Vyne Therapeutics Inc.
02/27/2026 | Press release | Distributed by Public on 02/27/2026 07:02
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, for purposes of this subsection only, all references to the "Company," "our," "us" "we" or "VYNE" refer to VYNE Therapeutics Inc. and its subsidiaries prior to the consummation of the Merger. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Item 1A. Risk Factors".
Company Overview
We are a clinical-stage biopharmaceutical company focused on developing differentiated therapies to treat inflammatory and immune-mediated conditions with high unmet need.
We have exclusive worldwide rights to research, develop and commercialize products containing small molecule bromodomain and extra-terminal domain ("BET") inhibitors for the treatment of any disease, disorder or condition in humans, which we licensed from Tay Therapeutics Ltd., formerly known as In4Derm Ltd ("Tay"). BET proteins are epigenetic enablers of transcription that regulate the expression of specific genes. Each BET protein consists of two bromodomains ("BD1" and "BD2") and one end terminal ("ET") domain. Through our transaction with Tay, we obtained access to a library of new small molecule BET inhibitor compounds including those that inhibit both BD1 and BD2 ("pan-BD" BET inhibitor) and that selectively inhibit BD2 ("BD2-selective" BET inhibitor). We initially focused our development efforts with these molecules on immune-mediated inflammatory diseases, which are not being targeted by current BET inhibitors in development.
We are developing VYN202, an oral, small molecule BD2-selective BET inhibitor. VYN202 has been designed to achieve potential class-leading potency and selectivity for BD2 vs. BD1. By maximizing BD2 selectivity, we believe VYN202 has the potential to be a potent oral immunomodulator option for both acute control and chronic management of immune-mediated inflammatory conditions, without the hematologic and gastrointestinal adverse effects associated with earlier generation systemic pan-BD BET inhibitors that were being developed in oncologic settings. We have evaluated VYN202 in preclinical studies in areas such as nephrology, pulmonology, rheumatology and myeloproliferative neoplasms, among others. In December 2024, we announced positive data from have completed a Phase 1a single ascending dose/multiple ascending dose ("SAD/MAD") trial of VYN202 in healthy volunteers and announced positive data from this trial in December 2024. We initiated a Phase 1b trial in February 2025 in adult subjects with moderate-to-severe plaque psoriasis. In April 2025, the U.S. Food and Drug Administration ("FDA") verbally placed a clinical hold on the Company's Phase 1b trial evaluating VYN202 in subjects with moderate-to-severe plaque psoriasis following an observation of testicular toxicity in dogs from a non-clinical toxicology study of VYN202. In June 2025, the FDA lifted the clinical hold for two doses of VYN202 for female subjects and indicated that sufficient data from a 12-week non-clinical toxicology study of VYN202 in dogs would be required in order to resume studies in male clinical subjects. Following the clinical hold, we made the decision to unblind the clinical data from the subjects who were enrolled in the trial. Based on interim unblinded clinical data from the Phase 1b trial, together with promising results from multiple preclinical models, we terminated the Phase 1b psoriasis trial in support of continued advancement of VYN202 into other serious, immune-mediated diseases with more limited effective treatment options. In October 2025, we initiated the repeat non-clinical toxicology study of VYN202 in male dogs to remedy the partial hold in male clinical subjects. The study is expected to be completed in the second half of 2026, with a final report expected in the fourth quarter of 2026.
Until July 2025, our lead product was repibresib gel (also known as VYN201), a topically administered, small molecule pan-bromodomain ("BD") BET inhibitor designed as a "soft" drug to address diseases involving multiple, diverse inflammatory cell signaling pathways while providing low systemic exposure. We announced positive results from a Phase 1b trial evaluating repibresib in nonsegmental vitiligo in October 2023 and initiated a Phase 2b trial in nonsegmental vitiligo in June 2024. In July 2025, we announced that the trial did not meet its primary endpoint of the proportion of subjects achieving an improvement in Facial Vitiligo Area Scoring Index of at least 50% from baseline ("F-VASI50") at week 24 compared to vehicle. Based on these data, we discontinued the then ongoing extension phase of the trial and terminated the trial.
