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

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section of our Form 10-K and in this report, as well as disclosures in this report and our other reports filed with the SEC, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company using our proprietary Precision Timed Release^TM (PTR^TM) drug delivery platform technology to build and advance a pipeline of next-generation pharmaceutical products designed to improve the lives of patients suffering from frequently diagnosed conditions characterized by burdensome daily dosing regimens and suboptimal treatment outcomes. With an initial focus on the treatment of Attention Deficit/Hyperactivity Disorder (ADHD) with an estimated US market size of approximately 100 million prescriptions of stimulants as of September 2025, and anxiety, we are identifying and evaluating additional therapeutic areas where our PTR technology may be employed to develop future product candidates. Our PTR platform incorporates a proprietary Erosion Barrier Layer designed to allow for the release of drug substance at specific, pre-defined time intervals, unlocking the potential for once-daily, multi-dose tablets. We believe there remains a significant, unmet need within the current treatment paradigm for true once-daily ADHD stimulant medications with lasting duration and a superior side effect profile to better serve the needs of patients throughout their entire active-day.

Since inception in 2012, our operations have focused on developing our product candidates, primarily CTx-1301, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. We do not have any product candidates approved for sale and have not generated any revenue. We have funded our operations through public and private capital raised. Cumulative capital raised from these sources, including debt financing, was approximately $160.4 million as of June 30, 2026.

We have incurred significant losses since our inception. Our net losses were $5.9 million and $5.0 million for the three months ended June 30, 2026 and 2025, respectively. See "Results of Operations" below for an explanation of the fluctuations in our net losses. As of June 30, 2026, we had an accumulated deficit of $147.6 million.

We expect to continue to incur significant expenses and operating losses in the near term, as we:

	●	complete the CMC work necessary to support resubmission of the NDA for CTx-1301 and seek regulatory approval;
	●	continue research and development activities for our existing and new product candidates;
	●	continue manufacturing activities, primarily the manufacture of process validation batches relating to CTx-1301;
	●	advance commercialization efforts for CTx-1301; and
	●	operate as a public company.

As of June 30, 2026, we had cash and cash equivalents of $28.4 million, which we believe will be sufficient to fund our operations into mid 2027, including costs associated with completing the requested CMC work and seeking regulatory approval for CTx-1301 and the build-out of internal and external support for the commercial launch of CTx-1301, if approved. We will need additional capital to advance other potential development programs. See "Liquidity and Capital Resources" below.

Our ability to generate revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

Clinical, Manufacturing, Regulatory and Business Update

CTx-1301

We designed our clinical program for CTx-1301 (dexmethylphenidate), our lead, investigational product candidate for the treatment of ADHD, based on U.S. Food and Drug Administration (FDA) feedback regarding our CTx-1301 clinical plan, and longstanding guidance on the streamlined approval pathway under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act.

In order to meet the pharmacology requirement for the CTx-1301 NDA submission, we completed a food effect study in October 2022 (25mg dose) and December 2024 (50mg dose). Each study demonstrated that CTx-1301 can be taken with or without food.

We initiated two CTx-1301 Phase 3 clinical studies in pediatric and adolescent patients- a fixed dose study and a dose-optimized onset and duration study in a laboratory classroom setting in the third quarter of 2023. Based upon written communication with the FDA that further conduct of these pediatric and adolescent studies is not required for the submission of an NDA, we closed enrollment on both Phase 3 trials. Analysis of the safety data from the two closed Phase 3 trials and the 50mg dose food effect study revealed that no subjects experienced a serious treatment emergent adverse event (TEAE), a serious TEAE or a TEAE leading to death and there were no clinically relevant trends in TEAEs overall. A final analysis that combines both adult and pediatric safety and efficacy data was included in the NDA submission for CTx-1301 which was submitted to the FDA on July 31, 2025.

In October 2025, we announced that the FDA accepted for review our NDA for CTx-1301 and assigned a Prescription Drug User Fee Act (PDUFA) targeted action date of May 31, 2026. On June 1, 2026, we received a Complete Response Letter (CRL) from the FDA regarding the NDA for CTx-1301. The CRL identified specific requests for additional CMC information and did not raise any concerns regarding the clinical safety or efficacy of CTx-1301. We and our CDMO (defined below) are working to complete the CMC work necessary to support a resubmission of the NDA as promptly as practicable. There can be no assurance regarding the timing of any resubmission, that any resubmission will be accepted by the FDA, that approval of CTx-1301 will occur following any resubmission, or that approval will occur at all. See Risk Factors section in Part II of this report for more information about the risks related to regulatory approval of CTx-1301.

