Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

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

You should read the following discussion and analysis of NRx Pharmaceuticals' financial condition and plan of operations together with NRx Pharmaceuticals' condensed consolidated financial statements and the related notes appearing elsewhere herein. In addition to historical information, this discussion and analysis contains forward looking statements that involve risks, uncertainties and assumptions. NRx Pharmaceuticals' actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section entitled "Risk Factors" included elsewhere herein. All references to "Note," followed by a number reference from 1 to 15 herein, refer to the applicable corresponding numbered footnotes to these condensed consolidated financial statements.

Overview

NRx Pharmaceuticals, Inc. (Nasdaq: NRXP) ("NRx", the "Company", "we", "us" or "our") is a clinical-stage bio-pharmaceutical company which develops and will distribute, through its wholly-owned operating subsidiary, NeuroRx, Inc., ("NeuroRx"), novel therapeutics for the treatment of central nervous system disorders including suicidal depression, chronic pain, and post-traumatic stress disorder ("PTSD") and schizophrenia. All of our current drug development activities are focused drugs that modulate on the N-methyl-D-aspartate ("NMDA") receptor in the brain and nervous system, a neurochemical pathway that has been disclosed in detail in our annual filings. The Company has two lead drug candidates - NRX-100, a preservative-free formulation of ketamine for intravenous infusion, and NRX-101, an oral fixed dose combination of D-cycloserine and lurasidone. NRX-100 and NRX-101 are in the process of submission for Food and Drug Administration ("FDA") approval as follows:

1.

An Abbreviated New Drug Application ("ANDA") for NRX-100 was filed, with Priority Review requested, during the second quarter of 2025 with a first response received August 13, 2025.

2.

A New Drug Application ("NDA") for NRX-100, originally initiated during the fourth quarter of 2024, is expected to be completed in September 2025. This follows the Company's successful application for a waiver under the Prescription Drug User Fee Act ("PDUFA"), which is expected to save the Company approximately $4.3 million in filing fees and grant of Fast Track Designation for NRX-100 for "Treatment of Suicidal Ideation in Patients with Depression, including Bipolar Depression. The Company has applied to receive a Commissioner's National Priority Voucher (CNPV), which could significantly reduce review time.

3.

An NDA filing for NRX-101 has been initiated with the transmission of the Module 3 manufacturing file to publishing. The drug was previously awarded Breakthrough Therapy Designation and accordingly the Company is requesting rolling review of the NDA. Breakthrough Therapy Designation is granted by the FDA to facilitate the development, and expedite the review of drugs to treat serious conditions meet an unmet medical need, and have demonstrated preliminary evidence of efficacy as determined by the FDA. The Company anticipates decision dates from the FDA for both its NDA applications potentially as early as year-end 2025 (NRX-100) and the first quarter of 2026 (NRX-101).

In February 2024, NRx incorporated HOPE Therapeutics, Inc. ("HOPE"), a medical care delivery organization focused on providing cutting-edge, comprehensive interventional psychiatric treatment of the above conditions with the most effective treatments available, including NMDA-targeted and other neuroplastic drugs, such as ketamine, Spravato and NRX-101, neuromodulatory devices, such as Transcranial Magnetic Stimulation ("TMS"), digital therapeutics, and medication management.

NeuroRx is organized as a traditional research and development ("R&D") company, whereas HOPE is organized as a medical care delivery company intended to own and/or operate clinics that serve patients with suicidal depression, PTSD, and other serious Central Nervous System ("CNS") disorders. Management's plan, through the establishment of HOPE, is to transform NRx from a pre-revenue biotechnology company to a revenue-generating enterprise that continues to develop life-saving drugs and technologies through NeuroRx, while also treating patients through HOPE.

During the second quarter of 2025 and in the subsequent period, key achievements by the Company in support of its overall mission to improve and save the lives of patients affected by central nervous system disorders including suicidal depression, chronic pain, post-traumatic stress disorder and schizophrenia include the following:

Drug Development

	●	Grant of Fast Track Designation for NRX-100 from the FDA for all indications and types of depression and related disorders based on its potential to satisfy an unmet medical need. This designation represents an approximately 10-fold expansion of the addressable market to 13 million Americans, compared to the original Fast Track Designation issued in 2017 for bipolar depression alone. The Designation letter contains a specific finding that NRX-100 addresses an "unmet medical need." This is a specific qualifying requirement for the Commissioner's National Priority Voucher Program.
	●	Filing of an ANDA for NRX-100 (preservative-free intravenous ketamine).
	●	Filing of Commissioner's National Priority Voucher application for intravenous ketamine (NRX-100).
	●	Submission of stability data for NRX-100 to the manufacturing data on file with FDA sufficient to support three years of room temperature shelf stability for NRX-100.
	●	Submission of draft labeling for NRX-100 in the treatment of suicidal depression based on the Fast Track Designation received.
	●	Completion of a toxicology assessment of Benzethonium Chloride, documenting its lack of "Generally Recognized as Safe" (GRAS) status and lack of safety data to support its use in intravenous presentations of ketamine.
	●	Filing of a Citizen's Petition with the U.S. Food and Drug Administration to seek the removal of benzethonium chloride, a toxic preservative, from all ketamine products for intravenous administration.
	●	Filing of a patent application for NRX-100, the Company's proprietary preservative-free formulation of intravenous ketamine.
	●	Receipt of filing fee waiver from the FDA for NRX-100.
	●	Filing of module 3 manufacturing data to support a New Drug Application for NRX-101 in the treatment of patients with suicidal bipolar depression and akathisia despite treatment with already-approved medication.