In August 2025, our board of directors initiated a strategic review to evaluate a range of options to maximize stockholder value, including the assessment of our internal pipeline, financing opportunities and strategic alternatives. Following the strategic review, we entered into an Agreement and Plan of Merger and Reorganization, dated as of December 17, 2025, which was amended on January 30, 2026 (as amended, the "Merger Agreement") with Yarrow Biosciences, Inc. ("Yarrow"), pursuant to which among other matters, Yellow Merger Sub Corp., a direct, wholly owned subsidiary of ours ("Merger Sub"), will merge with and into Yarrow, with Yarrow surviving as a wholly owned subsidiary of VYNE and the surviving corporation of the merger (the "Merger"). Following the completion of the Merger, the current business of Yarrow will become the Company's primary business. As such, we may continue to evaluate opportunities for repibresib and VYN202 prior to the closing of the Merger, which may include a sale, license, transfer, disposition, divestiture or other monetization transaction to a third party or to a related party so long as the transaction would not result in material post-closing obligations to the Company without Yarrow's consent.
The Proposed Merger
The Merger Agreement
Following the strategic review described above, on December 17, 2025, we entered into the Merger Agreement with Yarrow, a privately held biotechnology company advancing YB-101 (also known as GS-098), a clinical-stage, humanized monoclonal antibody targeting the thyroid-stimulating hormone receptor for the treatment of Graves' disease and exploring a clinical development plan for thyroid eye disease, pursuant to which Yarrow will become a wholly owned subsidiary of VYNE and VYNE will operate under the name Yarrow Bioscience, Inc. following the Merger. We anticipate that the Merger will close in the second quarter of 2026, subject to the satisfaction of certain closing conditions, along with the concurrent Yarrow Pre-Closing Financing (as described below). Following the Merger, the current business of Yarrow will become our primary business.
Yarrow Series A Preferred Stock Financing
In connection with the execution of the Merger Agreement, certain institutional and accredited investors (the "Series A Investors", led by an affiliate of RTW Investments) and Yarrow entered into a Series A stock purchase agreement, pursuant to which such persons invested in and purchased an aggregate of 20,242,911 shares of Yarrow Preferred Stock at a purchase price of $4.94 per share for aggregate gross proceeds to Yarrow of $100.0 million.
Yarrow Pre-Closing Financing
Concurrently with the execution and delivery of the Merger Agreement, the Series A Investors also entered into the Securities Purchase Agreement with Yarrow, pursuant to which such investors have agreed to purchase, immediately prior to the Merger, shares of Yarrow common stock or, in lieu thereof, Yarrow pre-funded warrants, representing an aggregate commitment of approximately $100.0 million in the Yarrow Pre-Closing Financing.
The shares of Yarrow common stock and Yarrow pre-funded warrants that are issued in the Yarrow Pre- Closing Financing will be or will have the right to be, respectively, converted into shares of VYNE common stock in the Merger.
The Securities Purchase Agreement contains customary representations and warranties of Yarrow and the purchaser parties thereto.
The Securities Purchase Agreement also contemplates Yarrow and the investors participating in the Yarrow Pre-Closing Financing entering into a registration rights agreement at the closing of the Yarrow Pre-Closing Financing, pursuant to which, among other things, the Combined Company will agree to provide for the registration and resale of certain shares of VYNE common stock that are held by the investors participating in the Yarrow Pre-Closing Financing from time to time pursuant to Rule 415.
Pre-Closing Special Cash Dividend
Further, prior to the closing of the Merger, we expect to declare and set aside the aggregate cash amount to be paid in accordance with a special cash dividend (the "special cash dividend") to holders of record of outstanding shares of our common stock as of a record date prior to the effective time of the Merger, to be determined by our board of directors. The ex-dividend date in respect of such special cash dividend will be determined by Nasdaq. Our stockholders of record prior to the ex-dividend date will be entitled to receive the special cash dividend, regardless of whether they beneficially own such shares as of the dividend date. The amount of the special cash dividend is expected to be approximately $14.5 million to $16.5 million in the aggregate.
