innovation and growth in high-potential clinical development and value-creating opportunities. These actions included a shift in commercial strategy for IGALMI^® in the institutional setting as described, a reduction of in-hospital commercialization expenses, a de-prioritization of programs no longer determined to be core to ongoing operations, and a prioritization on at-home treatment setting opportunities for BXCL501, all as described in Part I, Item 1, "Business".

​

As part of this strategy, the Company's Board of Directors approved a reduction of approximately 60% of the Company's workforce. The Company notified impacted employees on August 14, 2023. The Clinical Reprioritization was substantially complete as of December 31, 2023, and the remaining restructuring costs were paid during the first quarter of 2024.

2024 Clinical Reprioritization

​

On May 8, 2024, the Company took actions as part of its continued efforts to preserve cash and prioritize investment in its core clinical programs. The Company reduced its workforce by approximately 15% and notified impacted employees on May 8, 2024. All related restructuring costs were paid in the second quarter of 2024.

​

On September 17, 2024, the Company reduced its workforce by an additional 28% to extend its cash runway and prioritize clinical development of BXCL501. The Company completed the Clinical Reprioritization in October 2024, paid $475 of the related costs during the first quarter of 2025, and paid the remaining $128 during the second quarter of 2025.

​

Management believes that, after giving effect to theClinical Reprioritization and additional restructuring activities completed, the Company's cash, cash equivalents and restricted cash of $28,757 as of December 31, 2025 and proceeds subsequently raised pursuant to the ATM Program and pursuant to its Registered Direct Offering in March 2026, will allow the Company to fund its operations and meet its liquidity requirements into the second quarter of 2026.

​

Other (Income) Expense

Other (income) expense primarily consists of interest costs associated with the Credit Agreement the Company entered into in April 2022, changes in fair value of derivative financial instruments, and interest income earned on cash and cash equivalents that were comprised primarily of money market funds. Interest expense may increase in the future if we meet required milestones, and we are able to draw down additional funds under the Credit Agreement.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements is set forth in Note 3, Summary of Significant Accounting Policies to the consolidated financial statements included in this Annual Report on Form 10-K.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

Product Revenue, Net

Commercial sales of IGALMI^® launched in July 2022. As part of the Company's Reprioritization, the IGALMI^® commercial team shifted focus to a hospital/contracting strategy with a Corporate Account Director ("CAD") team. The goal of the realigned CAD team is to work with large hospital/Integrated Delivery Network ("IDN") and drive sales utilizing a top-down approach, allowing the Company to continue to make inroads into the institutional market in a more cost-efficient manner. IGALMI^® product revenue, net for the years ended December 31, 2025 and 2024 was $642 and $2,266, respectively. The decrease in sales was primarily due to a reduction in bulk sales to existing customers, an increase in GPO discounts, and a reduction in commercial activities due to the Clinical Reprioritization in May 2024 and September 2024.

Cost of Goods Sold

Cost of goods sold for the years ended December 31, 2025 and 2024 were $164 and $2,143, respectively, which primarily related to the costs to produce, package and deliver IGALMI^® to customers, as well as costs related to excess or obsolete inventory. We entered into a commercial supply agreement with ARx, LLC ("ARx") pursuant to which ARx has agreed to exclusively manufacture and supply us with all of our worldwide demand of film formulation of Dex to be used for the commercial supply of IGALMI^® and for ongoing clinical trials of our product candidate BXCL501, subject to certain alternative supply provisions. The decrease in Cost of goods sold for the year ended December 31, 2025 is primarily the result of lower charges for reserves for excess or obsolete inventory compared to the same period in 2024. Charges for reserves for excess or obsolete inventory were $108 and $1,980 for the year ended December 31, 2025 and 2024, respectively.

Research and Development Expense

Research and development expenses for the years ended December 31, 2025 and 2024 were as follows:

​

​

The decrease of $184 for the year ended December 31, 2025, compared to the year ended December 31, 2024 is primarily attributable to the following:

Following IGALMI^®'s approval by the FDA, we capitalize costs related to commercial production of IGALMI^® as inventory and expense those CMC costs related to clinical trials.

​

​

Selling, General and Administrative Expense

Selling, general and administrative expenses for the years ended December 31, 2025 and 2024 were as follows:

​

The decrease of $13,998 for the year ended December 31, 2025, relative to the year ended December 31, 2024 is primarily attributable to:

Restructuring Costs

Restructuring costs were $194 and $2,441 for the years ended December 31, 2025 and 2024, respectively. See "Components of Our Results of Operations - Restructuring Costs" above for a discussion of the Company's Clinical Reprioritization and restructuring activities.

Other (Income) Expense

Interest expense increased to $16,984 for the year ended December 31, 2025 compared to $15,129 for the year ended December 31, 2024, primarily due to higher debt balances and interest rates under the Credit Agreement. The expense was partially offset by interest income earned on cash and cash equivalents that were held primarily in short-term money market funds. Interest income decreased to $1,066 for the year ended December 31, 2025 compared to $2,602 for the year ended December 31, 2024, due to lower average cash balances during the year. Other (income) expense, net is primarily associated with changes in fair value of derivative financial instruments for the period, which relate to instruments associated with the Credit Agreement and the Company's registered direct equity offerings.