Bend Bioscience, a contract development and manufacturing organization (CDMO), will manufacture all clinical, registration, and, if approved, commercial batches of our lead ADHD candidate, CTx-1301. Manufacturing will occur at a suite within the CDMO's Gainesville, GA facility that is outfitted with equipment supplied by us.

If approved, we plan to commercialize CTx-1301 in the United States. We continue to advance our commercialization preparations, with dedicated teams established across all key functional areas. Our launch strategy leverages a commercialization strategy augmented by AI-driven tools designed to optimize targeting, decision-making, and performance measurement - positioning us for a rapid commercial launch contingent upon FDA approval. Key areas of focus include:

	●	Commercial Manufacturing: Working with Bend Bioscience, the Company's contract development and manufacturing organization, to complete the requested CMC work and advance process validation for CTx-1301, which would serve as launch inventory if approved.
	●	Product Distribution: On July 21, 2026, the Company signed an exclusive services agreement with Prasco, LLC to establish the commercial distribution infrastructure for the launch of CTx-1301, providing integrated third-party logistics and distribution capabilities designed to support broad national availability across major wholesalers as well as direct distribution to approximately 19,000 independent and smaller regional pharmacy accounts served under Prasco's UNLIMIT program.
	●	Market Access and Payer Strategy: Advancing payer segmentation, value proposition, pricing and contracting strategy, and to support formulary positioning ahead of a potential launch.
	●	Commercial Operations and Omnichannel Infrastructure: Building marketing, commercial operations and digital capabilities through the Company's master services agreement with Indegene, Inc., including dedicated market access, medical education, agency of record, and prescriber and patient marketing teams.
	●	Field Deployment Planning: Under its agreement with IQVIA Inc., the Company will deploy field-based sales representatives in addition to its currently deployed corporate account directors to align with the timing of a potential approval and launch.

We have an agreement with Indegene, Inc. (Indegene) for them to provide commercialization services for CTx-1301, including marketing, market access and pricing, commercial operations, and an omnichannel platform on a fee for service basis in the United States. We also have dedicated teams in place at Indegene across key functional areas including market access, medical education, prescriber and patient marketing, and digital infrastructure. Additionally, field-based sales representatives and corporate account directors will augment omnichannel promotional efforts through an agreement with IQVIA Inc.

Intellectual Property

On June 16, 2026, the United States Patent and Trademark Office issued U.S. Patent No. 12,653,791 covering CTx-1301. The patent protects key aspects of CTx-1301's formulation and method of use through December 2042 and represents the first U.S. patent wholly owned by the Company covering CTx-1301, further strengthening our intellectual property portfolio surrounding our PTR platform.

Securities Issuances

Private Placement

On January 27, 2026, the Company entered into a securities purchase agreement (Purchase Agreement) with several purchasers, including certain officers, directors and other affiliates of the Company (Purchasers), for the private placement (Private Placement) of: (i) 2,147,472 shares of the Company's common stock, (ii) 954 shares of Series A convertible preferred stock with a stated value of $1,000 and a conversion price equal to a $5.04 per share of common stock and (iii) a warrant to purchase 1,869,415 shares of common stock (Warrant Shares) for aggregate gross proceeds of approximately $12.0 million, at a price per share of $5.14 per share of common stock (including $0.10 per Warrant Share). The Warrant Shares have an exercise price of $5.04 per share of common stock, subject to adjustment as provided in the Warrant.

The closing of the Private Placement occurred on February 6 and 13, 2026. At the special meeting of stockholders on March 24, 2026, stockholders approved the issuance of common stock upon conversion of the preferred stock and the exercise of the warrant. Upon stockholder approval (i) the preferred stock, without any further action by the Company or the holder, automatically converted into 191,824 shares of common stock determined by dividing the stated value plus all unpaid accrued and accumulated preferential dividends on such share by the $5.04 conversion price and (ii) the warrant became exercisable.