Interventional Psychiatry Clinics (HOPE Therapeutics)

	●	Execution of definitive Purchase Agreement and receipt of final regulatory clearance from Florida's Agency for Health Care Administration ("ACHA") to proceed with closing the acquisition of Dura Medical.
	●	Execution of binding letter of intent to acquire the assets of NeuroSpa TMS of Tampa, FL.
	●	Execution of a binding letter of intent to acquire a 49% interest in Cohen and Associates, LLC.
	●	Receipt of approval pending legal stipulations for $7.8 million of debt financing to support the acquisition of Dura Medical, NeuroSpa TMS, and Cohen Psychiatry.
	●	Execution of a definitive purchase agreement, subject to standard closing conditions and agreement between the parties regarding the resolution of ongoing discussions, to purchase the non-clinical assets of Kadima Neuropsychiatry Institute.
	●	Execution of a non-binding term sheet for a strategic investment from a global medical device manufacturer into HOPE.

Development of NRX-101 for Suicidal Treatment-Resistant Suicidal Bipolar Depression

On May 5, 2024, the Company announced final data from the recently completed phase 2b/3 trial of NRX-101 in suicidal bipolar depression, with a significantly improved safety profile as demonstrated by a statistically significant reduction in akathisia, an adverse event considered by many experts to be a precursor to suicide. Given the vital need for safer medications in this at-risk population, we plan to submit an NDA to the US FDA for treatment of bipolar depression patients at risk of akathisia, based on these data as well as additional data from our STABIL-B trial.

Trial participants had identical mean scores on the BARS at baseline with subsequent decrease in the NRX-101 treated group versus an increase in the lurasidone-treated group, yielding a 76% relative mean difference between the groups. The difference was apparent at the first post-randomization visit and continued throughout the trial. (Fig 1) Over the 42 days of observation, an effect size of .37 was identified with a statistically significant P value of 0.025 on the Mixed Model for Repeated Measures methodology agreed to with FDA in the 2018 Special Protocol Agreement. Akathisia as ascertained by a 1 point increase in the BARS was seen in 11% of participants randomized to lurasidone (comparable to previous reports in the literature) and seen in only 2% of those treated with NRX-101, an akathisia level that was previously reported for the placebo arm of the lurasidone registration trial.

Akathisia was a prespecified key safety endpoint of the Company's clinical trial. Hence this finding is not a "post-hoc" observation. As previously noted, this clinical trial of 91 participants with suicidal bipolar depression who were not pre-treated with ketamine demonstrated that NRX-101 and lurasidone were comparable in their antidepressant effect. A 33% but statistically non-significant sustained decrease in suicidality was also seen favoring NRX-101. As noted above, improved antidepressant efficacy is not required to seek drug accelerated drug approval based on a statistically-significant safety benefit.

The results released on May 24 are consistent with and amplify the results of the Company's previously published STABIL-B trial (Fig 2 below). In both trials a meaningful reduction in Akathisia was seen, which was statistically significant in the current trial (P<.025) and near significant (P=0.11) in the STABIL-B with similar effect sizes The STABIL-B additionally demonstrated a statistically-significant reduction in suicidality on the Columbia Suicide Severity Rating Scale (C-SSRS).

1 Nierenberg A, Lavin P, Javitt DC, et. al. NRX-101 vs lurasidone for the maintenance of initial stabilization after ketamine in patients with severe bipolar depression with acute suicidal ideation and behavior; a randomized prospective phase 2 trial. Int J Bipolar Dis 2023;11:28-38, doi.org/10.1186/s40345-023-00308-5.

Reduced suicidality associated with the administration of D-cycloserine has additionally been demonstrated by Chen and Coworkers.