Inflation

Inflation generally affects us by increasing our labor costs and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented. For a discussion of inflationary risks to our future revenues under the Inflation Reduction Act, see "Health care reform measures could hinder or prevent our product candidates' commercial success." in Part I, Item 1A., "Risk Factors" elsewhere in this Annual Report on Form 10-K.

Reverse Stock Split

On February 10, 2025, the Company effected a 1-for-16 reverse stock split of its issued and outstanding common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, each 16 shares of common stock issued and outstanding immediately prior to February 10, 2025 were automatically converted into 1 share of common stock. The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. All outstanding convertible notes, stock options and RSUs entitling their holders to purchase or obtain or convert into shares of our common stock were adjusted, as required by the terms of these securities. All applicable common share and per share amounts have been retrospectively restated to show the effect of the reverse stock split.

Liquidity and Capital Resources

As of December 31, 2025, we had cash, cash equivalents and restricted cash of $28,757, negative working capital of $9,241 and stockholders' deficit of $95,463. Net cash used in operating activities was $57,615 and $72,027 for the years ended December 31, 2025 and 2024, respectively. We incurred losses of approximately $69,897 and $59,599 for the years ended December 31, 2025 and 2024, respectively. We will need to generate significant product revenues to achieve profitability. Our history of significant losses, negative cash flows from operations, potential near-term increased covenant-driven amortization payments or full repayment obligations under our Credit Agreement, the regulatory event of default triggers under the Credit Agreement, other funding requirement covenants under the Credit Agreement, limited liquidity resources currently on hand, and dependence on our ability to obtain additional financing to fund our operations after the current resources are exhausted, about which there can be no certainty, have resulted in management's assessment that there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months from the issuance date of the financial statements included in this Annual Report on Form 10-K.

Successful completion of the Company's development programs and, ultimately, the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to support the Company's cost structure and operating plan. Management's plans to improve the Company's liquidity and reduce its operating expenses and capital requirements include, among other things, pursuing one or more of the following steps to raise additional capital, none of which can be guaranteed or are entirely within the Company's control:

●raise funding through the sale of the Company's equity securities;

●raise funding through third-party investments in or other strategic options for OnkosXcel;

●raise funding through debt financing and/or restructuring of its existing Credit Agreement;

●establish collaborations with potential partners to advance the Company's product pipeline;

●establish collaborations with potential marketing partners;

●reduce overhead and headcount to focus on core priorities, and/or

●any combination of the foregoing.

To date, we have continued research and development activities while managing our cash position. However, we require additional funding to continue as a going concern. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly when there is market uncertainty or an economic downturn or if other events make investment in our securities less appealing. If we are unable to secure adequate additional funding as and when needed on acceptable or commercially reasonable terms, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates. In addition, there are various macro-economic trends affecting the financing markets whose impact on our liquidity and future funding requirements are uncertain as of the filing date of this Annual Report on Form 10-K. We will need substantial additional funding, and if we are unable to raise capital when needed, we could be compelled to pursue alternative options, including, without limitation, implementing further workforce reductions, reducing or ceasing product development programs and advancement of our clinical trials and product candidates, selling our assets or seeking other strategic alternatives. See "Risks Related to Financial Position and

Need for Additional Capital - We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts or otherwise seek strategic alternatives." in Part I. Item 1A., "Risk Factors" elsewhere in this Annual Report on Form 10-K.

Sources of Liquidity

We have primarily focused our efforts on raising capital and building the products in our pipeline, and, although we generate revenue from sales of IGALMI^®, we do not expect to generate positive cash flows from operations in the near term. Since our inception, our operations have been financed primarily from proceeds from the sale of equity securities, including our initial public offering, private placements of our common stock, registered offerings of our common stock, an Equity Distribution Agreement with Canaccord Genuity LLC ("Canaccord"), and borrowings under our Credit Agreement (as described below). We have not yet established an ongoing source of revenue sufficient to cover our operating costs and will need to do so in future periods.

Financing Agreements

On April 19, 2022, we entered into two financing agreements: the Credit Agreement and the RIFA. Pursuant to the Credit Agreement, the Lenders originally agreed to provide up to $135,000 in senior secured term loans to us. On April 28, 2022, we borrowed the first $70,000 tranche of loans under the Credit Agreement. Pursuant to the RIFA, the Purchasers agreed to provide us with up to $120,000 in financing for our near-term commercial activities of IGALMI^®, development and commercialization of BXCL501 and other general corporate purposes. On July 8, 2022, we drew down the first tranche of $30,000 under the RIFA. In connection with the Credit Agreement, we granted to the Lenders (i) warrants to purchase up to 17 shares of our common stock (the "Closing Date Warrants"), (ii) rights to purchase up to $5,000 of our common stock and (iii) warrants to purchase up to 175 individual ownership units (i.e., not in thousands) in OnkosXcel (the "OnkosXcel Warrants").