Known Trends, Events and Uncertainties
Business and Macroeconomic Conditions
Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including inflation, interest rates, financial market volatility and uncertainty, the impact of war or military conflict, including the wars in Ukraine and the Middle East, rising tensions between China and Taiwan and the response thereto, public health pandemics, global trade policy volatility, such as tariffs, and supply chain disruptions. Adverse effects of these large macroeconomic conditions have been prevalent in many of the areas where we, our contract research organizations, suppliers or third-party business partners conduct business and as a result, we have experienced disruptions and may continue to experience more pronounced disruptions in our operations. In addition, financial markets have experienced a period of high volatility due to these macroeconomic factors. The persistence of this volatility may impact our ability to engage in capital market activities and adequately fund our operations. As of the filing date of this Annual Report, the extent to which these macroeconomic events and conditions may impact our financial condition, results of operations or liquidity is uncertain. The effect of these macroeconomic events and conditions may not be fully reflected in our results of operations and overall financial performance until future periods. See "Part I-Item 1A. Risk Factors" for further discussion of the possible impact of these macroeconomic conditions on our business.
Development and License Agreements
Agreements with Tay Therapeutics
Evaluation and Option Agreement
In April 2021, we entered into an Evaluation and Option Agreement (the "Option Agreement") with Tay. Pursuant to the Option Agreement, Tay granted us an exclusive option to obtain certain exclusive worldwide rights to research, develop and commercialize products containing Tay's BET inhibitor compounds for the treatment of any disease, disorder or condition in
humans. Pursuant to the Option Agreement, we agreed to use commercially reasonable efforts to develop and manufacture a product with a pan-BD BET inhibitor as its active ingredient, and Tay agreed to provide a mutually agreed data package and select a new chemical entity development candidate from its Oral BETi Compounds. We paid a $1.0 million non-refundable cash payment to Tay upon execution of the Option Agreement.
Under the terms of the Option Agreement, our option (the "Oral Option") with respect to the Oral BETi Compounds was to expire on June 30, 2022, but in June 2022, we and Tay entered into a letter agreement to extend the option term to February 28, 2023. In February 2023, we and Tay entered into an additional letter agreement pursuant to which the option term was further extended to April 30, 2023. We exercised the Oral Option for VYN202 on April 28, 2023.
License for Locally Administered Pan-BD BET Inhibitor Program (Repibresib)
In August 2021, we exercised our option with respect to the repibresib program and entered into a License Agreement (the "Repibresib License Agreement") granting us a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of Tay's pan-BD BET inhibitor compounds in all fields. We have the sole responsibility for development, regulatory, marketing and commercialization activities to be conducted for the licensed products at our sole cost and discretion. We are required to use commercially reasonable efforts to develop and, if approved, commercialize such products. Pursuant to the Repibresib License Agreement, a joint development committee consisting of one representative from each party reviews the progress of the development plan for the licensed products. Pursuant to the Repibresib License Agreement, we may develop a product that contains or incorporates a specific BET inhibitor, whether alone or in combination with other active ingredients, in any form, formulation, presentation, or dosage, and for any mode of administration.
We made a $0.5 million cash payment to Tay in 2021 in connection with entering into the Repibresib License Agreement. Pursuant to the Repibresib License Agreement, we agreed to make cash payments to Tay upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed topical product in the United States of up to $15.75 million for all indications, of which $1.8 million has been paid or accrued through December 31, 2025. Tay is entitled to additional milestone payments upon the achievement of regulatory approvals in certain non-U.S. jurisdictions. In addition, with respect to any products we commercialize under the Repibresib License Agreement, we will pay tiered royalties to Tay on net sales of such licensed products by us, our affiliates, or sublicensees, of 5%, 7.5% and 10% based on tiered annual net sales of licensed products under the Repibresib License Agreement and the VYN202 License Agreement, subject to specified reductions. We are obligated to pay royalties until the latest of (1) the tenth anniversary of the first commercial sale of the relevant licensed product, (2) the expiration of the last valid claim of the licensed patent rights covering such licensed product in such country and (3) the expiration of regulatory exclusivity for the relevant licensed product in the relevant country, on a licensed product-by-licensed product and country-by-country basis.