Falcon Creek Capital Advisor LLC, on behalf of the Purchasers that it manages has designated two (2) individuals to serve on the Company's Board of Directors (each a Falcon Creek Director); provided, that (1) one Falcon Creek Director shall be required to resign from the Board of Directors if the Purchasers managed by Falcon Creek no longer beneficially owns at least 15% of the outstanding common stock of the Company and (2) the remaining Falcon Creek Director shall be required to resign from the Board of Directors if the Purchasers managed by Falcon Creek no longer beneficially owns at least 5% of the outstanding common stock of the Company.

Except as provided in the Purchase Agreement, during the period commencing on and including the date of the Purchase Agreement and continuing through and including the 180th day following the date of the Purchase Agreement (such period being referred to as the Lock-up Period), each Purchaser could not, without the prior written consent of the Company, sell, offer to sell, contract to sell or lend any shares of common stock or Warrant Shares (Securities). The Purchase Agreement also provides that during the Lock-up Period, the Purchasers could not (i) effect any short sale, or establish or increase any "put equivalent position" or liquidate or decrease any "call equivalent position" of any Securities; (ii) pledge, hypothecate or grant any security interest in any Securities; (iii) in any other way transfer or dispose of any Securities; (iv) enter into any swap, hedge or similar arrangement or agreement that transfers, in whole or in part, the economic risk of ownership of any Securities, regardless of whether any such transaction is to be settled in securities, in cash or otherwise; (v) grant any proxies or powers of attorney with respect to any Securities, deposit any Securities into a voting trust, or enter into a voting agreement or similar arrangement or commitment with respect to any Securities; or (vi) publicly announce the intention to do any of the foregoing.

The Purchase Agreement includes a standstill provision for a period of twenty-four (24) months following the closing date, whereby each Purchaser has agreed that, without the prior written consent of the Company, the Purchaser will not: (i) acquire, offer to acquire, or agree to acquire any additional securities of the Company if such acquisition would result in the Purchaser and its affiliates beneficially owning more than 40% of the Company's outstanding common stock on an as-converted basis; (ii) make, or in any way participate in, any solicitation of proxies or consents with respect to any securities of the Company; or (iii) propose or participate in any merger, tender offer, business combination, recapitalization, or similar transaction involving the Company.

ATM Agreements

We entered into the At-the-Market Agreement (2023 ATM Agreement) with H.C. Wainwright & Co., LLC (HCW) in January 2023, as amended in May 2023, pursuant to which we could issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $31.9 million in at-the-market offering sales. HCW acted as sales agent and was paid a 3% commission on each sale under the 2023 ATM Agreement. Our common stock sold at prevailing market prices at the time of the sale, and, as a result, prices varied. We terminated the 2023 ATM Agreement, effective March 23, 2026.

During the three months ended June 30, 2025, we sold 364,963 shares of common stock, respectively, under the 2023 ATM Agreement, for net proceeds of $1,578,731, after deducting $54,363 of compensation to HCW and other administration fees.

On March 24, 2026, we entered into an ATM Sales Agreement (2026 ATM Agreement) with A.G.P./Alliance Global Partners, as sales agent (AGP), pursuant to which we may offer and sell, from time to time through AGP, shares of our common stock for aggregate gross proceeds of up to $100,000,000 in at-the-market offering sales. AGP acts as sales agent and is paid a 3% commission on each sale under the 2026 ATM Agreement. Our common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary.

During the three months ended June 30, 2026, we sold 806,893 shares of common stock under the 2026 ATM Agreement, for net proceeds of $4,347,364, after deducting $136,364 of compensation to A.G.P. and other administration fees. Subsequent to June 30, 2026, we sold 271,717 shares of common stock under the 2026 ATM Agreement, for net proceeds of $1,394,179, after deducting $43,751 of compensation to A.G.P. and other administration fees.

Equity Line of Credit

In April 2023, we entered into a purchase agreement (Original LP Purchase Agreement) with Lincoln Park Capital Fund LLC (Lincoln Park). Pursuant to the Original LP Purchase Agreement, Lincoln Park agreed to purchase from us up to an aggregate of $12.0 million of common stock. As of June 30, 2025, the Company sold to Lincoln Park the maximum dollar value worth of common stock pursuant to the Original LP Purchase Agreement, and the Original LP Purchase Agreement thereupon expired in accordance with its terms.