On November 13, 2023, we, the Lenders and OFA entered into a Waiver and First Amendment to Credit Agreement and Guaranty (the "First Amendment") that provided for, among other things, a waiver and a modification to the covenant in the Credit Agreement regarding investments in OnkosXcel, pursuant to which we were permitted to invest up to a maximum of $30,000 at any time outstanding in OnkosXcel, increased from the $25,000 at any time outstanding. The First Amendment waived any defaults or events of default arising under the Credit Agreement due to a breach prior to the date of the First Amendment of the OnkosXcel investment covenant, or a breach of our obligation to notify OFA of such default, including our investment in an amount in excess of what was previously permitted under the OnkosXcel investment covenant. In connection with the First Amendment, we paid to the Lenders a fee of $180 (representing 0.25% of the loans outstanding under the Credit Agreement on the date of the First Amendment) and agreed to pay to the Lenders an exit fee equal to 0.25% of the loans under the Credit Agreement repaid upon maturity or prepayment of the loans.

On December 5, 2023, we entered into the Second Amendment to Credit Agreement and Guaranty and Termination of Revenue Interest Financing Agreement (the "Second Amendment") with the Lenders and OFA, as administrative agent. The Second Amendment terminated the RIFA and converted the financing previously provided to us thereunder to term loans under the Credit Agreement. In addition, the Second Amendment replaced the Credit Agreement's existing "Tranche B" and "Tranche C" term loan opportunities with three new tranches aggregating up to $100,000 in potential funding:

As of December 31, 2025, there are no remaining unfunded commitments under the Credit Agreement.

The Second Amendment also modified the interest rate of the loans provided under the Credit Agreement to be a floating rate per annum equal to the secured overnight financing rate ("SOFR") (subject to a SOFR floor of 2.5% and a cap of 5.5%) plus 7.5%.

Following the Second Amendment, we were required to comply with certain covenants under the Credit Agreement, including a financial covenant that requires we maintain a minimum cash liquidity amount of $15,000 (or higher upon certain events) and a modified minimum revenue requirement measured on a quarterly basis based on the revenue attributable to BXCL501 for the six consecutive month period ending on the last day of the relevant quarter (the "Revenue Covenant"), subject to cure payments of not less than $1,000 if we failed to meet the minimum revenue requirement.

In connection with the closing of the Second Amendment, we amended and restated the Closing Date Warrants granted to the Lenders on April 19, 2022 to purchase up to 17 shares of the Company's common stock at an exercise price of $320.64 per share. Pursuant to the amendment and restatement of the Closing Date Warrants, dated December 5, 2023 (the "Amended and Restated Closing Date Warrants"), the exercise price of the Closing Date Warrants was reduced to $58.3232 per share, which represented the arithmetic average of the volume-weighted average price of the Company's common stock on the Nasdaq Capital Market during the 30 trading days preceding the Second Amendment Effective Date. In addition, the Company granted new warrants to the Lenders to purchase up to 4 shares of the Company's common stock (the "2023 Warrant Shares") at an exercise price of $58.3232 per share (the "2023 Warrants"). The Amended and Restated Closing Date Warrants and the 2023 Warrants will expire on April 19, 2029 and may be net exercised at the holder's election.

On February 12, 2024 (the "Third Amendment Effective Date"), we entered into the Third Amendment to Credit Agreement and Guaranty (the "Third Amendment"), pursuant to which the Lenders agreed to waive the covenant that we shall not receive a report and opinion from our independent auditors that contains a "going concern" or like qualification or exception or emphasis of matter of going concern footnote with respect to our financial statements for the fiscal year ended December 31, 2023 and, as a result, such event shall not be an event of default. As a condition to the effectiveness of the Third Amendment, among other things, we shall have received at least $40,000 in gross proceeds from a registered public sale of the Company's common stock, warrants and/or pre-funded warrants on or before February 20, 2024. We did not meet this condition and therefore the Third Amendment did not become effective.

On March 20, 2024, we entered into the Fourth Amendment to the Credit Agreement ("the Fourth Amendment"), pursuant to which the Lenders waived the Credit Agreement's covenant that the report and opinion the Company received from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2023 not contain a "going concern" or similar qualification.

The Fourth Amendment included covenants that we receive, (i) after the effective date of the Fourth Amendment and on or before April 15, 2024, at least $25,000 in gross proceeds from the issuance of our common stock, warrants

and/or pre-funded warrants, and/or in non-refundable cash consideration from partnering transactions entered into after the effective date of the Fourth Amendment (so long as such partnering transactions would not require us or any of our subsidiaries to make any cash investments in connection with the partnering transactions and no such cash investments are made), and (ii) after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 (for the avoidance of doubt, inclusive of amounts previously counted toward the preceding clause (i)) in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or in cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent (as defined in the Credit Agreement) in its sole discretion ) from partnering transactions entered into after the effective date of the Fourth Amendment. Failure to perform this covenant would constitute (A) a default under the Credit Agreement and (B) an event of default under the Credit Agreement, subject to a cure period, in the case of clause (i) of the preceding sentence, until May 15, 2024 (for the avoidance of doubt, failure to perform clause (ii) would constitute an immediate event of default under the Credit Agreement without any cure or grace period).