Figure 2: Results from published STABIL-B Trial

Incorporation of HOPE Therapeutics and progress towards an NDA for HTX-100 (IV ketamine) in the treatment of suicidal depression

In the first quarter of fiscal 2024, the Company incorporated HOPE Therapeutics as a wholly-owned subsidiary and engaged its auditors who in August 2024 completed an audit of its financial statements which will be necessary for the intended spin-off of HOPE to the Company's shareholders. Intravenous ketamine has now become a standard of care for acute treatment of suicidal depression, in the absence of an FDA-labeled product. Intranasal Esketamine is approved by the FDA (SPRAVATO®), but has not demonstrated a benefit on suicidality and is not approved for use in patients with bipolar depression. Attempts to use intranasal racemic ketamine for suicidal depression have failed.

The Company has formed data-sharing partnerships to license clinical trial data from a French Government-funded trial and two National Institute of Health (NIH)-funded trials all of which demonstrate efficacy of racemic Intravenous ketamine against depression and two of which demonstrate statistically significant benefit vs suicidality. The Company's role is to reformat these data into the required presentation required for review by the FDA.

In contrast to nasal ketamine, Intravenous racemic ketamine demonstrates dramatic and immediate reduction of suicidality in patients with both Major Depressive Disorder and Bipolar Depression. Grunebaum and colleagues demonstrated a rapid and statistically significant reduction in Suicidal Ideation at day 1 (p=0.0003) and in depression (P=0.0234), as measured by the Profile of Mood States among patients randomized to IV Ketamine compared to those randomized to midazolam. This trial was published in the American Journal of Psychiatry . Abbar and colleagues similarly published 84% remission from suicidality on the C-SSRS in patients treated with ketamine, vs. 28% in those treated with placebo (P<.0001). This trial was published in the British Medical Journal.

In November 2023, the Company initiated manufacture of ketamine together with Nephron Pharmaceuticals, Inc. to develop a single patient presentation of ketamine. Stability and sterility data deemed sufficient to establish three year room temperature shelf life were obtained. Demonstrating the ability to manufacture drug product, and prove its stability, are critical components of the drug approval process with the US FDA.

A long-term challenge with ketamine is that the current formulation (KETALAR®) is highly acidic. While it is suitable for intravenous use, it cannot be administered subcutaneously. In March 2024 the Company demonstrated the formulation of a pH neutral patentable form of IV ketamine that it anticipates will have widespread applicability both in treatment of depression and chronic pain.

Treatment of Urinary Tract Infection ("UTI") and Urosepsis:

Although treatment of UTI is quite different from use of NRX-101 to treat Central Nervous System disorders, D-cycloserine was originally developed as an antibiotic because of its role in disrupting the cell wall of certain pathogens. During Q3 2023, NRx tested NRX-101 and its components against resistant pathogens that appear on the Congressionally mandated QIDP list and proved in vitro effectiveness against antibiotic-resistant E. coli, Pseudomonas, and Acinetobacter. Accordingly, NRx was granted QIDP designation, Fast Track Designation, and Priority Review by the US FDA in January 2024.

In recent years, increased antibiotic resistance to common pathogens that cause urinary tract infections and urosepsis (i.e., sepsis originating in the urinary tract) has resulted in a marked increase in cUTI, hospitalization, and death from urosepsis. The US Center for Disease Control and Prevention reports that more than 1.7 million Americans contract sepsis each year, of whom at least 350,000 die during their hospitalization or are discharged to hospice (CDC Sepsis Ref.). There are approximately three million patients per year who contract cUTI in the U.S. annually (Lodise, et. al.). Additionally, should NRX-101 succeed in clinical trials, the Company will consider developing a follow-on product that is anticipated to achieve another 20 years of patent exclusivity.

A key challenge in the treatment of cUTI is the tendency of advanced antibiotics to cause C. Difficile infection, which is fatal in 10% of those who contract it over the age of 65 and results in prolonged hospitalization in many more. The Company recently announced data demonstrating that NRX-101 does not compromise the intestinal microbiome, unlike common antibiotics including Clindamycin and Ciprofloxacin. Should these findings be documented in human patients, NRX-101 would represent the only treatment for cUTI that does not cause C. Difficile infection.

Activities surrounding this development program, as well as chronic pain, are on hold into 2026 as the Company focuses on its nearer term, more significant development programs.

Recent Developments

Financing

In May 2025, the Company reinstated the At the Market Offering and increased the maximum aggregate offering amount and filed a prospectus supplement under the Offering Agreement for an aggregate of $20,000,000. During the three months ended June 30, 2025 the Company sold an aggregate of 399,078 of its common stock shares for approximately $1.0 million, net of less than $0.02 million in offering costs.

We executed a term sheet with a publicly-traded strategic investor to provide additional capital to support the expansion of HOPE clinics. In addition, management is negotiating with several commercial lenders to provide additional financing to support the acquisition of additional clinics on standard commercial loan terms. Although no assurances can be given, and assuming we're able to consummate the proposed financings, management believes that we will have sufficient financing to consummate our previously announced acquisitions, execute our business plan and achieve our projected revenue objectives.