In July 2025, we entered into a second purchase agreement with Lincoln Park (2025 LP Purchase Agreement), pursuant to which Lincoln Park has agreed to purchase from the Company up to an aggregate of $25.0 million of common stock (subject to certain limitations and satisfaction of the conditions set forth in the 2025 LP Purchase Agreement) from time to time and at the Company's sole discretion over the 36-month term of the 2025 LP Purchase Agreement. During the three months ended June 30, 2026, we sold 1,032,372 shares of common stock to Lincoln Park, under the 2025 LP Purchase Agreement, for net proceeds of $5,058,975. Subsequent to June 30, 2026, we sold 220,476 shares of common stock to Lincoln Park, under the 2025 LP Purchase Agreement, for net proceeds of $1,068,525.

Debt for Equity Exchanges

In December 2024, we entered into a note purchase agreement with Streeterville Capital, LLC, a Utah limited liability company (Lender), pursuant to which we issued and sold to Lender an unsecured promissory note in the amount of $5,480,000 (2024 Note).

During the three months ended March 31, 2026, we entered into exchange agreements with Lender to exchange an aggregate of $2,308,947 in principal, monitoring fee and interest for 460,122 shares of common stock, thereby extinguishing the 2024 Note.

In November 2025, we entered into a note purchase agreement with Avondale Capital, LLC, a Utah limited liability company (Avondale), pursuant to which we issued and sold to Avondale an unsecured promissory note in the amount of $6,570,000 (2025 Note). From time to time, beginning on May 7, 2026, Avondale may redeem a portion of the 2025 Note, not to exceed an amount of $660,000 per month; and provided that we have not previously received a "complete response letter" from the FDA with respect to CTx-1301, we may defer up to two redemptions for up to thirty (30) days each. If we exercise our deferral right, the outstanding balance of the 2025 Note will be increased by 1% of the outstanding balance on the date of the deferral.

During the three months ended June 30, 2026, the Company entered into exchange agreements with Avondale to exchange an aggregate of $1,320,000 in principal for 147,301 shares of common stock and aggregate cash payments of $660,000, thereby extinguishing that portion of the promissory note with Avondale. Subsequent to June 30, 2026, the Company entered into exchange agreements with Avondale to exchange an aggregate of $1,320,000 in principal for 139,751 shares of common stock and a cash payments of $600,000, thereby extinguishing that portion of the promissory note with Avondale.

See Note 7 to our consolidated financial statements for additional information regarding the 2024 Note and 2025 Note.

Components of Operating Results

Revenue

Since inception, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration of license agreements.

Operating Expenses

Research and Development Expenses

Research and development (R&D) expenses consist of costs incurred in the discovery and development of our product candidates, and primarily include:

	●	expenses incurred under third party agreements with contract research organizations (CROs), and investigative sites, that conducted or will conduct our clinical trials and a portion of our pre-clinical activities;
	●	costs of raw materials, as well as manufacturing cost of our materials used in clinical trials and other development testing;
	●	expenses, including salaries and benefits of employees engaged in R&D activities;
	●	costs of manufacturing equipment, depreciation and other allocated expenses; and
	●	fees paid for contracted regulatory services as well as fees paid to regulatory authorities including the FDA for review and approval of our product candidates.

We expense R&D costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued costs.

R&D activities are central to our business model. Subject to successful regulatory approval and commercialization of CTx-1301, we expect that our R&D expenses will continue to increase as we continue clinical development for our product candidates, as well as adding additional PTR product candidates to our pipeline. As products enter later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Historically, our R&D costs have primarily related to the development of CTx-1301. We expect to fund our R&D expenses from our current cash and cash equivalents and any future equity or debt financings, or other capital sources.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses consist primarily of (i) professional fees for legal, accounting, audit, tax and consulting services, (ii) salaries and related costs for our employees in administrative, executive and finance functions and (iii) pre-commercialization expenses for CTx-1301. SG&A expenses also include insurance, office, and travel expenses.

