Quarterly Report for Quarter Ending September 30, 2025 (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 Annual Report on Form 10-K for the year ended December 31, 2024 (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) 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 $116.1 million as of September 30, 2025.

We have incurred significant losses since our inception. Our net losses were $7.3 million and $4.1 million for the three months ended September 30, 2025 and 2024, respectively. See "Results of Operations" below for an explanation of the fluctuations in our net losses. As of September 30, 2025, we had an accumulated deficit of $126.1 million.

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

	●	seek regulatory approval for CTx-1301;
	●	continue research and development activities for our existing and new product candidates, primarily for CTx-1301;
	●	continue manufacturing activities, primarily relating to CTx-1301;
	●	advance commercialization efforts for CTx-1301; and
	●	operate as a public company.

Taking into account the $6 million we received from the debt issuance described below, we believe our cash will satisfy our capital needs into the second quarter of 2026 under our current business plan. To advance our commercialization efforts for CTx-1301 through our Prescription Drug User Fee Act (PDUFA) date of May 31, 2026, we believe we will need to raise approximately $9 million of additional capital. We will also need additional capital to advance our other 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.

Debt Issuance

On November 7, 2025, we entered into a note purchase agreement (2025 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. The principal amount includes an original issue discount of $540,000 and expenses payable by us of $30,000. In exchange for the promissory note, Avondale paid a purchase price of $6,000,000 in cash. The promissory note bears interest at a rate of 9% per annum and matures 18 months after its issuance date. Our wholly-owned subsidiaries Cingulate Therapeutics LLC and Cingulate Works, Inc., provided a guarantee of our obligations to Avondale under the promissory note and the other transaction documents. We intend to use the net proceeds from the sale of the promissory note for working capital and other general corporate purposes.

From time to time, beginning on May 7, 2026, Avondale may redeem a portion of the promissory 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, 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 promissory note will be increased by 1% of the outstanding balance on the date of the deferral. In the event the promissory note is outstanding on the 90-day anniversary of the effective date of the promissory note, we will be charged a monitoring fee equal to the outstanding balance on such date divided by 0.85 less the outstanding balance on such date. Subject to the terms and conditions set forth in the promissory note, we may prepay all or any portion of the outstanding balance of the promissory note at any time.

Pursuant to the 2025 Note Purchase Agreement, while the promissory note is still outstanding, we will not enter into any arrangement that prohibits us from entering into a variable rate transaction, as defined in the 2025 Note Purchase Agreement, with Avondale or its affiliates, or from issuing our securities to Avondale or its affiliates. The Company is also prohibited from entering into a variable rate transaction while the Note is outstanding, subject to certain exceptions. At any time while the promissory note is still outstanding, Avondale will have the right, but not the obligation, with our consent, to reinvest up to an additional $5.0 million in one or more tranches on the same terms and conditions as the promissory note. Additionally, so long as the promissory note is outstanding, upon any issuance by us of any debt security with any economic term or condition more favorable to the holder of such security that was not provided to Avondale pursuant to the promissory note, then, at Avondale's option, such additional term shall become part of the promissory note and related documents for the benefit of Avondale.

Management Update

Effective November 3, 2025, Bryan Downey was hired as our Chief Commercial Officer. In this role, Mr. Downey will lead all commercial activities focused on the potential launch of CTx-1301 in mid-2026 pending FDA approval.

On August 7, 2025, the employment of Laurie A. Myers, our former Executive Vice President and Chief Operating Officer, was terminated.

On August 9, 2025, Shane Schaffer, Chairman and Chief Executive Officer, was charged with one count of aggravated domestic battery. On August 14, 2025, the Board (i) placed Shane Schaffer on administrative leave pending the resolution of the legal proceedings, (ii) appointed Jennifer Callahan, our current Chief Financial Officer, to serve as interim Chief Executive Officer and (iii) appointed John A. Roberts, a current member of the Board, to serve as Executive Chairman of the Board. Ms. Callahan will continue to serve as Chief Financial Officer while serving as interim Chief Executive Officer until further action by the Board. In his role as Executive Chairman, Mr. Roberts will among other services, provide operational support to our executive management team. On October 28, 2025, Dr. Schaffer's charge was amended to one count of domestic battery (misdemeanor).

Clinical, Manufacturing 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. The FDA accepted for review the NDA for CTx-1301 and assigned a PDUFA target action date of May 31, 2026.

We executed a commercial supply agreement with CoreRx, Inc., DBA Bend Bioscience on August 27, 2025.