Pursuant to the Repibresib License Agreement, we were granted a sublicense under certain intellectual property which was licensed to Tay by the University of Dundee ("Dundee") pursuant to a certain license agreement between Tay and Dundee effective as of July 24, 2020 and amended and restated on October 8, 2021 (the "Head License"). On February 13, 2025, Tay and Dundee entered into an agreement for the termination of the Head License and assignment of such intellectual property from Dundee to Tay. Upon termination of the Head License, the Repibresib License Agreement was accordingly amended to reflect the assignment of the intellectual property to Tay upon its payment in full to Dundee. The amendment does not change any of Tay's or VYNE's rights or obligations under the Repibresib License Agreement, except that any obligations owed by VYNE to Dundee with respect to repibresib are now owed to Tay.
License for Selective BET Inhibitor Program (VYN202)
On April 28, 2023, we exercised the Oral Option and entered into a license agreement (the "VYN202 License Agreement") with Tay granting us a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of Tay's Oral BETi Compounds in all fields. We have the sole responsibility for development, regulatory, marketing and commercialization activities to be conducted for the licensed products at our sole cost and discretion, and shall use commercially reasonable efforts to develop and, if approved, commercialize such products. We may sublicense our rights to a third party without Tay's consent. Pursuant to the VYN202 License Agreement, a joint development committee consisting of one representative from each party reviews the progress of the development plan for the licensed products.
We made a cash payment of $3.75 million to Tay in connection with entering into the VYN202 License Agreement. Pursuant to the terms of the VYN202 License Agreement, we agreed to make cash payments to Tay of up to $43.75 million upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed oral product in the United States for all indications, of which $2.3 million has been paid or accrued through December 31, 2025. In August 2025, we paid Tay $1.0 million in partial satisfaction of the "Phase 2 Milestone" under the VYN202 License Agreement for the initiation of the Phase 1b trial in psoriasis and amended the VYN202 License Agreement to provide that upon initiation of a new clinical trial in a target patient population involving VYN202 for oral administration with an efficacy endpoint, regardless of the trial's phase designation or regulatory classification, we shall pay Tay the remaining $4.0 million under the "Phase 2 Milestone." All other terms of the VYN202 License Agreement were unchanged. Tay is entitled to additional milestone payments upon the achievement of regulatory approvals in certain non-U.S. jurisdictions. In addition, with respect to any products we commercialize under the VYN202 License Agreement, we will pay tiered royalties to Tay on net sales of such licensed products by us, our affiliates, or sublicensees, of 5%, 7.5% and 10% based on tiered annual net sales of licensed products under the VYN202 License Agreement and the Repibresib License Agreement, subject to specified reductions. We are obligated to pay royalties until the latest of (1) the tenth anniversary of the first commercial sale of the relevant licensed product, (2) the expiration of the last valid claim of the licensed patent rights covering such licensed product in such country and (3) the expiration of regulatory exclusivity for the relevant licensed product in the relevant country, on a licensed product-by-licensed product and country-by-country basis.
Components of Results of Operations
Segment Results
As of December 31, 2024, we adopted ASU 2023-07, Segment Reporting (Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company has identified and reports as one operating segment. See "Note 15-Segment Information" for further details.
Revenues
Historically, we have generated revenues under development and license agreements, including royalty payments from sales of Finacea foam. We previously licensed the rights to Finacea to LEO Pharma A/S ("LEO Pharma"). Royalty revenues for the years ended December 31, 2025 and 2024 were $0.6 million and $0.5 million, respectively, from LEO Pharma in connection with sales of Finacea.