We expect that our SG&A expenses will increase in the future as we increase our SG&A headcount to support our growing operations, including the potential commercialization of CTx-1301, and incur costs related to pre-commercialization activities. We have experienced, and will continue to experience, increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services; director and officer insurance; and investor and public relations costs.

Change in fair value of derivative and interest and other income (expense), net

Change in fair value of derivative relates to the 2025 LP Purchase Agreement and the change in fair value of the derivative asset or liability. Interest and other income (expense), net consists of interest expense on our notes payable and interest earned on our cash and cash equivalents, including money market funds. The primary objective of our investment policy is liquidity and capital preservation.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during a reporting period. Actual results could differ from estimates.

A discussion of these policies can be found in the "Critical Accounting Policies and Significant Judgments and Estimates" section of our Form 10-K. There have been no changes in our application of critical accounting policies since December 31, 2025.

Results of Operations

Comparison of the three months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025:

		Three Months Ended												%
		June 30,								Increase				Increase
(in thousands)		2026				2025				(Decrease)				(Decrease)
Operating Expenses:
Research and development		$	1,487			$	2,701			$	(1,214	)			(44.9	)%
Selling, general and administrative			3,928				1,949				1,979				101.5	%
Operating Loss			(5,415	)			(4,650	)			765				16.5	%
Change in fair value of derivative			(314	)			(194	)			120				61.9	%
Interest and income (expense), net			(141	)			(139	)			2				1.4	%
Net Loss		$	(5,870	)		$	(4,983	)		$	887				17.8	%

Research and development expenses

The following table summarizes our R&D expenses for the three months ended June 30, 2026 and 2025:

		Three Months Ended
		June 30,												%
(in thousands)		2026				2025				Increase				Increase
Clinical operations		$	37			$	764			$	(727	)			(95.2	)%
Drug manufacturing			909				1,110				(201	)			(18.1	)%
Personnel expenses			585				409				176				43.0	%
Regulatory costs			(44	)			418				(462	)			(110.5	)%
Total research and development expenses		$	1,487			$	2,701			$	(1,214	)			(44.9	)%

R&D expenses decreased $1.2 million, or 44.9%, to $1.5 million for the three months ended June 30, 2026, from $2.7 million for the three months ended June 30, 2025. The decrease was driven primarily by lower clinical operations costs following the conclusion of clinical study activities in early 2025, and by the absence of the regulatory costs incurred in the second quarter of 2025 in connection with preparing the CTx-1301 NDA, which was submitted on July 31, 2025.

Selling, general and administrative expenses

The following table summarizes our SG&A expenses for the three months ended June 30, 2026 and 2025:

		Three Months Ended												%
		June 30,								Increase				Increase
(in thousands)		2026				2025				(Decrease)				(Decrease)
Pre-commercialization costs		$	1,688			$	99			$	1,589				NM
Personnel expenses			869				459				410				89.3	%
Legal and professional fees			1,039				969				70				7.2	%
Occupancy			47				88				(41	)			(46.6	)%
Insurance			149				175				(26	)			(14.9	)%
Other			136				159				(23	)			(14.5	)%
Total selling, general and administrative expenses		$	3,928			$	1,949			$	1,979				101.5	%

Total SG&A expenses increased $2.0 million, or 101.5%, to $3.9 million for the three months ended June 30, 2026, from $1.9 million for the three months ended June 30, 2025. The increase was driven primarily by commercial readiness planning for the potential launch of CTx-1301, including increased headcount and market access, pricing, reimbursement, and medical affairs activities conducted through Indegene, our primary commercial partner.

Change in fair value of derivative and interest and other income (expense), net

The following table summarizes the change in fair value of derivative and interest and other income (expense), net for the three months ended June 30, 2026 and 2025:

		Three Months Ended												%
		June 30,								Increase				Increase
(in thousands)		2026				2025				(Decrease)				(Decrease)
Change in fair value of derivative		$	(314	)		$	(194	)		$	120				61.9	%
Interest and other income (expense), net			(141	)			(139	)			2				1.4	%

Change in fair value of derivative for the three months ended June 30, 2026 and June 30, 2025 relates to the 2025 LP Purchase Agreement and the change in fair value of the derivative asset or liability. Interest expense, net for the three months ended June 30, 2026 and June 30, 2025 relates to interest incurred on the 2024 Note and 2025 Note, offset by interest earned on invested balances.