Drug Development

NRX-100 - Preservative-Free Ketamine:

As described in previous filings, we have undertaken two paths to market for NRX-100: a generic-approval path under an Abbreviated New Drug Application (ANDA) to address the current generic market for ketamine and an innovative drug path under a New Drug Application (NDA) to develop ketamine for use in treating suicidal depression. The ANDA market is estimated at $750 million today and we anticipate entering this market in early 2026. There is one ketamine-based drug currently marketed for treatment of depression and its manufacturer recently reported $1.3 billion in 2024 sales. With recent positive changes in the regulatory environment, we similarly anticipate entering the innovative market for ketamine in early-mid 2026.

Our proprietary, preservative free formulation is the subject of a US patent filing that has potential to confer market exclusivity. In addition, we have filed a Citizens Petition (Sapko, M. T., Panicucci, R., & Javitt, J. (2025). Toxicological Evaluation of Benzethonium Chloride in Ketamine Formulations. Zenodo. https://doi.org/10.5281/zenodo.16883346) with FDA noting that the Benzethonium Chloride (BZT) preservative in ketamine is not Generally Recognized as Safe (GRAS) and has not been demonstrated to be safe in the context of this product. Historically, BZT was added to ketamine to enable multidose use and multi-patient use from a single vial. Those uses are no longer common in US healthcare facilities. We have performed an extensive review of the toxicology literature around BZT and determined that FDA no longer allows BZT to be used in hand cleansers and topical antiseptics. BZT is part of a class of quaternary amines that have been shown to be toxic to corneal and conjunctival cells. A related compound in this class, Benzalkonium Chloride, has been removed from many eyedrops because of this demonstrated toxicity. The toxicology review link suggests that while single dose administration of preserved ketamine is generally thought of as safe, the cumulative dose of BZT with repeated intravenous administration may approach a toxicologically-concerning exposure to this compound.

In general, we anticipate that a preservative-free form of ketamine will be welcomed by physicians and patients, which may enable NRX-100 to gain a larger share of the existing ketamine market than would be available to an undifferentiated product. However, should the Citizens Petition be granted the share of the generic market captured by NRX-100 could be considerably higher.

Our path to New Drug Approval of Ketamine for treatment of depression was substantially augmented on August 8, 2025 by award of an expanded Fast Track Designation (FTD) to NRX-100 by the FDA Division of Psychiatry Products. In 2017, FDA awarded FTD to NRX-100 in association with NRX-101 for the treatment of suicidal bipolar depression. FDA subsequently requested in 2018 that the Company establish a separate Investigative New Drug file for NRX-100 and the Company complied. Last week, FDA gave a far broader Fast Track Designation to NRX-100, designating it for "Treatment of suicidal ideation in depression, including bipolar depression," According to the US Centers for Disease Control (CDC), 13 million Americans develop suicidal ideation each year, with 1.5 million attempting suicide and an American dying of suicide every 11 minutes.

FDA further augmented the potential path to market of NRX-100 by establishing the Commissioner's National Priority Voucher Program (CNPV). The key criteria are shown below, taken from the FDA website. To receive a CNPV, a product must meet at least one of the criteria below. Management believes that NRX-100 meets all five criteria.

●

Addressing a U.S. public health crisis. An example could include developing a universal flu vaccine that could provide broad protection against multiple strains of influenza, including those with pandemic potential.

●

Delivering more innovative cures for the American people. The focus for this priority is transformative impact that far outstrips the threshold for breakthrough therapy designation. Examples could include creating a novel immunotherapy that reprograms the body's immune system to fight multiple diseases; or transforming mental health care through a novel treatment for PTSD.

●

Addressing a large unmet medical need. This includes a condition that available therapies do not adequately diagnose or treat, including drugs to treat or prevent rare diseases or addressing America's chronic disease crisis.

●

Onshoring drug development and manufacturing to advance the health interests of Americans and strengthen U.S. supply chain resiliency. Examples could include companies with new manufacturing establishments that shift manufacturing of essential medicines (such as generic sterile injectables) from foreign facilities to the U.S.; or a clinical trial that maintains robust U.S. enrollment to support generalizability for Americans against the U.S. standard of care.

●

Increasing affordability. This could include a company that lowers the U.S. price of a drug or drugs consistent with Most Favored Nation pricing or reduces other downstream medical utilization to lower overall healthcare costs.

Receipt of a CNPV affords a substantially faster review time of 1-2 months vs. 10-12 months, enhanced communication throughout the review process, a multidisciplinary team-based evaluation, and potential for accelerated approval if the applicable requirements are met. Key to this process is determination that the candidate product meets a large, unmet medical need. That determination was specifically made in the case of NRX-100 by the Division of Psychiatry Products and included in the Fast Track Determination letter. There is an additional feature to the CNPV that may limit eligibility to a relatively few drugs. The CNPV requires that a Company's module 3 manufacturing data be on file. These data were initially filed for NRX-100 in December 2024 and the stability data were updated in July 2025 to support three years of room temperature shelf stability.