In addition, the Fourth Amendment provided that if we had not, after the Effective Date and on or before September 30, 2024, received at least $40,000 in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent in its sole discretion) from partnering transactions entered into after the effective date of the Fourth Amendment, the "Minimum Liquidity Amount" (as defined in the Credit Agreement) that we are required to maintain at all times will increase to $25,000 from $15,000, unless and until we had received, after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 in gross proceeds from the issuance of our common stock, warrants and/or pre-funded warrants, and/or in cash and/or non-cash consideration (measured at fair market value, as determined by the Administrative Agent in its sole discretion) from partnering transactions entered into after the effective date of the Fourth Amendment.

In connection with the Fourth Amendment, on the effective date of the Fourth Amendment, we granted new warrants to the Lenders to purchase up to 6 shares of our common stock (the "2024 Warrant Shares") at an exercise price of $49.1568 per share (the "2024 Warrants"), which represents a 10% premium over the arithmetic average of the volume-weighted average price of our common stock on the Nasdaq Capital Market during the 30 trading days preceding the Effective Date. The 2024 Warrants will expire on April 19, 2029 and may be net exercised at the holder's election.

On November 21, 2024, the Company entered into the Fifth Amendment to Credit Agreement and Guaranty and First Amendment to Fourth Amendment to Credit Agreement and Guaranty (the "Fifth Amendment").

​

Pursuant to the Fifth Amendment, the Lenders agreed to, among other things, (i) waive the Credit Agreement's covenant that the report and opinion the Company will receive from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2024 will not contain a "going concern" or similar qualification, (ii) permanently waive the Credit Agreement's minimum revenue covenant, and (iii) waive the Fourth Amendment's requirement that the Company raise, after the effective date of the Fourth Amendment and on or before November 30, 2024, at least $50,000 in gross cash proceeds from the issuance of its common stock, warrants, and/or pre-funded warrants, and/or in cash and/or non-cash consideration from newly entered-into partnering transactions.

​

The Fifth Amendment included a new capital raising covenant requiring that the Company receive (A) after the effective date of the Fifth Amendment and on or prior to November 27,2024, at least $7,000 in gross cash proceeds from the issuance of the Company's common stock, warrants and/or pre-funded warrants("Raise 1"), (B) after the effective date of the Fifth Amendment and on or before March 15, 2025 (provided that the Company was required to use its commercially reasonable efforts to satisfy the requirement by February 15, 2025), at least $18,000 in net cash proceeds (including the proceeds of Raise 1) from (i) the issuance of the Company's common stock, warrants and/or pre-funded warrants, (ii) non-refundable cash consideration from partnering transactions entered into after the effective date of the Fifth Amendment (so long as such partnering transactions would not require the Company or any of its subsidiaries to make any cash investments in connection with the partnering transactions and no such cash investments are made), (iii) the issuance of the Company's subordinated debt (subject to terms set forth in the Fifth Amendment), and/or (iv) asset sales permitted pursuant to the Credit Agreement or consented to by the Lenders (such capital raise, "Raise 2"), and (C) after the effective date of the Fifth Amendment and on or prior to the earlier of (x) August 15, 2025 and (y) the date that is 30 days after the final data readout of the SERENITY At-Home Phase 3 trial, at least $29,000 in net cash proceeds (including the proceeds

from Raise 1 and Raise 2) from the same permitted capital raising activities listed in the preceding clause (B) ("Raise 3"). The Company has raised sufficient net proceeds to date to satisfy this requirement.

​

In connection with the Fifth Amendment and the required capital raises described in the preceding paragraph, the Lenders agreed to modify the Credit Agreement's minimum liquidity covenant to require minimum cash liquidity of $7,500 (instead of $25,000) from and after the closing of Raise 1 until March 30, 2025. On March 31, 2025, the minimum liquidity amount will increase to $10,000 and on September 30, 2025, the minimum liquidity amount will further increase to $15,000.

​

In connection with the Fifth Amendment, the Company made the required one-time amortization payment of $2,500 principal amount, together with accrued and unpaid interest and a portion of the prepayment fee and other fees payable by December 31, 2024.

​

The Fifth Amendment also modified the interest rate of the loans provided under the Credit Agreement from a floating rate of Term SOFR plus 7.50% per annum, to a fixed rate of 13% per annum, retroactive to and effective as of September 30, 2024. For the quarterly payment dates ending December 31, 2024, March 31, 2025, and June 30, 2025, the Company will have the ability to make interest payments of up to 10% per annum "in-kind" by capitalizing and adding such interest to the outstanding principal amount of the loans under the Credit Agreement. In addition, pursuant to the Fifth Amendment, the Company will be required to make quarterly amortization payments equal to 5.0% of the principal amount of funded loans, together with applicable prepayment fees, beginning on March 31, 2026.

​

On the effective date of the Fifth Amendment and as a condition to effectiveness thereof, the Company's wholly owned subsidiaries OnkosXcel Therapeutics, LLC and OnkosXcel Employee Holdings, LLC (collectively, "OnkosXcel"), which previously provided unsecured guarantees of the Company's obligations under the Credit Agreement, granted security interests in substantially all of their assets to support such obligations.