CTx-2103: We have embarked on a program to develop CTx-2103 (buspirone), for the treatment of anxiety, the most common mental health disorder in the United States. We completed a formulation study in which the pharmacokinetics were evaluated for this trimodal tablet providing three precisely timed doses of buspirone versus one immediate release dose. In addition, scintigraphic imaging visualized transit of the tablets through the gastrointestinal tract to confirm both the site and onset of release, which will then be correlated with pharmacokinetic data to establish the full release profile of the CTx-2103 formulation. Based on the pharmacokinetic profile seen in the data, CTx-2103 achieved a triple release of buspirone. These results provided the critical information required to allow us to request a Pre-IND (Investigational New Drug) meeting with the FDA to discuss the design of our clinical and regulatory program for CTx-2103 which occurred in the fourth quarter of 2023. We received input from the FDA regarding the regulatory pathway for CTx-2103, and the design of clinical studies for filing of an IND. Based on this FDA feedback, we believe that we can seek and win approval of CTx-2103 under the 505(b)(2) pathway, which typically requires less time and resources than the 505(b)(1) full NDA pathway. Additional capital resources will be required to continue the development of this product candidate.

CTx-1302: We plan to initiate the clinical plan for CTx-1302 (dextroamphetamine), our second investigational asset for the treatment of ADHD, pending additional capital resources.

We entered into a master services agreement with Indegene, Inc. (Indegene) to partner in the commercialization of CTx-1301 in the United States. Indegene's comprehensive commercialization infrastructure includes marketing, sales, market access and pricing, commercial operations, pharmacovigilance, and an unparalleled omnichannel platform. We continue to negotiate potential international licensing agreements while remaining open to a strategic partnership in the United States.

Securities Issuances

We entered into an At The Market Offering Agreement (ATM Agreement) with H.C. Wainwright & Co., LLC (HCW), as sales agent, in January 2023 as amended in May 2023, pursuant to which we may offer and sell, from time to time through HCW, shares of our common stock for aggregate proceeds of up to $23.5 million based on prospectus supplements filed with the SEC through the date of this report (upon the terms and subject to the conditions and limitations set forth in the ATM Agreement). In the three months ended September 30, 2025, we sold 82,048 shares of common stock under the ATM Agreement, for net proceeds of $412,996, after deducting $15,346 of compensation to HCW and other administration fees. Subsequent to September 30, 2025, we sold 138,289 shares of common stock under the ATM Agreement, for net proceeds of $562,479, after deducting $19,113 of compensation to HCW and other administration fees.

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

On July 21, 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. Pursuant to the terms of the 2025 LP Purchase Agreement, the Company issued 120,424 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of common stock under the 2025 LP Purchase Agreement. During the quarter ended September 30, 2025, we sold 291,109 shares of common stock to Lincoln Park, under the 2025 LP Purchase Agreement, for net proceeds of $1,147,727. Subsequent to September 30, 2025, we sold 561,839 shares of common stock to Lincoln Park, under the 2025 LP Purchase Agreement, for net proceeds of $2,090,280.

During the quarter ended September 30, 2025, the Company entered into exchange agreements with Streeterville Capital, LLC to exchange an aggregate of $2,475,000 in principal for 594,487 shares of common stock, thereby extinguishing that portion of the promissory note with Streeterville Capital. Subsequent to September 30, 2025, the Company entered into exchange agreements with Streeterville Capital to exchange an aggregate of $850,000 in principal for 218,917 shares of common stock, thereby extinguishing that portion of the promissory note with Streeterville Capital.

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. The FDA accepted for review the NDA for CTx-1301 and assigned a PDUFA target action date of May 31, 2026.

Operating Expenses

Research and Development Expenses

Research and development 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 research and development 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 research and development 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.

Research and development activities are central to our business model. Subject to successful regulatory approval and commercialization of CTx-1301, we expect that our research and development 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 research and development costs have primarily related to the development of CTx-1301. As we advance CTx-1301, CTx-1302, and CTx-2103, as well as identify any other potential product candidates, we will continue to allocate our direct external research and development costs to the products. We expect to fund our research and development expenses from our current cash and cash equivalents and any future equity or debt financings, or other capital sources.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions. General and administrative expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

We expect that our general and administrative expenses will increase in the near future as we increase our general and administrative headcount to support our growing operations, including the potential commercialization of CTx-1301. 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.