NRx intends to seek Accelerated Approval of NRX-100. The data that have been licensed from the Government of France and Columbia University demonstrate that intravenous ketamine is superior to placebo and to active placebo in reducing suicidal ideation and depression within hours and has an effect duration of about a week. The PCORI-funded trial of ketamine vs. ECT demonstrates non-inferiority to ECT on depression over a 6 month period. The Company believes that these data are sufficient for an FDA grant of initial market access subject to confirmatory data. However, longer term data are desirable for a drug that may ultimately be used in millions of patients each year. Additional detail regarding established ketamine efficacy data is noted below.

Financial Results

Since inception, the Company has incurred significant operating losses. For the three months ended June 30, 2025 and 2024, the Company's net loss was $17,581 million and $7.9 million, respectively. For the six months ended June 30, 2025 and 2024, the Company's net loss was $23.1 million and $14.4 million, respectively. As of June 30, 2025, the Company had an accumulated deficit of $301.4 million, a stockholders' deficit of $35.6 million and a working capital deficit of $35.9 million.

Going Concern

The Company's ongoing clinical activities continue to generate losses and net cash outflows from operations. The Company plans to pursue additional equity or debt financing or refinancing opportunities in 2025 to fund ongoing clinical activities, to meet obligations under its current debt arrangements and for the general corporate purposes of the Company. Such arrangements may take the form of loans, equity offerings, strategic agreements, licensing agreements, joint ventures or other agreements. The sale of equity could result in additional dilution to the Company's existing shareholders. The Company cannot make any assurances that additional financing will be available to it and, if available, on acceptable terms, or that it will be able to refinance its existing debt obligations which could negatively impact the Company's business and operations and could also lead to a reduction in the Company's operations. We will continue to carefully monitor the impact of our continuing operations on our working capital needs and debt repayment obligations. As such, the Company has concluded that substantial doubt exists about the Company's ability to continue as a going concern for a period of at least twelve months from the date of issuance of these condensed consolidated financial statements. The Company may raise substantial additional funds, and if it does so, it may do so through one or more of the following: issuance of additional debt or equity and/or the completion of a licensing or other commercial transaction for one of the Company's product candidates.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

Components of Results of Operations

Operating Expense

Research and development expense

The Company's research and development expense consists primarily of costs associated with the Company's clinical trials, salaries, payroll taxes, employee benefits, and equity-based compensation charges for those individuals involved in ongoing research and development efforts. Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

General and administrative expense

General and administrative expense consists primarily of salaries, stock-based compensation, consultant fees, and professional fees for legal and accounting services.

Settlement expense

Settlement expense during the six months ended June 30, 2025 consists of deductibles related to insurance claims.

Results of operations for the three months ended June 30, 2025 and 2024

The following table sets forth the Company's selected statements of operations data for the following periods (in thousands):

		Three months ended June 30,								Change
		2025				2024				Dollars
		(Unaudited)
Operating expense:
Research and development		$	987			$	2,804			$	(1,817	)
General and administrative			2,743				4,246				(1,503	)
Total operating expense			3,730				7,050				(3,320	)
Loss from operations		$	(3,730	)		$	(7,050	)		$	3,320
Other expense (income):
Interest income		$	(2	)		$	(7	)		$	5
Convertible note default penalty			-				849				(849	)
Change in fair value of convertible note payable			5,565				23				5,542
Change in fair value of warrant liabilities			6,414				(18	)			6,432
Loss on convertible note conversion			1,874				-				1,874
Total other expense			13,851				847				13,004
Loss before tax			(17,581	)			(7,897	)			(9,684	)
Net loss		$	(17,581	)		$	(7,897	)		$	(9,684	)

Operating expense

Research and development expense

For the three months ended June 30, 2025, the Company recorded $1.0 million of research and development expense, as compared to approximately $2.8 million for the three months ended June 30, 2024. The decrease of $1.8 million is related primarily due to the conclusion of the phase 2 study related to NRX-101 and the Company's cash conservation efforts, specifically to reduction in $0.4 million in clinical costs, $1.5 million in other regulatory and process development costs, and less than $0.1 million in payroll and payroll related expenses. The research and development expense for each of the three months ended June 30, 2025 and 2024, includes less than $0.1 million of non-cash stock-based compensation.

General and administrative expense

For the three months ended June 30, 2025, the Company recorded $2.7 million of general and administrative expense, as compared to approximately $4.2 million for the three months ended June 30, 2024. The decrease of $1.5 million is related primarily to a decrease of $1.2 million in consultant and legal fees, $0.1 million in insurance expense and $0.2 million in employee expenses and other general and admin expenses. General and administrative expense includes less than $0.1 million of non-cash stock-based compensation for both of the three months ended June 30, 2025 and 2024.