​

The Fifth Amendment amended the negative covenants under the Credit Agreement to remove flexibility the Company and its subsidiaries previously had thereunder to undertake various transactions, including, without limitation, with respect to potential dispositions of OnkosXcel or out-licenses by OnkosXcel of its intellectual property.

​

Pursuant to the Fifth Amendment, the Company committed to appoint a new independent board director (subject to customary background checks, applicable law, confirmation of independence and Nasdaq rules), and to provide the independent director with various privileges and committee memberships on the board of directors of the Company (including the appointment of such director on committee to be formed to focus on capital raising and evaluate strategic options). The Company also agreed to engage an investment banker reasonably acceptable to OFA and the Lenders to assist the Company and its board of directors with evaluating and exploring strategic options.

​

The Company also agreed to covenants requiring that the Company's cash expenditures be monitored by the Lenders according to a board-approved budget provided to the Lenders prior to the signing of the Fifth Amendment, which cash budget will be updated on a bi-weekly basis going forward. The Company will not be permitted to make disbursements for any two-week period in excess of 115% of the aggregate budgeted amount of disbursements for the applicable period. Finally, pursuant to the Fifth Amendment, the Company is restricted from paying cash bonuses its employees or executives during the fiscal years 2024 and 2025 without OFA's consent or increasing the cash compensation for fiscal year 2025for certain senior officers of the Company from their compensation for fiscal year 2024.

​

On March 4, 2025, the Company entered into the Sixth Amendment to our Credit Agreement, which extended the deadline to engage an investment banker. The Company subsequently entered into the Seventh and Eighth Amendments on March 12, 2025 and April 22, 2025, respectively, and collectively, these amendments extended the deadline to July 31, 2025. The Company retained an investment banker on July 29, 2025.

​

The Credit Agreement contains, among other things, a covenant requiring that our audited annual financial statements included in our Annual Report be delivered without a "going concern" or like qualification or exception. On March 27, 2026, we entered into the Ninth Amendment to Credit Agreement and Guaranty (the "Ninth Amendment"). Pursuant to the Ninth Amendment, the Lenders agreed to (i) waive the Credit Agreement's covenant that the report and opinion the

Company will receive from its independent registered public accounting firm with respect to the financial statements for the year ending December 31, 2025 will not contain a "going concern" or similar qualification, and (ii) reduce the Credit Agreement's minimum liquidity covenant to require minimum cash liquidity of $12.50 million from and after March 31, 2026 (instead of $15.0 million).

​

The Ninth Amendment's effectiveness is subject to various customary conditions precedent, as well as conditions subsequent requiring the Company to:

​

​

​

​

On the date of issuance of the New Warrants, if applicable, the Company agreed to amend and restate its Third Amended and Restated Registration Rights Agreement with the Lenders, dated November 25, 2024. Pursuant to such amendment and restatement (the "Fourth Amended and Restated Registration Rights Agreement"), the Company will agree to register the shares of common stock issuable under the New Warrants, in addition to all warrants previously issued to the Lenders, for resale.

​

As of December 31, 2025, the Company had aggregate principal indebtedness of $112,156 outstanding under the Credit Agreement. On March 31, 2026, the Company is required to make (i) the required payment of $9,252, representing an amortization payment of 5.0% of the principal amount of funded loans, together with accrued and unpaid interest and a portion of the prepayment fee and (ii) one-time prepayment of the principal amount of $2,500 in connection with the Ninth Amendment.

​

Company Warrants and Registration Rights Agreement

​

Prior to the Fifth Amendment, pursuant to the Credit Agreement, the Lenders had the right to purchase shares of our common stock, so long as borrowings under the Credit Agreement are outstanding, for a purchase price of $5,000 at a price per share equal to a 10% premium to the volume-weighted average price of the common stock over the 30 trading days prior to the Lenders' election to proceed with such equity investment (the "Equity Investment Right"). The Equity Investment Right was terminated as part of the Fifth Amendment. Also, in connection with the closing of the Fifth Amendment, the Company agreed to, substantially concurrently with the closing of Raise 1, grant new warrants to the Lenders to purchase an aggregate of 313 shares of common stock, at an exercise price of $0.16 per share (the "New Warrants"). During the nine months ended September 30, 2025, the Company issued 284 shares of Common Stock in connection with the cashless exercises of the 313 New Warrants.

In addition, the Company agreed to, substantially concurrently with the closing of Raise 1, amend and restate all warrants to purchase stock of the Company issued to the Lenders prior to the effective date of the Fifth Amendment, to revise the exercise price thereunder to an exercise price equal to the lower of (i) the price per share of the common stock of the Company issued in Raise 1 and (ii) arithmetic average of the volume-weighted average price of the Company's

common stock on the Nasdaq Capital Market during the 30 trading days preceding Raise 1 (such existing warrants, as amended and restated, the "Original Warrants"). The Original Warrants provide the Lenders with the right to purchase a total of 28 shares of common stock of the Company.