Operating Expenses
Research and development expenses
Our research and development expenses relate primarily to the development of repibresib and VYN202. We charge all research and development expenses to operations as they are incurred.
Our total research and development expenses for the years ended December 31, 2025 and 2024 were $19.2 million and $30.9 million, respectively.
Research and development expenses consist primarily of:
•employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses, for research and development personnel;
•expenses incurred under agreements with third parties, including contract research organizations, subcontractors, suppliers and consultants that conduct regulatory activities, clinical trials and preclinical studies;
•expenses incurred to acquire, develop and manufacture clinical trial materials;
•expenses and milestone payments incurred under licensing agreements;
•costs associated with the creation, development and protection of intellectual property; and
•other costs associated with preclinical and clinical activities and regulatory operations.
General and administrative expenses
Our general and administrative expenses for the years ended December 31, 2025 and 2024 were $11.1 million and $13.2 million, respectively.
Our general and administrative expenses consist principally of:
•employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses;
•professional fees for legal, auditing, tax and other consulting expenses; and
•facility, insurance, information technology, travel, and depreciation expenses.
Other Income, net
Other income, net primarily consists of amounts recognized for the settlement of the ERTC in 2025 and interest earned on our cash, cash equivalents, and marketable securities.
Income Taxes and Net Operating Loss Carryforwards
We have incurred significant net operating losses ("NOLs") since our inception. We expect to continue to incur NOLs until such a time when we generate adequate revenues for us to reach profitability. As of December 31, 2025, we had federal and state net operating loss carryforwards of $332.1 million and $94.2 million, respectively, of which $4.1 million will begin to expire in 2037 for federal and $94.2 million will begin to expire in 2040 for state purposes. As of December 31, 2025, we had federal research and development tax credit carryforwards of $7.1 million which will begin to expire in 2031. We have no state research and development tax credit carryforwards. As of December 31, 2025, we had $227.8 million in federal and state NOLs with no limited period of use. Other than the federal NOLs expected to expire unutilized as noted below, there were no significant updates through December 31, 2025.
NOLs and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of our company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. State NOLs and tax credit carryforwards may be subject to similar limitations under state laws. We have not completed a Section 382 study through December 31, 2025; however, we have completed a 382 study through March 31, 2025, and we determined that we experienced ownership changes in connection with the 2020 merger between Menlo Therapeutics (our predecessor company) and Foamix Pharmaceuticals Ltd. and with our private placement transaction in November 2023. As a result of the ownership changes, $40.2 million of federal NOLs and $2.1 million of research and development tax credits are expected to expire unutilized and have been written off. We may experience ownership changes in the future as a result of the Merger or subsequent shifts in our stock ownership, some of which may be outside of our control. As a result, even if we earn net taxable income, our ability to use the NOL and tax credit carryforwards may be materially limited, which could harm our future operating results by effectively increasing our future tax obligations.
Results of Operations for the Years Ended December 31, 2025 and December 31, 2024
| Year Ended December 31, | Increase/(Decrease) | Increase/(Decrease) | |||||||||||||||||||||||||||
| (in thousands, except %) | 2025 | 2024 | $ | % | |||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Royalty revenues | $ | 570 | $ | 501 | $ | 69 | 13.8 | % | |||||||||||||||||||||
| Total revenues | 570 | 501 | 69 | 13.8 | % | ||||||||||||||||||||||||
|
Operating expenses
|
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| Research and development | 19,237 | 30,946 | (11,709) | (37.8) | % | ||||||||||||||||||||||||
| General and administrative | 11,082 | 13,192 | (2,110) | (16.0) | % | ||||||||||||||||||||||||
| Total operating expenses | 30,319 | 44,138 | (13,819) | (31.3) | % | ||||||||||||||||||||||||
| Operating loss | (29,749) | (43,637) | (13,888) | (31.8) | % | ||||||||||||||||||||||||
| Other income, net | 3,017 | 3,834 | (817) | (21.3) | % | ||||||||||||||||||||||||
| Loss from continuing operations before income taxes | (26,732) | (39,803) | (13,071) | (32.8) | % | ||||||||||||||||||||||||
| Income tax expense | 4 | 4 | - | * | |||||||||||||||||||||||||
| Loss from continuing operations | (26,736) | (39,807) | (13,071) | (32.8) | % | ||||||||||||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes
|
253 | (27) | (280) | * | |||||||||||||||||||||||||
| Net loss | $ | (26,483) | $ | (39,834) | $ | (13,351) | (33.5) | % | |||||||||||||||||||||
|
*percentage not meaningful
|
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Revenues
Revenues totaled $0.6 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively, consisting of royalty revenue from our royalty agreement with LEO Pharma.