Other expense (income)

Interest income

For the three months ended June 30, 2025, the Company recorded less than $0.1 million of interest income, as compared to less than $0.1 million of interest income for the three months ended June 30, 2024.

Convertible note default penalty

For the three months ended June 30, 2025, the Company recorded $0 million of a default penalty, as compared to $0.8 million of a default penalty for the three months ended June 30, 2024. The decrease is due to alleged default in connection with the convertible note during the three months ended June 30, 2024.

Change in fair value of convertible notes payable

For three months ended June 30, 2025, the Company recorded a loss of $5.6 million related to the change in fair value of the convertible notes payable which are accounted for under the fair value option. For the three months ended June 30, 2024, the Company recorded a loss of less than $0.1 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

For the three months ended June 30, 2025, the Company recorded a loss of $6.4 million related to the change in fair value of the warrant liabilities, as compared to a gain of less than $0.1 million for the three months ended June 30, 2024. The increase in loss during the three months ended June 30, 2025 was attributed to the warrants issued in conjunction with the First, Second and Third Tranches of the Anson Notes as well as increase in the Company's stock prices.

Loss on convertible note conversion

For the three months ended June 30, 2025, the Company recorded a loss of $1.9 million related to convertible note conversion, as compared to $0 during the three months ended June 30, 2024. These conversions were calculated as the difference between the conversion price per the terms of the Anson agreement (See Note 7) relative to the fair value of the common stock on the date of conversion.

Results of operations for the six months ended June 30, 2025 and 2024

The following table sets forth the Company's selected statements of operations data for the following periods (in thousands):

		Six months ended June 30,								Change
		2025				2024				Dollars
		(Unaudited)
Operating expense:
Research and development		$	1,791			$	4,552			$	(2,761	)
General and administrative			5,686				8,496				(2,810	)
Settlement Expense			100				-				100
Total operating expense			7,577				13,048				(5,471	)
Loss from operations		$	(7,577	)		$	(13,048	)		$	5,471
Other expense(income):
Interest income		$	(6	)		$	(34	)		$	28
Interest expense			-				230				(230	)
Convertible note default penalty			-				849				(849	)
Change in fair value of convertible note payable			6,530				341				6,189
Change in fair value of warrant liabilities			3,518				(9	)			3,527
Loss on issuance of the Registered Direct Offering			729				-				729
Loss on Considerations Shares and Warrants			1,277				-				1,277
Loss on convertible note conversion			3,467				-				3,467
Total other (income) expense			15,515				1,377				14,139
Loss before tax			(23,092	)			(14,425	)			(8,667	)
Net loss		$	(23,092	)		$	(14,425	)		$	(8,667	)

Operating expense

Research and development expense

For the six months ended June 30, 2025, the Company recorded $1.8 million of research and development expense, as compared to approximately $4.6 million for the six months ended June 30, 2024. The decrease of $2.8 million is related primarily due to the conclusion of the phase 2 study related to NRX-101 and the Company's cash conservation efforts, $0.8 million in clinical costs, $1.5 million in other regulatory and process development costs, and $0.5 million in regulatory and process consultants fees. The research and development expense for each of the six months ended June 30, 2025 and 2024, respectively, includes less than $0.1 million of non-cash stock-based compensation.

General and administrative expense

For the six months ended June 30, 2025, the Company recorded $5.7 million of general and administrative expense, as compared to approximately $8.5 million for the six months ended June 30, 2024. The decrease of $2.8 million is related primarily to a decrease of $2.1 million in consultant fees, $0.2 million in insurance expense, and $0.6 million in employee expenses and other general and admin expenses, partially offset by an increase of $0.1 million in legal expense. General and administrative expense includes $0.2 million and $0.3 million of non-cash stock-based compensation for the six months ended June 30, 2025 and 2024, respectively.

Settlement expense

Settlement expense during the six months ended June 30, 2025 consists of $0.1 million of deductibles related to insurance claims, as compared to $0 during the six months ended June 30, 2024.

Other expense (income)

Interest income

For the six months ended June 30, 2025, the Company recorded less than $0.1 million of interest income, as compared to less than $0.1 million of interest income for the six months ended June 30, 2024.

Interest expense

For the six months ended June 30, 2025, the Company recorded $0 of interest expense, as compared to $0.2 million of interest expense for the six months ended June 30, 2024. The decrease of $0.2 million is due to premiums for cash payments on the convertible note for the six months ended June 30, 2024.

Convertible note default penalty

For the six months ended June 30, 2025, the Company recorded $0 million of a default penalty, as compared $0.8 million of a default penalty for the six months ended June 30, 2024. The decrease is due to alleged default in connection with the convertible note in 2024 and no such event of default during the six months ended June 30, 2025.