​

We entered into a registration rights agreement with the Lenders in connection with the original closing of the Credit Agreement, which has been amended and restated since in connection with each issuance of additional warrants to the Lenders, including most recently, in connection with the Fifth Amendment (as so amended and restated the "Amended and Restated Registration Rights Agreement"). Pursuant to the Amended and Restated Registration Rights Agreement, we have filed registration statements on Form S-3 to register the shares issuable upon exercise of the Original Warrants and the New Warrants for resale. The maximum shares of our common stock issuable under the Original Warrants and the New Warrants is 366.

​

As part of entering into the Credit Agreement, OnkosXcel, a wholly owned subsidiary of BTI, granted the OnkosXcel Warrants to the Lenders to purchase 175 individual limited liability company units. The strike price of the OnkosXcel Warrants is formulaic based on the value of OnkosXcel at the time of exercise and can only be exercised upon occurrence of an equity related liquidity event for OnkosXcel of at least $20,000. The exercise price per unit of the OnkosXcel Warrants will be set upon the earlier of the closing of the next sale (or series of related sales) by OnkosXcel of equity securities of OnkosXcel with aggregate proceeds of not less than $20,000 to unrelated third parties (the "Next Equity Financing") at an exercise price per unit equal to a 10% premium over the price per unit of the equity securities sold by OnkosXcel in such Next Equity Financing or, in the event of a sale of OnkosXcel prior to the Next Equity Financing or an initial public offering constituting the Next Equity Financing, the lesser of (x) 75% of the fair value of the consideration to be paid for a unit upon the consummation of such transaction and (y) 150% of the valuation applicable to the initial profits units issued by OnkosXcel after the closing of the Credit Agreement. The OnkosXcel Warrants are transferable with approval from BTI, which cannot be unreasonably withheld, expire on April 19, 2029, and may be net exercised at the holder's election.

​

See Note 9, Debt and Credit Facilities and Note 20, Subsequent Events in the notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information relating to the Credit Agreement and RIFA, including applicable interest rates, payment obligations and certain restrictive and financial covenants thereunder. As of December 31, 2025, we were in compliance with all restrictive and financial covenants under the Credit Agreement.

March 2025 Registered Direct Offering

​

On March 3, 2025, the Company entered into a purchase agreement (the "March 2025 Offering") pursuant to which the Company agreed to issue and sell an aggregate of (i) 188 shares of Common Stock at an offering price of $3.50 per Share, (ii) Pre-Funded Warrants to purchase up to 3,812 shares of Common Stock, at an offering price of $3.499 per share underlying the Pre-Funded Warrants, which equals the offering price per share less the $0.001 exercise price per share of the Pre-Funded Warrants, and (iii) an aggregate of 4,000 accompanying warrants (the "March 2025 Accompanying Warrants") to purchase up to 4,000 shares of Common Stock at an offering price of $4.20 per accompanying warrant. The Pre-Funded Warrants have an exercise price per share of common stock equal to $0.001 per share. For the year ended December 31, 2025, all 3,812 Pre-Funded Warrants were exercised and the same number of common stock were issued in exchange for $4 of proceeds. For the year ended December 31, 2025, 2,300 of the March 2025 Accompanying Warrants were exercised and the same number of common stock were issued in exchange for $9,660 of proceeds.

​

ATM Program - Canaccord

In April 2025, we entered into an Equity Distribution Agreement with Canaccord to sell shares of the Company's common stock, with aggregate gross sales proceeds of up to $8,135, from time to time, through an "at the market" equity offering program under which Canaccord will act as sales agent.

In August 2025, the Company increased the maximum amount of shares that are eligible to be sold pursuant to the Equity Distribution Agreement to allow for the offer and sale of up to an additional $3,500 of its common stock.

Following the sale of common stock under the Equity Distribution Agreement in August 2025, the Company raised sufficient net proceeds to satisfy the Raise 3 requirement under the Fifth Amendment to the Credit Agreement.

In August 2025, the Company again increased the maximum amount of shares that are eligible to be sold pursuant to the Equity Distribution Agreement to allow for the offer and sale of up to $80,000 shares of common stock pursuant to the Equity Distribution Agreement. For the year ended December 31, 2025, the Company sold 12,087 shares for gross proceeds of $34,476 and received proceeds of $33,670, net of issuance costs of $806.

Subsequent to December 31, 2025, the Company sold 245 shares for gross proceeds of $498 and received proceeds of $488, net of issuance costs of $10.

March 2026 Offering and Warrant Amendment

​

On March 10, 2026, we entered into a securities purchase agreement (the "March 2026 Offering") with the purchaser named therein (the "Purchaser"). Pursuant to the March 2026 Offering, we agreed to issue and sell to the Purchaser and the Purchaser agreed to buy in a registered direct offering (i) an aggregate of 2,480 shares (the "Shares") of common stock, par value $0.001 per share ("Common Stock") and accompanying warrants to purchase up to 2,480 shares of Common Stock at a combined offering price of $1.739 per Share and accompanying warrant, and (ii) Pre-Funded warrants to purchase up to 2,020 shares of Common Stock and accompanying warrants to purchase up to 2,020 shares of Common Stock, at a combined offering price of $1.738 per share underlying the Pre-Funded Warrants and accompanying warrant, which equals the offering price per Share and accompanying warrant less the $0.001 exercise price per share of the Pre-Funded Warrants, pursuant to our effective registration statement on Form S-3 (File No. 333-275261), including the base prospectus included therein, and a prospectus supplement filed with the Securities and Exchange Commission on March 10, 2026. The accompanying warrants have an exercise price of $1.614 per share, are immediately exercisable upon issuance, and will expire on the five-year anniversary of the date of issuance.