Research and development expenses
Our research and development expenses for the year ended December 31, 2025 were $19.2 million, representing a decrease of $11.7 million, or 37.8%, compared to $30.9 million for the year ended December 31, 2024. The decrease was primarily due to a decrease of $7.8 million in expenses for repibresib, a decrease of $3.5 million in expenses for VYN202 and a decrease of $0.4 million related to consulting services. The $7.8 million decrease in expenses for repibresib was primarily driven by the timing of expenses for the Phase 2b trial in nonsegmental vitiligo, including our decision to terminate the trial following the announcement of topline results in July 2025. The $3.5 million decrease in expenses for VYN202 was primarily driven by decreased clinical expenses for the Phase 1 trials evaluating VYN202, partially offset by a $1.0 million milestone payment made to Tay in the third quarter of 2025 under an amendment to the VYN202 License Agreement.
General and administrative expenses
Our general and administrative expenses for the year ended December 31, 2025 were $11.1 million, representing a decrease of approximately $2.1 million, or 16.0%, compared to $13.2 million for the year ended December 31, 2024. The decrease was primarily driven by $1.6 million of employee related expenses and consulting and professional fees of $0.5 million.
Other Income, net
Other income, net for the years ended December 31, 2025 and 2024 was $3.0 million and $3.8 million, respectively. The decrease was primarily related to decreased interest income earned on cash, cash equivalents and marketable securities compared to prior period, partially offset by the recognition of $1.3 million in income during 2025 related to the closure of the IRS examination period of the Company's ERTC filings.
Loss from discontinued operations, net of income taxes
Due to the sale of the MST Franchise during the first quarter of 2022, in accordance with ASC 205, Discontinued Operations, we have classified the results of the MST Franchise as discontinued operations in our consolidated statements of operations and comprehensive loss for all periods presented. See "Note 4-Discontinued Operations" in the consolidated financial statements.
Liquidity and Capital Resources
Sources of Liquidity
On December 17, 2025, we entered into the Merger Agreement pursuant to which, among other matters, Merger Sub will merge with and into Yarrow, with Yarrow surviving as a wholly owned subsidiary of the Company. The closing of the Merger is subject to approval by our stockholders and the stockholders of Yarrow and other customary closing conditions. Our future operations are highly dependent on the success of the proposed Merger with Yarrow.
As of December 31, 2025, we had cash, cash equivalents, and marketable securities of $29.0 million and an accumulated deficit of $757.7 million. We had no outstanding debt as of December 31, 2025. For the year ended December 31, 2025, we incurred a net loss of $26.5 million and used $33.1 million of cash in operations.
Based on our current operating plan, we believe our existing cash, cash equivalents, and marketable securities are sufficient to fund our operating and capital expenditure requirements through the anticipated closing date of the Merger and for a period of at least 12 months from the date of issuance of the audited consolidated financial statements included in this Annual Report; however, we have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. If our available cash, cash equivalents, and marketable securities are insufficient to satisfy our liquidity requirements, we may need to raise additional capital to fund our operations. No assurance can be given as to whether additional needed financing will be available on terms acceptable to us, if at all. If sufficient funds on acceptable terms are not available when needed, we may be required to suspend or forego certain planned activities. Failure to manage discretionary spending or raise additional financing, as needed, would adversely impact our ability to achieve our intended business objectives and have an adverse effect on our results of operations and future prospects.