Issuance cost and change in fair value of derivative and interest and other income (expense), net

Issuance cost and change in fair value of derivative relates to the consideration for Lincoln Park's commitment to purchase shares under 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, 2024.

Results of Operations

Comparison of the three months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 :

		Three Months Ended												%
		September 30,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Operating Expenses:
Research and development		$	2,849			$	1,428			$	1,421				99.5	%
General and administrative			3,147				1,854				1,293				69.7	%
Operating Loss			(5,996	)			(3,282	)			2,714				82.7	%
Issuance cost and change in fair value of derivative			(772	)			(894	)			(122	)			(13.6	%)
Interest and other income (expense), net			(573	)			50				623				NM
Net Loss		$	(7,341	)		$	(4,126	)		$	3,215				77.9	%

Research and development expenses

The following table summarizes our research and development (R&D) expenses for the three months ended September 30, 2025 and 2024:

		Three Months Ended
		September 30,												%
(in thousands)		2025				2024				Increase				Increase
Clinical operations		$	436			$	398			$	38				9.5	%
Drug manufacturing and formulation			913				533				380				71.3	%
Personnel expenses			1,129				441				688				156.0	%
Regulatory costs			371				56				315				562.5	%
Total research and development expenses		$	2,849			$	1,428			$	1,421				99.5	%

R&D expenses were $2.8 million for the three months ended September 30, 2025, an increase of $1.4 million or 99.5% from the three months ended September 30, 2024. This change was primarily the result of an increase in personnel expenses, manufacturing costs and regulatory costs in the three months ended September 30, 2025 as compared to the same period in 2024. Personnel expenses increased due to separation costs for an executive in August 2025 as well as costs related to the contingent bonus plan, which were accrued upon the NDA submission of CTx-1301 in the third quarter of 2025 when the payment became probable. The increase in manufacturing costs was due to more significant manufacturing costs in 2025 related to activity in preparation of the manufacturing of the process validation batches of CTx-1301. Regulatory costs increased due to preparation for the NDA submission.

General and administrative expenses

The following table summarizes our general and administrative (G&A) expenses for the three months ended September 30, 2025 and 2024:

		Three Months Ended												%
		September 30,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Personnel expenses		$	1,280			$	515			$	765				148.5	%
Legal and professional fees			877				828				49				5.9	%
Occupancy			93				76				17				22.4	%
Insurance			191				236				(45	)			(19.1	%)
Other			706				199				507				254.8	%
Total general and administrative expenses		$	3,147			$	1,854			$	1,293				69.7	%

Total G&A expenses were $3.1 million for the three months ended September 30, 2025, an increase of $1.3 million or 69.7% from the three months ended September 30, 2024. This is primarily the result of an increase personnel and other expenses. The increase in personnel expenses was due to costs related to the contingent bonus plan, which were accrued upon the NDA submission of CTx-1301 in the third quarter of 2025, when the payment became probable. Other costs increased primarily due to commercial costs related to our contract with Indegene.

Issuance cost and change in fair value of derivative and interest and other income (expense), net

The following table summarizes issuance cost and change in fair value of derivative and interest and other income (expense), net for the three months ended September 30, 2025 and 2024:

		Three Months Ended												%
		September 30,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Issuance cost and change in fair value of derivative		$	(772	)		$	(894	)		$	(122	)			(13.6	%)
Interest and other income (expense), net			(573	)			50				623				NM

Issuance cost and change in fair value of derivative for the three months ended September 30, 2025 and September 30, 2024 relates to the consideration for Lincoln Park's commitment to purchase shares under the 2025 LP Purchase Agreement and the change in fair value of the derivative asset or liability. Interest and other income (expense), net for the three months ended September 30, 2025 and September 30, 2024 relates to interest incurred on the outstanding note payable, offset by interest earned on invested balances. The increase in interest expense for the period ended September 30, 2025 is related to interest expense incurred on the promissory note which was executed in December 2024, including loss on debt extinguishments.