The March 2026 Offering closed on March 11, 2026. We received aggregate gross proceeds of approximately $7,825, before deducting placement agent fees and estimated offering expenses payable by us.

Rodman & Renshaw LLC (the "Placement Agent") acted as our exclusive placement agent in connection with the March 2026 Offering. As compensation in connection with the March 2026 Offering, we agreed to pay the Placement Agent a cash fee equal to 6.0% of the gross proceeds from the March 2026 Offering, and issue to the Placement Agent or its designees warrants to purchase a number of shares of Common Stock equal to 4.0% of the aggregate number of shares placed in the Registered Direct Offering (180,031 shares), at an exercise price equal to 125% of the offering price per share (or $2.0175 per share), with a term of five years from the commencement of the Registered Direct Offering (the "Placement Agent Warrants"). We also agreed to reimburse the Placement Agent for certain expenses in an amount of up to $75 and to pay up to $16 for clearing and closing expenses.

In connection with the March 2026 Offering, pursuant to the terms of a Warrant Amendment Agreement, dated as of March 10, 2026 (the "Warrant Amendment Agreement"), the exercise price of certain outstanding warrants issued on March 27, 2024 and November 25, 2024 to purchase up to an aggregate of 1,385 shares of Common Stock held by the Purchaser was reduced to $1.614 per share, equal to the exercise price of the Accompanying Warrants issued in the March 2026 Offering, and the term of such warrants was extended to five years following the closing date of the March 2026 Offering. The investor paid approximately $173 in exchange for the reduction in exercise price and the extension of the term of these warrants. We paid the Placement Agent a cash fee of 6.0% of the gross proceeds paid for the warrant amendment.

Cash Flows

​

Operating Activities

Net cash used in operating activities for the year ended December 31, 2025 was $57,615 and was primarily attributable to our net loss of $69,897 and an increase of $8,156 in prepaid expenses, other current assets and other assets, offset by a $6,973 increase in accounts payable, accrued expenses, due to related parties, and other current liabilities, $5,434 in payable in kind interest on our credit agreement, a $3,505 decrease in the change in fair value of our derivative liability, and $2,767 in non-cash stock-based compensation,

Net cash used in operating activities for the year ended December 31, 2024 was $72,027 and was primarily attributable to our net loss of $59,599, a $20,180 increase in the change in fair value of our derivative liability, a $4,327 decrease in accounts payable, accrued expenses, due to related parties, and other current liabilities, and a $1,872 increase in prepaid expenses, other current assets and other assets, offset by $6,543 in payable in kind interest on our credit agreement and $6,156 in non-cash stock-based compensation.

Investing Activities

Net cash used in investing activities for the years ended December 31, 2025 and 2024, respectively was $0 and $0.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025, was $56,518 and was primarily attributable to net proceeds of $12,957 received from the March 2025 registered direct offering, net proceeds from the sale of common stock under the Equity Distribution Agreement with Canaccord of $33,670, and net proceeds from the exercise of warrants of $9,660.

Net cash provided by financing activities for the year ended December 31, 2024, was $36,660 and was primarily attributable to net proceeds of $39,214 from the sale of common stock under public offerings and the Sale Agreement with Jefferies, less a debt principal payment of $2,500.

Operating Capital and Capital Expenditure Requirements

We expect to continue to incur significant and increasing operating losses at least for the next several years as we commercialize IGALMI^®and as we expand our clinical trials of and seek marketing approval focused on BXCL501 while pursuing development of additional product candidates for BXCL701. We expect to continue to incur net losses in the near term. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical trials and our expenditures on other research and development activities.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. We anticipate that our expenses will increase substantially as we:

We believe that our existing cash, cash equivalents and restricted cash as of December 31, 2025 will not be sufficient to enable us to fund operating expenses and capital expenditure requirements for at least the next 12 months from the date of the issuance of the consolidated financial statements included in this Annual Report on Form 10-K, including funding our ongoing research and development and commercialization efforts. In particular, we believe that our cash, cash equivalents and restricted cash of $28,757 as of December 31, 2025 plus the additional capital raised subsequent to December 31, 2025 will allow us to fund our operations and meet our liquidity requirements into the second quarter of 2026.