Comparison of the six months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:

		Six Months Ended												%
		June 30,								Increase				Increase
(in thousands)		2026				2025				(Decrease)				(Decrease)
Operating Expenses:
Research and development		$	3,671			$	4,924			$	(1,253	)			(25.4	)%
Selling, general and administrative			9,667				3,432				6,235				181.7	%
Operating Loss			(13,338	)			(8,356	)			4,982				59.6	%
Change in fair value of derivative			(1,166	)			(244	)			922				377.9	%
Interest and income (expense), net			(678	)			(236	)			442				187.3	%
Net Loss		$	(15,182	)		$	(8,836	)		$	6,346				71.8	%

Research and development expenses

The following table summarizes our R&D expenses for the six months ended June 30, 2026 and 2025:

		Six Months Ended
		June 30,												%
(in thousands)		2026				2025				Increase				Increase
Clinical operations		$	91			$	1,872			$	(1,781	)			(95.1	)%
Drug manufacturing			2,076				1,490				586				39.3	%
Personnel expenses			1,356				970				386				39.8	%
Regulatory costs			148				592				(444	)			(75.0	)%
Total research and development expenses		$	3,671			$	4,924			$	(1,253	)			(25.4	)%

R&D expenses decreased approximately $1.3 million, or 25.4%, to $3.7 million for the six months ended June 30, 2026, from $4.9 million for the six months ended June 30, 2025. The decrease was driven primarily by lower clinical operations costs following the conclusion of clinical studies in early 2025 and the absence of increased NDA-preparation regulatory costs incurred in the prior-year period, partially offset by increased manufacturing activities in the first half of 2026 related to CTx-1301 as well as increased personnel costs.

Selling, general and administrative expenses

The following table summarizes our SG&A expenses for the six months ended June 30, 2026 and 2025:

		Six Months Ended												%
		June 30,								Increase				Increase
(in thousands)		2026				2025				(Decrease)				(Decrease)
Pre-commercialization costs		$	5,213			$	111			$	5,102				NM
Personnel expenses			1,985				1,030				955				92.7	%
Legal and professional fees			1,708				1,474				234				15.9	%
Occupancy			141				150				(9	)			(6.0	)%
Insurance			299				371				(72	)			(19.4	)%
Other			321				296				25				8.4	%
Total selling, general and administrative expenses		$	9,667			$	3,432			$	6,235				181.7	%

Total SG&A expenses increased approximately $6.2 million, or 181.7%, to $9.7 million for the six months ended June 30, 2026, from $3.4 million for the six months ended June 30, 2025, reflecting the progressive build-out of commercial readiness capabilities across the first half of the year, including headcount additions and expanded market access, pricing, reimbursement, and medical affairs activity through Indegene, our primary commercialization partner.

Change in fair value of derivative and interest and other income (expense), net

The following table summarizes the change in fair value of derivative and interest and other income (expense), net for the six months ended June 30, 2026 and 2025:

		Six Months Ended												%
		June 30,								Increase				Increase
(in thousands)		2026				2025				(Decrease)				(Decrease)
Change in fair value of derivative		$	(1,166	)		$	(244	)		$	922				NM
Interest and other income (expense), net			(678	)			(236	)			442				187.3	%

Change in fair value of derivative for the six-months ended June 30, 2026 relates to the 2025 LP Purchase Agreement and remeasurement of the associated derivative asset or liability. Interest expense, net reflects interest incurred on the 2024 Note and 2025 Note, partially offset by interest earned on invested cash balances.

Cash Flows

		Six Months Ended
		June 30,
		2026				2025
Net cash used in operating activities		$	(12,813	)		$	(9,403	)
Net cash used in investing activities			(128	)			(6	)
Net cash provided by financing activities			30,390				6,098
Net increase (decrease) in cash and cash equivalents		$	17,449			$	(3,311	)

Cash Flows from Operating Activities

Net cash used in operating activities was $12.8 million for the six months ended June 30, 2026. Cash used in operating activities was primarily due to the use of funds in our operations and to develop CTx-1301 resulting in a net loss of $15.2 million, including the effects of significant noncash items, stock-based compensation expense of $1.0 million, change in fair value of derivative of $1.2 million, loss on debt extinguishment of $0.5 million, accretion of discount on note payable of $0.2 million and depreciation expense of $0.2 million. Changes in operating assets and liabilities included an increase in prepaid expenses and other current assets of $0.7 million primarily due to payments for manufacturing materials and professional fees.