Change in fair value of convertible notes payable

For six months ended June 30, 2025, the Company recorded a loss of $6.5 million related to the change in fair value of the convertible notes payable which are accounted for under the fair value option. For the six months ended June 30, 2024, the Company recorded loss of $0.3 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

For the six months ended June 30, 2025, the Company recorded a loss of $3.5 million related to the change in fair value of the warrant liabilities, as compared to a gain of less than $0.1 million for the six months ended June 30, 2024. The increase in loss during the six months ended June 30, 2025 was attributed to the warrants issued in conjunction with the First, Second and Third Tranches of the Anson Notes as well as increase in the Company's fair value of its common shares.

Loss on issuance of Registered Direct Offering

For the six months ended June 30, 2025, the Company recorded a loss of $0.7 million related to the issuance of Registered Direct Offering, as compared to $0 during the six months ended June 30, 2024. As the fair value of the warrant liabilities issued in the Registered Direct Offering exceeded the net proceeds received of $3.255 million, the Company recognized the excess of the fair value over the net proceeds received of $3.255 million as a loss upon issuance of RD Shares of $0.7 million which is included in other expense (income) in the condensed consolidated statement of operations for the period ended June 30, 2025.

Loss on Considerations shares and warrants

For the six months ended June 30, 2025, the Company recorded a loss of $1.2 million related to the loss on issuance of Consideration Shares and Warrants, as compared to $0 during the six months ended June 30, 2024.

Loss on convertible note conversion

For the three months ended June 30, 2025, the Company recorded a loss of $3.5 million related to convertible note conversion, as compared to $0 during the six months ended June 30, 2024. These conversions were calculated as the difference between the conversion price per the terms of the Anson agreement (See Note 7) relative to the fair value of the common stock on the date of conversion.

Liquidity and Capital Resources

The Company has generated no revenues, has incurred operating losses since inception, expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. Until such time as the Company is able to establish a revenue stream from the sale of its therapeutic products, it is dependent upon obtaining necessary equity and/or debt financing to continue operations. The Company cannot make any assurances that sales of NRX-101 will commence in the near term or that additional financings will be available to it on acceptable terms or at all. This could negatively impact our business and operations and could also lead to the reduction of our operations.

At-The Market Offering Agreement

On April 15, 2024, the Company increased the maximum aggregate offering amount of the shares of common stock issuable under that certain At the Market Offering Agreement, dated August 14, 2023 (the "Offering Agreement"), with H.C. Wainwright & Co., and filed a prospectus supplement under the Offering Agreement for an aggregate of $4.9 million (the "ATM Offering"). On August 14, 2024, the Company reduced the amount to under the Offering Agreement to $0 and suspended the ATM Offering. On April 17, 2025, the Company reinstated the ATM Offering and filed a prospectus supplement under the Offering Agreement for an aggregate of $20 million.

Through June 30, 2025, the Company received aggregate net cash proceeds to the Company from the ATM Offering of approximately $2.8 million.

Cash Flows

The following table presents selected financial information and statistics for each of the periods shown below:

		June 30, 2025				December 31, 2024
Balance Sheet Data:
Cash		$	2,910			$	1,443
Total assets			4,838				3,651
Convertible notes payable and accrued interest			9,854				6,257
Total liabilities			40,453				26,874
Total stockholders' deficit			(35,615	)			(23,223	)

		Six months ended June 30,
		2025				2024
		(Unaudited)
Statement of Cash Flow Data:
Net cash used in operating activities		$	(7,508	)		$	(6,233	)
Net cash used in investing activities			-				-
Net cash provided by financing activities			8,975				3,536
Net increase (decrease) in cash		$	1,467			$	(2,697	)

Operating Activities

During the six months ended June 30, 2025, operating activities used approximately $7.5 million of cash, primarily resulting from a net loss of $23.1 million partially offset by net non-cash losses of $16.1 million, including $6.5 million in change in fair value of convertible promissory notes, $0.2 million of stock-based compensation, $3.5 million loss in convertible note conversion, $1.2 million of loss on Consideration Shares and Warrants, $0.4 million in debt issuance costs, $0.7 million in loss on issuance of Register Direct offering, $3.5 million loss in change in fair value of warrant liabilities and changes in operating assets and liabilities of $0.5 million.

During the six months ended June 30, 2024, operating activities used approximately $6.2 million of cash, primarily resulting from a net loss of $14.4 million partially offset by (a) net non-cash losses of $2.9 million, including $0.3 million in change in fair value of convertible promissory note, and $0.3 million of stock-based compensation, $1.3 million of contract costs related to Alvogen termination, $0.8 million of default penalties, and (b) changes in operating assets and liabilities of $5.3 million.

