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

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

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission ("SEC") on March 18, 2026 (the "2025 Annual Report on Form 10-K"), under "Item 1A. Risk Factors", available on the SEC EDGAR website at www.sec.gov, Part II, and Item 1A of the report, for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those risks noted above.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements", within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "objective," "ongoing," "plan," "predict," "project," "potential," "should," "will," or "would," and or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements, including the risks set forth in the 2025 Annual Report on Form 10-K. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain.

The forward-looking statements contained in this Quarterly Report on Form 10-Q include, among other things, statements about:

Overview

We are a pre-revenue, development-stage biopharmaceutical company focused on developing new medicines to treat pain and peripheral neuropathy associated with cancer treatment, with the ability to expand into other pain states with continued clinical success. Pain and neuropathy affect the majority of patients undergoing chemotherapy treatment with deleterious effects on patient quality of life and function and can result in patients lowering their dose or stopping their chemotherapy resulting from progression to moderate or severe forms of the illness. There are no FDA approved treatments for patients suffering from chemotherapy induced pain or neuropathy ("CINP"), highlighting a significant medical need for advancing new treatments to manage CINP. Chronic pain medications approved by FDA to treat other forms of chronic pain have failed to exhibit consistent clinical benefits in eleven of twelve previous research trials, highlighting limitations of using other pain medications "off-label" to manage CINP symptoms.

Our priority pipeline drug candidates include:

On April 21, 2026, Dogwood entered into an agreement with PRIDCor Therapeutics, LLC ("PRIDCor") pursuant to which PRIDCor will be fully responsible for financing and executing future development, commercialization and intellectual property maintenance for both IMC-1 and IMC-2. IMC-1 is a novel, proprietary, fixed dose combination of a nucleoside analog and the anti-inflammatory agent celecoxib for the treatment of fibromyalgia and IMC-2, a combination of valacyclovir and celecoxib that is intended to synergistically suppress herpesvirus activation for the treatment of Long-COVID. In exchange, Dogwood is entitled to a tiered royalty on net sales of up to 15% upon commercialization of IMC-1 or IMC-2. Further, Dogwood is entitled to receive 10% of PRIDCor's initial Series A financing and 9% of all future capital raised by PRIDCor to advance IMC-1 or IMC-2, as well as future PRIDCor partnership-related development and regulatory payments associated with IMC-1 or IMC-2. Potential payments to Dogwood under the development partnership are capped at $100 million. In July 2026, PRIDCor broke escrow subject to the Series A Payment and Escrow Break Minimum of $1,000,000. As a result, the Company received its first payment under the PRIDCor License Agreement in the amount of $100,000 and submitted $87,750 related to the payment made to the Rights Agent to be distributed to the CVR holders under the CVR Agreement.

Na_V 1.7 Non-Opioid Analgesic Program

Halneuron^® is in Phase 2b clinical development ("HAL-CINP-203") for the treatment of CINP. The active pharmaceutical ingredient is highly purified Tetrodotoxin ("TTX"), a potent sodium channel modulator found in puffer fish and several other marine animals. Halneuron^® works as an analgesic by modulating the activity of Na_V 1.7, a key sodium channel located in the peripheral nervous system that is directly involved in pain signal transmission. By reducing the activity of the Na_V 1.7 channel, Halneuron^® has the potential to reduce pain associated with conditions involving neuropathic pain, chronic pain and acute forms of pain.

In the first quarter of 2025, we commenced dosing of patients in the HAL-CINP-203 clinical trial in the United States. HAL-CINP-203 is a Phase 2b, double-blind, placebo controlled clinical trial intended to assess the efficacy and safety of Halneuron^® in approximately 230 patients with moderate to severe neuropathic pain caused by previous platinum and/or taxane based cancer chemotherapy. The primary efficacy endpoint is the reduction in pain from baseline to week 4 in the weekly average of daily 24-hour recall pain intensity scores captured on an electronic diary and analyzed as a responder analysis. The responder analysis will compare Halneuron^® to placebo in terms of the proportion of patients who achieve 50% or more reduction in their pain from baseline to the primary endpoint. The secondary endpoints include patient global impression of change, PROMIS fatigue, PROMIS sleep, PROMIS-29, pain interference, hospital anxiety and depression scale and the neuropathic pain symptom inventory. In December 2025, we announced interim results from a planned interim assessment of the ongoing Halneuron^® Phase 2b trial, the goal of which was to finalize the statistical methodology and the endpoint analysis to be used to determine Halneuron^® safety and effectiveness as a treatment for CINP. Key highlights from the first 97 patients completing the trial included Halneuron demonstrating treatment effect versus placebo, with responders exhibiting durable treatment effects over the course of the four-week trial. Halneuron^®'s treatment effect was observed when used alone or in combination with other pain medications as compared with placebo. Notably, the overall drop out rate was 4.5% for this cohort and is far below the drop out rate observed with other FDA approved chronic pain medications, including duloxetine (20+%) and pregabalin (30-40%). Based on the recommendation of the independent statisticians conducting the assessment, we plan to enroll between 210-240 patients by the end of summer to ensure a sample size that provides 80+% power to achieve a statistically significant outcome via responder analysis. Currently, we have enrolled 217 patients and expect top-line data from the trial in the fall of 2026.