Comparison of the nine months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 :

		Nine Months Ended
		September 30,												%
(in thousands)		2025				2024				Increase				Increase
Operating Expenses:
Research and development		$	7,772			$	5,116			$	2,656				51.9	%
General and administrative			6,580				4,320				2,260				52.3	%
Operating Loss			(14,352	)			(9,436	)			4,916				52.1	%
Issuance cost and change in fair value of derivative			(1,017	)			(915	)			102				11.1	%
Interest and other income (expense), net			(808	)			23				831				NM
Net Loss		$	(16,177	)		$	(10,328	)		$	5,849				56.6	%

Research and development expenses

The following table summarizes our R&D expenses for the nine months ended September 30, 2025 and 2024:

		Nine Months Ended
		September 30,												%
(in thousands)		2025				2024				Increase				Increase
Clinical operations		$	2,307			$	1,541			$	766				49.7	%
Drug manufacturing and formulation			2,403				2,336				67				2.9	%
Personnel expenses			2,100				1,091				1,009				92.5	%
Regulatory costs			962				148				814				550.0	%
Total research and development expenses		$	7,772			$	5,116			$	2,656				51.9	%

R&D expenses were $7.8 million for the nine months ended September 30, 2025, an increase of $2.7 million or 51.9% from the nine months ended September 30, 2024. This change was primarily the result of an increase in personnel expenses, regulatory costs and clinical operations in the nine months ended September 30, 2025 as compared to the same period in 2024. Personnel costs increased due to separation costs for an executive in August 2025, costs related to the contingent bonus plan, which were accrued upon the NDA submission of CTx-1301 in the third quarter of 2025 when the payment became probable and the reinstatement of base salaries in September 2024 following salary reduction measures which had been implemented in late 2023. Regulatory costs increased due to preparation for the pre-NDA meeting with the FDA in the second quarter of 2025 and the NDA submission. The increase in clinical operations costs is the result of the close-out and analytical activities required for NDA submission related to two Phase 3 studies for CTx-1301, the fixed dose pediatric and adolescent safety and efficacy study and the pediatric dose optimization and duration study.

General and administrative expenses

The following table summarizes our G&A expenses for the nine months ended September 30, 2025 and 2024:

		Nine Months Ended												%
		September 30,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Personnel expenses		$	2,311			$	1,332			$	979				73.5	%
Legal and professional fees			2,352				1,638				714				43.6	%
Occupancy			243				251				(8	)			(3.2	%)
Insurance			561				718				(157	)			(21.9	%)
Other			1,113				381				732				192.1	%
Total general and administrative expenses		$	6,580			$	4,320			$	2,260				52.3	%

Total G&A expenses were $6.6 million for the nine months ended September 30, 2025, an increase of $2.3 million or 52.3% from the nine months ended September 30, 2024. This is primarily the result of an increase in personal expenses, legal and professional fees and other expenses. Personnel costs increased due to costs related to the contingent bonus plan, which were accrued upon the NDA submission of CTx-1301 in the third quarter of 2025 when the payment became probable and the reinstatement of base salaries in September 2024 following salary reduction measures which had been implemented in late 2023. The increase in legal and professional fees was due to an increase in certain financial, accounting and legal fees. Other costs increased primarily due to commercial costs related to our contract with Indegene.

Issuance cost and change in fair value of derivative and interest and other income (expense), net

The following table summarizes issuance cost and change in fair value of derivative and interest and other income (expense), net for the nine months ended September 30, 2025 and 2024:

		Nine Months Ended
		September 30,												%
(in thousands)		2025				2024				Increase				Increase
Issuance cost and change in fair value of derivative		$	(1,017	)		$	(915	)		$	102				11.1	%
Interest and other income (expense), net			(808	)			23				831				NM

Issuance cost and change in fair value of derivative for the nine months ended September 30, 2025 and September 30, 2024 relates to the consideration for Lincoln Park's commitment to purchase shares under the 2025 LP Purchase Agreement and the change in fair value of the derivative asset or liability. Interest and other income (expense), net for the nine months ended September 30, 2025 and September 30, 2024 relates to interest incurred on outstanding notes payable, offset by interest earned on invested balances. The increase in interest expense for the period ended September 30, 2025 is related to interest expense incurred on the promissory note which was executed in December 2024, including loss on debt extinguishments.

Cash Flows

		Nine Months Ended
		September 30,
		2025				2024
Net cash (used in) operating activities		$	(13,648	)		$	(14,372	)
Net cash (used in) investing activities			(6	)			(13	)
Net cash provided by financing activities			7,561				24,373
Net increase (decrease) in cash and cash equivalents		$	(6,093	)		$	9,988

Cash Flows from Operating Activities

Net cash used in operating activities was $13.6 million for the nine months ended September 30, 2025. 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 $16.2 million, prior to the effects of four noncash items, stock-based compensation expense of $1.1 million, issuance cost and change in fair value of derivative of $1.0 million, loss on debt extinguishment of $0.5 million, accretion of discount on note payable of $0.2 million and depreciation expense of $0.4 million. Changes in operating assets and liabilities included an increase in prepaid expenses and other current assets of $0.9 million primarily due to payments for materials, professional and marketing fees.