Investing Activities

During the six months ended June 30, 2025 and 2024, there was no cash used in investing activities.

Financing Activities

During the six months ended June 30, 2025, financing activities provided $9.0 million of cash resulting from $3.3 million in proceeds from issuance of common stock and warrants related to the RD Offering and $5.0 million in proceeds from the Anson Notes, $1.0 million in proceeds from issuance of common stock in connection with ATM offering, offset by $0.3 million in repayments of and by $0.4 million of proceeds from insurance notes, and $0.4 million in debt issuance costs due to the fair value election on Anson Notes.

During the six months ended June 30, 2024, financing activities provided $3.5 million of cash resulting from $1.0 million in proceeds from issuance of Common Stock and warrants issued in a private placement, and $4.7 million in proceeds from issuance of Common Stock and warrants offset by $2.2 million in repayments of the convertible note.

Contractual Obligations and Commitments

See Note 7, Debt, and Note 8, Commitments and Contingencies, of the notes to the Company's condensed consolidated financial statements as of and for the three months ended June 30, 2025 included elsewhere in this report for further discussion of the Company's commitments and contingencies.

Milestone Payments

Pursuant to the legal settlement with Sarah Herzog Memorial Hospital Ezrat Nashim ("SHMH") in September 2018, which included the license of intellectual property rights from SHMH, an ongoing royalty of 1% to 2.5% of NRX-101 gross sales is due to SHMH, together with milestone payments of $0.3 million, upon completion of phase 3 trials and commercial sale of NRX-101. The milestone payments for developmental and commercial milestones range from $0.1 million to $0.8 million. Annual maintenance fees are up to $0.2 million.

Off-Balance Sheet Arrangements

The Company is not party to any off-balance sheet transactions. The Company has no guarantees or obligations other than those which arise out of normal business operations.

Critical Accounting Policies and Significant Judgments and Estimates

The Company's management's discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). The preparation of these financial statements requires NRx Pharmaceuticals to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. In accordance with GAAP, NRx Pharmaceuticals evaluates its estimates and judgments on an ongoing basis. The most critical estimates relate to stock-based compensation, the valuation of warrants, and the valuation of convertible notes payable. NRx Pharmaceuticals bases its estimates and assumptions on current facts, historical experiences, and various other factors that NRx Pharmaceuticals believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company defines its critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which the Company applies those principles. While its significant accounting policies are more fully described in Note 3 to its financial statements, the Company believes the following are the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments.

Stock-based Compensation

We measure stock option awards granted to employees and directors based on the fair value of the award on the date of the grant and recognize compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. For restricted stock awards, the grant date fair value is the fair market value per share as of the grant date based on the closing trading price for the Company's stock. The straight-line method of expense recognition is applied to awards with service-only conditions. We account for forfeitures as they occur.

We estimate the fair value of each stock option award using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our stock-based awards, the risk-free interest rate for a period that approximates the expected term of our stock-based awards, and our expected dividend yield. Therefore, we estimate our expected volatility based on the implied volatility of publicly traded warrants on our common stock and historical volatility of a set of our publicly traded peer companies. We estimate the expected term of our options using the "simplified" method for awards that qualify as "plain-vanilla" options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends on common stock and do not expect to pay any cash dividends in the foreseeable future.

The assumptions used in determining the fair value of stock-based awards represent reasonable estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different in the future.

Warrant Liabilities

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own common stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, or date of modification, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Private Placement Warrants, Anson Warrants, Consideration Warrants, and Anson Registered Direct Offering Warrants were estimated using a Black Scholes valuation approach and the fair value of the Substitute Warrants was estimated using a modified Black Scholes valuation approach which applies a probability factor based on the earnout cash milestone and earnout shares milestone probabilities of achievement at each reporting period.

Convertible Notes Payable

As permitted under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 825, Financial Instruments ("ASC 825"), the Company elects to account for its convertible promissory notes, which meets the required criteria, at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating loss in the condensed consolidated statements of operations. As a result of electing the fair value option, direct costs and fees related to the convertible promissory notes are expensed as incurred.

The Company estimates the fair value of the convertible notes payable using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility and volume volatility of our common stock, the time to expiration (i.e. expected termination date) of the convertible note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default. Therefore, we estimate our expected future equity and volume volatility based on the historical volatility of both our common stock utilizing a lookback period consistent with the time to expiration. The time to expiration is based on the contractual maturity date, giving consideration to the mandatory and potential accelerated redemptions beginning six months from the issuance date. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. Probability of default is estimated using Bloomberg's Default Risk function which uses our financial information to calculate a default risk specific to the Company.

The assumptions used in determining the fair value of the convertible note payable represent reasonable estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, the change in fair value of the convertible note payable recorded to other (income) expense could be materially different in the future.