Our sources of funding for the years ended December 31, 2025 and 2024 are further evaluated in the cash flow section below. Other than our obligations pursuant to the Tay License Agreements, we have no ongoing material financial commitments that may affect our liquidity over the next five years. See the section titled "Development and License Agreements-Agreements with Tay Therapeutics" for additional discussion of our financial obligations under the Tay License Agreements.
Future Funding Requirements
Our primary uses of capital were historically compensation and related expenses, research and development costs to support our product candidate pipeline, legal and other regulatory expenses and general overhead costs. Now that we have suspended and are winding down our research and development activities in anticipation of the Merger with Yarrow, our operations will be limited and we expect that our expenses other than those related to the Merger will decrease significantly. Our future operations are highly dependent on the success of the proposed Merger with Yarrow. If the Merger Agreement with Yarrow is terminated, we may pursue other strategic alternatives, including financing opportunities, or liquidation.
If the Merger is not completed, in order to continue the development of VYN202 (including making milestone payments pursuant to the VYN202 License Agreement), or any future product candidates, we will require substantial additional capital. Accordingly, we may seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include collaborations, partnerships or other licensing or other strategic arrangements with third parties. To the extent that we raise additional capital through equity financings or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation, voting or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain investments or engage in merger, consolidation, licensing, or asset sale transactions. If we raise capital through collaborations, partnerships, and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We may be unable to raise additional capital from these sources on favorable terms, or at all.
In addition, the amount of proceeds we may be able to raise pursuant to our shelf registration statement on Form S-3 is limited. As of the filing of this Annual Report, we are subject to the general instructions of Form S-3 known as the "baby shelf rules." Under these rules, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of our common stock held by our non-affiliates. Therefore, we will be limited in the amount of proceeds we are able to raise by selling shares of common stock using our Form S-3 until such time as our public float exceeds $75.0 million.
Our ability to raise additional capital may also be adversely impacted by global economic conditions and disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from bank failures, other general macroeconomic conditions and otherwise. The failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to delay, reduce or curtail our research or product development efforts. We cannot provide assurance that we will ever generate positive cash flow from operating activities.
Our present and future funding requirements will depend on a number of factors, including the following:
•the costs and timing of the Merger;
•our ability to complete the Merger or, if the Merger is not completed, identify and consummate another strategic transaction;
•the scope, timing, progress, results, and costs of researching and developing VYN202;
•the scope, timing, progress, results, and costs of preclinical studies and clinical trials for any other current and future programs;
•the time and costs involved in obtaining regulatory approval for our other pipeline product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of these product candidates;
•terms and timing of any acquisitions, collaborations or other arrangements;
•the cost and timing of attracting, hiring, and retaining skilled personnel to support our operations;
•the number of potential new products we identify and decide to develop;
•the costs involved in filing and prosecuting patent applications and obtaining, maintaining and enforcing patents or defending against claims or infringements raised by third parties, and license royalties or other amounts we may be required to pay to obtain rights to third party intellectual property rights; and
•the costs associated with operating as a public company.
Our operating plan may change as a result of many factors currently unknown to us, and any such change may affect our funding requirements. We may therefore need to seek additional capital sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations or additional license arrangements. Such financings may result in dilution to stockholders, imposition of debt covenants and repayment obligations or other restrictions that may affect our business.
For more information as to the risks associated with our future funding needs, see "Part I-Item 1A. Risk Factors" included herein.