Net cash used in operating activities was $14.4 million for the nine months ended September 30, 2024. 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 $10.3 million, prior to the effects of three noncash items, stock-based compensation expense of $0.9 million, issuance cost and change in fair value of derivative of $0.9 million and depreciation expense of $0.5 million. Changes in operating assets and liabilities included a decrease in trade accounts payable and accrued expenses of $5.5 million primarily due to the payment of vendor balances in the first quarter of 2024 with the cash proceeds from the issuance of common stock pursuant to our ATM Agreement in January 2024 and the issuance of equity in February 2024.

Cash Flows from Investing Activities

Net cash used in investing activities for both the nine-month periods ended September 30, 2025 and September 30, 2024 was primarily related to the purchase of equipment to support our research and development.

Cash Flows from Financing Activities

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

Net cash provided by financing activities for the nine-month period ended September 30, 2024 was related to the cash proceeds from the issuance of common stock pursuant to the ATM Agreement, the Original LP Purchase Agreement, the issuance of equity in February 2024 and the warrant inducement transaction in June 2024.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception in 2012 through September 30, 2025, we have not generated any revenue and have incurred significant operating losses and negative cash flow from our operations.

In the three months ended September 30, 2025, we sold 82,048 shares of common stock under the ATM Agreement, for net proceeds of $412,996, after deducting $15,346 of compensation to HCW and other administration fees. Subsequent to September 30, 2025, we sold 138,289 shares of common stock under the ATM Agreement, for net proceeds of $562,479, after deducting $19,113 of compensation to HCW and other administration fees.

During the three months ended September 30, 2025, we sold 291,109 shares of common stock under the 2025 LP Purchase Agreement, for net proceeds of $1,147,727. Subsequent to September 30, 2025, we sold 561,839 shares of common stock under the 2025 LP Purchase Agreement, for net proceeds of $2,090,280.

As of September 30, 2025, we had cash and cash equivalents of $6.1 million. Taking into account the $6 million we received from our debt issuance to Avondale Capital, LLC on November 7, 2025, we believe our cash will satisfy our capital needs into the second quarter of 2026 under our current business plan. To advance our commercialization efforts through the May 31, 2026 PDUFA date for CTx-1301, we believe we will need to raise approximately $7 million of additional capital. 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. 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 develop CTx-1301 and seek marketing approval and, subject to obtaining such approval, the eventual commercialization. If we obtain marketing approval for CTx-1301, we will incur significant sales, marketing and outsourced manufacturing expenses. In addition, we expect to incur additional expenses to add operational, financial and information systems and personnel, including personnel to support our planned product commercialization efforts. We also expect to incur significant costs to comply with corporate governance, internal controls and similar requirements applicable to us as a public company.

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

	●	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 research and development, 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 note purchase agreements with Streeterville Capital, LLC and Avondale Capital, LLC, respectively, we are subject to certain restrictions on our ability to issue securities during the term of the promissory notes. 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 note purchase agreements, we may be obligated to indemnify the lender for loss or damage arising as a result of any breach or alleged breach by us of the note purchase agreements, which may affect our business operations and financial condition. Additionally, the promissory notes provide that following an event of default under the promissory notes, the lenders have 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 promissory notes. The lenders also have 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 promissory notes, unless it contains a closing condition that the promissory notes are paid in full upon consummation of the transaction or the lenders have provided their 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 September 30, 2025 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 first milestone payment of $250,000 was paid in February 2023 upon dosing of the first patient in the Phase 3 adult onset and duration study for CTx-1301. The second milestone payment of $250,000 was paid in September 2025 upon submission of the NDA. The third milestone payment of $250,000 will become due 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 Societal, our CMO, for both the manufacturing of process validation batches of our lead asset, CTx-1301, including active pharmaceutical ingredients and materials. 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 $1,394,044, the current portion of the operating lease liability was $231,123 and the long-term portion of the lease liability was $1,162,921 as of September 30, 2025.

Going Concern

Since inception we have been engaged in organizational activities, including raising capital and research and development 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 research and development. There can be no assurance that our research and development 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 September 30, 2025 and 2024 and had accumulated losses of $126.1 million since inception to September 30, 2025. 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 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 and the issuance of the promissory note in December 2024. 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 Jumpstart Our Business Startups Act of 2012 (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 or until we no longer meet the requirements for being an "emerging growth company," whichever occurs first.