We expect that we will need to obtain substantial additional funding to fund our ongoing operations. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interests of our existing stockholders may be materially diluted, and the terms of these securities could include liquidation or other preferences that could adversely affect the rights of our existing stockholders. Under the terms of the Ninth Amendment, following receipt of aggregated gross proceeds from (a) the issuance of the Company's common stock, warrants and/or pre-funded warrants, (b) non-refundable cash consideration from partnering transactions, (c) the issuance of the Company's subordinated debt and/or (d) sales by the Company of its assets, in each case ((a) through (d)), in transactions permitted under the Credit Agreement ("Capital Raise Activities"), make a prepayment of the loans under the Credit Agreement in an aggregate principal amount equal to 50% of such gross cash proceeds, together with accrued interest thereon and any fees or premia (including prepayment premium) payable in connection therewith; provided that such prepayment requirement shall not be applicable (A) with respect to the first $2.5 million gross proceeds received from Capital Raise Activities and (B) once the aggregate principal amount of the prepaid pursuant to one or more of such prepayments equals $2.5 million. In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, which could adversely impact our ability to conduct our business. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. If we are unable to raise capital when needed or on attractive terms, we could be forced to significantly delay, scale back or discontinue the development or commercialization of our product candidates, seek collaborators at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available, and relinquish or license, potentially on unfavorable terms, our rights to our product candidates that we otherwise would seek to develop or commercialize ourselves. To date, we have continued research and development activities while managing our cash position. However, we can provide no assurance that will be successful in obtaining additional necessary resources and, if we are unable to fund our operations, including our clinical trials, we may need to focus on advancing fewer of our product candidates or otherwise consider strategic alternatives.

​

Contractual Obligations and Commitments

In July 2024, the Company signed an amendment to its commercial supply agreement that requires minimum annual payments for the first five years of the agreement ending in 2026 that in aggregate total $10,000. The Company has met the minimum requirements for the first 4 years ending in 2025. The remaining minimum commitments for year 5 (2026) is $2,000.

In February 2022, we signed a distribution agreement with a third party to distribute product related to BXCL501 in the U.S. The distributor will be paid defined fees for its services under the agreement, which can be terminated by either party for cause. The distribution agreement can also be terminated by us without cause, subject to payment of agreed termination fees.

BTI leases office space for its corporate headquarters at 555 Long Wharf Drive, New Haven, Connecticut (the "HQ Lease"). The HQ Lease expires in February 2026. The Company has an option to renew the HQ Lease for one additional five-year term. Payments under the HQ Lease are fixed. The Company has approximately $65 of payments remaining under the HQ Lease. For additional details, see Note 13, Leases in the notes to consolidated financial statements included in this Annual Report on Form 10-K for additional information relating to the Company's leases.

In addition, we are obligated to make quarterly interest payments under our Credit Agreement. For additional details, see Note 9, Debt and Credit Facilities in the notes to consolidated financial statements included in this Annual Report on Form 10-K for additional information relating to the Company's debt payment obligations.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to exercise its judgment. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the consolidated financial statements.

On an ongoing basis, we evaluate our estimates and judgments. We base our estimates and judgments on a variety of factors including our historical experience, knowledge of our business and industry, current and expected economic conditions, the attributes of our products and the regulatory environment. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary.

While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

We define critical accounting policies as those that are reflective of significant judgments and uncertainty and which may potentially result in materially different results under different assumptions and conditions. In applying these critical accounting policies, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an inherent degree of uncertainty. Our critical accounting policies are noted below.

Stock Compensation

The Company has granted stock options, restricted stock units and profit units to employees, directors, and consultants, as well as warrants to other third parties. The fair value of restricted stock units is estimated on the date of grant and is equal to the closing market price per share of our common stock on that date. For employee, director and consultant stock options, profit units and warrants, the value of each grant is estimated on the date of grant using a Black-Scholes option-pricing model. The Black-Scholes pricing model incorporates the volatility of the price of BTI's stock, the risk-free interest rate, the estimated life of the award, the closing market price of the Company's stock and the exercise price of the award. Management bases the Company's estimates of stock price volatility on the historical volatility of the Company's common stock. However, these estimates are neither predictive nor indicative of the future performance of the Company's stock. For purposes of the calculation, management assumed that no dividends would be paid during the life of the stock awards. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment.

Research and Development Expenses

As part of the process of preparing the Company's consolidated financial statements, BTI's management is required to estimate prepaid and accrued expenses, including research and development expenses. This process involves reviewing open contracts, communicating with personnel to identify services that have been performed on behalf of the Company and estimating the level of service performed and the associated cost incurred for the service when BTI has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company's service providers invoice BTI monthly for services performed or when contractual milestones are met. BTI management makes estimates of prepaid and/or accrued expenses, including research and development expenses, as of each reporting date in the Company's consolidated financial statements based on facts and circumstances known to management at that time. BTI periodically confirms the accuracy of its estimates with the service providers and makes adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to contract research organizations ("CROs") in connection with clinical studies, amounts paid to contract manufacturing organizations, and fees paid to sites in connection with clinical trials.

The Company bases its expenses related to clinical studies on management's estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical trial studies on our behalf.

The financial terms of these agreements are subject to an initial negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing certain service fees, BTI management estimates the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from management's estimate, management will adjust the accrual or prepaid accordingly. Although the Company does not expect management's estimates to be materially different from amounts actually incurred, management's understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in BTI reporting amounts that are too high or too low in any particular period.