Net cash used in operating activities was $9.4 million for the six months ended June 30, 2025. Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $8.8 million, including the effects of significant noncash items, stock-based compensation expense of $0.5 million and depreciation expense of $0.3 million. Changes in operating assets and liabilities included a decrease in trade accounts payable and accrued expenses of $0.9 million primarily due to the payment of vendor balances in the first quarter of 2025 and an increase in prepaid expenses and other current assets of $0.9 million primarily due to payments for professional and marketing fees.

Cash Flows from Investing Activities

Net cash used in investing activities for the six-month period ended June 30, 2026 was primarily related to the purchase of equipment to support our R&D activities.

Cash Flows from Financing Activities

Net cash provided by financing activities for the six-month period ended June 30, 2026 was related to the cash proceeds from the issuance of securities pursuant to the Private Placement, 2023 ATM Agreement, 2026 ATM Agreement and the 2025 LP Purchase Agreement.

Net cash provided by financing activities for the six-month period ended June 30, 2025 was related to the cash proceeds from the issuance of common stock pursuant to the 2023 ATM Agreement and the Original LP Purchase Agreement.

Liquidity and Capital Resources

Sources of Liquidity

As of June 30, 2026, we had cash and cash equivalents of $28.4 million. Under our current business plan, we believe our cash will satisfy our capital needs into mid 2027. Changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control.

Since our inception in 2012 through June 30, 2026, we have not generated any revenue and have incurred significant operating losses and negative cash flow from our operations. We have funded our operations primarily through private and public equity and debt financings. In February 2026, we received gross proceeds of $12,011,000 from the Private Placement.

In the three months ended June 30, 2026, we sold 806,893 shares of common stock under the 2026 ATM Agreement, for net proceeds of $4,347,364, after deducting $136,364 of compensation to A.G.P. and other administration fees. Subsequent to June 30, 2026, we sold 271,717 shares of common stock under the 2026 ATM Agreement, for net proceeds of $1,394,179, after deducting $43,751 of compensation to A.G.P. and other administration fees.

During the three months ended June 30, 2026, we sold 1,032,372 shares of common stock under the 2025 LP Purchase Agreement, for net proceeds of $5,058,975. Subsequent to June 30, 2026, we sold 220,476 shares of common stock under the 2025 LP Purchase Agreement, for net proceeds of $1,068,525.

Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity while producing a modest return on investment. Accordingly, our cash equivalents are invested primarily in money market funds which are currently providing only a minimal return given the current interest rate environment.

We expect to continue to incur substantial additional operating losses for the near term as we continue to seek marketing approval for CTx-1301 . Subsequent to potential marketing approval for CTx-1301, we will incur sales, marketing, operational and manufacturing expenses.

Our future use of operating cash and capital requirements will depend on many forward-looking factors, including the following:

	●	whether we receive FDA approval for CTx-1301 and the timing of such approval;
	●	the cost and timing of the FDA review process for CTx-1301;
	●	the cost and timing of manufacturing the clinical supply of our product candidates;
	●	the initiation, progress, timing, costs and results of clinical trials for our product candidates;
	●	the clinical development plans we establish for each product candidate;
	●	the number and characteristics of product candidates that we develop or may in-license;
	●	the terms of any collaboration or license agreements we may choose to execute;
	●	the outcome, timing and cost of meeting regulatory requirements established by the FDA or other comparable foreign regulatory authorities;
	●	the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
	●	the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;
	●	the cost and timing of the implementation of commercial scale manufacturing activities; and

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the cost and timing of outsourcing our commercialization efforts, including sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products.