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash (used in) / provided by: | (in thousands) | ||||||||||
| Operating activities | $ | (33,124) | $ | (33,972) | |||||||
| Investing activities | 37,368 | 23,365 | |||||||||
| Financing activities | (143) | (141) | |||||||||
Net cash used in operating activities
During the year ended December 31, 2025, net cash used in operating activities was $33.1 million and primarily reflected our net loss of $26.5 million adjusted for non-cash share-based compensation expense of $2.3 million, partially offset by the amortization of premium on marketable securities of $0.8 million. The remainder of the cash used in operations was due to net changes in assets and liabilities, which was largely driven by a $12.3 million decrease in trade payables, accrued expenses, employee related obligations and other long-term liabilities and a $4.2 million decrease in trade receivables, prepaid expenses and other assets. The decreases were largely attributable to the wind down of the clinical trials for repibresib and VYN202 and the related fees for contract research organizations, investigative sites, and other service providers that assist in conducting preclinical research studies and clinical trials.
During the year ended December 31, 2024, net cash used in operating activities was $34.0 million and primarily reflected our net loss of $39.8 million adjusted for non-cash share-based compensation expense of $3.3 million, partially offset by the amortization of premium on marketable securities of $2.4 million. The remainder of the cash used in operations was due to net changes in assets and liabilities, which was largely driven by a $6.0 million increase in trade payables, accrued expenses, employee related obligations and other long-term liabilities. This increase was primarily comprised of accruals related to fees for contract research organizations, investigative sites, and other service providers that assist in conducting preclinical research studies and clinical trials.
Net cashprovided by investing activities
During the year ended December 31, 2025, net cash provided by investing activities was $37.4 million and consisted of $68.3 million of proceeds received from the sale and maturity of marketable securities, partially offset by $30.9 millionpaid for the purchase of marketable securities.
During the year ended December 31, 2024, net cash provided by investing activities was $23.4 million and consisted of $84.0 millionof proceeds received from the sale and maturity of marketable securities, partially offset by $60.5 millionpaid for the purchase of marketable securities and $0.1 millionpaid for the purchase of property and equipment.
Net cashused in financing activities
During the year ended December 31, 2025, net cash used in financing activities related to $0.1 millionof withholdings from the exercise of options and issuance of shares for share-based compensation arrangements.
During the year ended December 31, 2024, net cash used in financing activities related to $0.1 million of withholdings from the exercise of options and issuance of shares for share-based compensation arrangements.
Cash and Funding Sources
Our sources of funding in the year ended December 31, 2025 consisted primarily of $68.3 million of proceeds received from the sale and maturity of marketable securities.
Our sources of funding in the year ended December 31, 2024 consisted primarily of $84.0 million of proceeds received from the sale and maturity of marketable securities.
Contractual Obligations
Lease Commitments
In November 2022, we signed a Sublease Agreement (the "Sublease") to sublease approximately 5,755 square feet of office space (the "Leased Premises") in Bridgewater, New Jersey through September 30, 2023. We signed a Lease Agreement (the "Master Lease") to lease the Leased Premises following the termination of the Sublease through September 30, 2025, which we extended to October 30, 2025. Since November 1, 2025, we operate on a fully remote model. We have no operating lease obligations at December 31, 2025.
R&D Commitments
We enter into contracts in the normal course of business with CROs, contract manufacturing organizations and other service providers for clinical trials, preclinical studies and testing, manufacturing and other services and products for operating purposes. These contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.
Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Significant Judgments and Estimates
We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
While our significant accounting policies are more fully described in "Note 2-Significant Accounting Policies," to the consolidated financial statements included in this Annual Report, we believe that the following accounting policies are the most critical to assist stockholders and investors reading the consolidated financial statements in fully understanding and evaluating our financial condition and results of operations. These policies relate to significant areas involving management's judgments and estimates and that require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Research and Development Expenses
We make estimates of our accrued research and development expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. There may also be instances in which payments made to our vendors will exceed the level of service provided and result in a prepayment of the expense. In accruing expenses, we estimate the time period over which services will be performed 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 the estimate, we adjust the accrual or the amount of the prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our 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 reporting higher or lower amounts in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.
Recently Issued Accounting Pronouncements
Certain recently issued accounting pronouncements are discussed in "Note 2-Significant Accounting Policies," to the consolidated financial statements included in this Annual Report.
Vyne Therapeutics Inc. published this content on February 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 27, 2026 at 13:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]