To continue to grow our business over the longer term, we plan to commit substantial resources to R&D, including clinical trials of our product candidates, and other operations and potential product acquisitions and in-licensing. We have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in-license and develop additional products and product candidates to augment our internal development pipeline. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. In addition, we may pursue development, acquisition or in-licensing of approved or development products in new or existing therapeutic areas or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

For example, pursuant to the 2025 Note Purchase Agreement with Avondale, we are subject to certain restrictions on our ability to issue securities during the term of the 2025 Note. Specifically, we have agreed, among other things, to refrain from entering into any agreement or covenant that locks up, restricts or otherwise prohibits us from entering into a variable rate transaction with the lenders or any of their affiliates, or from issuing common stock or other equity or debt securities to the lenders or any of their affiliates. If we breach the 2025 Note Purchase Agreement, we may be obligated to indemnify Avondale for loss or damage arising as a result of any breach or alleged breach by us of the 2025 Note Purchase Agreement, which may affect our business operations and financial condition. Additionally, the 2025 Note provides that following an event of default under the 2025 Note, Avondale has the right to seek and receive injunctive relief from a court or an arbitrator prohibiting us from issuing any of our common stock or preferred stock to any party unless fifty percent of the gross proceeds received by us in connection with such issuance are simultaneously used to make a payment under the 2025 Note. Avondale also has the right to seek and receive injunctive relief from a court or arbitrator to prevent the consummation of any fundamental transaction, as defined in the 2025 Note, unless it contains a closing condition that the 2025 Note are paid in full upon consummation of the transaction or Avondale has provided its written consent to such transaction.

Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences that are not favorable to us or our existing stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

Contractual Obligations

The following summarizes our contractual obligations as of June 30, 2026 that will affect our future liquidity.

We entered into a patent and know-how licensing agreement with BDD Pharma Limited in August 2018. See "Item 1. Business - Material Agreements" section of our Form 10-K for a description of this agreement. We are required to pay BDD Pharma certain amounts in connection with clinical trial and regulatory milestones. The final milestone payment of $250,000 will be due to BDD upon FDA approval of CTx-1301. Additional royalty payments will become due upon potential sales of CTx-1301 pursuant to the terms of the agreement.

We entered into agreements with Bend Bioscience, our CDMO, for CMC work to be completed relating to the resubmission of our NDA for CTx-1301 including the manufacturing of our verification batches with a total cost of approximately $1.6 million.

We entered into an agreement with Bend Bioscience, our CDMO, for the manufacture of process validation batches of CTx-1301 with a total estimated cost of approximately $7.0 million.

In May 2025, the Company executed a lease to renew the office space for its headquarters in Kansas City, Kansas. The lease has a five-year term that commenced on June 1, 2025 with total rent of $33,145 per month over the lease term. The operating lease right-of-use asset was $1,223,587, the current portion of the operating lease liability was $255,132 and the long-term portion of the lease liability was $968,455 as of June 30, 2026.

Going Concern

Since inception we have been engaged in organizational activities, including raising capital and R&D activities. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. We are subject to those risks associated with any pre-clinical stage pharmaceutical company that has substantial expenditures for R&D. There can be no assurance that our R&D projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, we operate in an environment of rapid technological change that is largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for one year after the issuance date of our financial statements. The accompanying consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We have incurred a net loss for the three months ended June 30, 2026 and 2025 and had accumulated losses of $147.6 million since inception to June 30, 2026. We anticipate incurring additional losses until such time, if ever, that we can generate significant revenue from our product candidates currently in development. Our sources of capital have included private capital raises in various classes of units of CTx prior to the Reorganization Merger, the issuance of equity securities in connection with our initial public offering (IPO), follow-on public offerings in September 2023 and February 2024, sales of common stock under our 2023 ATM Agreement and 2026 ATM Agreement, Original LP Purchase Agreement and 2025 LP Purchase Agreement, a private placement with WFIA, the WFIA Note, which was subsequently converted to equity, the June 2024 warrant inducement, the issuance of the 2024 Note, which was subsequently converted to equity, and 2025 Note and the Private Placement in February 2026. Additional capital will be needed by us to fund our operations, to complete development of and to commercially develop our product candidates. There is no assurance that such capital will be available when needed or on acceptable terms.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an "emerging growth company." As an "emerging growth company," we are electing to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies.

Subject to certain conditions set forth in the JOBS Act, as an "emerging growth company," we are not required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation. These exemptions will apply until the fifth anniversary of the completion of our IPO, which occurred in December 2021, or until we no longer meet the requirements for being an "emerging growth company," whichever occurs first.