SP16 Chemotherapy Induced Peripheral Neuropathy Program (CIPN)

We licensed the rights to the IV formulation of SP16 for the treatment of CIPN in September 2025. SP16 is a 17 amino acid peptide drug that has been designed to mimic the anti-inflammatory and immunomodulatory properties of Alpha-1 Antitrypsin, without the limitations seen with the much larger Alpha-1 Antitrypsin protein. The initial Phase 1 evaluation of SP16's safety when used to treat CIPN will be conducted by the University of Virginia Cancer Center under a National Cancer Institute ("NCI") grant. Patient recruitment for this initial evaluation is expected to start in the second half of 2026. We will be providing our clinical development expertise, but with the NCI funding the trial, we will incur no further expenses in connection with this initial evaluation of the safety of SP16 in cancer patients. Dogwood announced FDA acceptance of the Investigational New Drug ("IND") application for SP16, administered intravenously ("IV"), for the treatment of CINP. Patient dosing in the planned Phase 1b trial should commence in the second half of this year.

Registered Direct Offering and Private Placement Offering

On January 11, 2026, we entered into a securities purchase agreement (the "Purchase Agreement") with a single healthcare-focused institutional investor (the "Purchaser") pursuant to which we agreed to issue and sell, in a registered direct offering (the "Registered Offering"), 2,338,948 shares of our Common Stock. In a concurrent private placement (the "Private Offering" and, together with the Registered Offering, the "January 2026 Offerings"), and pursuant to the Purchase Agreement, the Company agreed to sell to the Purchaser (i) unregistered pre-funded warrants to purchase 2,047,089 shares of Common Stock (the "Pre-funded Warrants") and (ii) unregistered common warrants to purchase up to an aggregate of 4,386,037 shares of Common Stock (the "Common Stock Warrants", together with the Pre-funded Warrants, the "Warrants"). The Common Stock

Warrants and Pre-funded Warrants are classified as equity on the Company's condensed consolidated balance sheet. The Common Stock Warrants include certain rights upon "fundamental transactions," as described in the warrant agreement, including the right of the holder thereof to receive from the Company or a successor entity the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such fundamental transaction if it had been the holder of the number of warrant shares immediately prior to such fundamental transaction. At the holder's option, exercisable within thirty (30) days after the consummation of a fundamental transaction (if within the Company's control), the Company or any successor entity shall purchase the Common Stock Warrant from the holder by paying to the holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of the Warrants on the date of the consummation of such fundamental transaction. Each share of Common Stock (or Pre-funded Warrant in lieu thereof) was sold together with one Common Stock Warrant at a combined purchase price of $2.85 per share and accompanying warrant (or $2.8499 per Pre-funded Warrant and accompanying warrant), priced at-the-market under Nasdaq rules. The aggregate gross proceeds to the Company from the January 2026 Offerings were approximately $12.5 million, before deducting placement agent fees and offering expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the Common Stock Warrants. Net proceeds were approximately $11.4 million.

The Registered Offering was made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-287575). The Pre-funded Warrants, the Common Stock Warrants and the shares of Common Stock issuable upon exercise thereof were offered and sold in the Private Offering in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation D promulgated thereunder. Pursuant to the Purchase Agreement, the Company agreed to file one or more registration statements with the SEC covering the resale of the shares of Common Stock issuable upon exercise of the pre-funded warrants and Common Stock Warrants. Maxim Group LLC acted as the sole placement agent for the January 2026 Offerings.

On January 15, 2026, we filed a Form S-3 Registration Statement for the resale of up to 6,433,126 shares of our Common Stock consisting of (i) 2,047,089 shares of Common Stock underlying the Pre-funded Warrants at an exercise price of $0.0001 per share; and (ii) 4,386,037 shares of Common Stock underlying the Common Stock Warrants to purchase shares of Common Stock at an exercise price of $3.28 per share. The Form S-3 Registration Statement was declared effective by the SEC on January 29, 2026.

The Pre-funded Warrants have an initial exercise price per share of $0.0001, subject to certain adjustments, and became exercisable on January 29, 2026 following the effectiveness of the Form S-3 discussed above. The Pre-funded Warrants do not expire and terminate when all of the Pre-funded Warrants are exercised. The Common Stock Warrants have an exercise price of $3.28 per share, became exercisable following the effective date of stockholder approval on March 2026, and expire five and one-half years following the initial exercise date.

Under the Warrants, the Company may not effect the exercise of any of Warrant, and a holder will not be entitled to exercise any portion of any Warrant to the extent that immediately following the exercise, holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99%, as applicable, of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of such shares of Common Stock.

At a special meeting of stockholders held on March 11, 2026, the stockholders approved the exercise of the Common Stock Warrants to purchase up to 4,386,037 shares of Common Stock.

Results of Operations

Below is a summary of the results of operations:

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Three and six months ended June 30, 2026 and 2025

Research and Development Expenses

Research and development expenses increased by $0.6 million and $0.9 million for the three and six months ended June 30, 2026, respectively, compared to prior periods. The increase of $0.6 million for the three months ended June 30, 2026 was primarily related to an increase in HAL-CINP-203 clinical trial costs of $0.7 million offset by a decrease in drug development and manufacturing costs of $0.1 million. The increase of $0.9 million for the six months ended June 30, 2026 was primarily related to an increase in HAL-CINP-203 clinical trial costs of $0.7 and an increase in salaries and related personnel costs of $0.2 million.

General and Administrative Expenses

General and administrative expenses increased by $0.3 million and $0.7 million for the three and six months ended June 30, 2026, respectively, compared to prior periods. The increase of $0.3 million for the three months ended June 30, 2026 was primarily related to an increase in salaries and related personnel costs of $0.3 million and an increase in franchise fees of $0.1 million offset by a decrease in public company costs of $0.1 million. The increase of $0.7 million for the six months ended June 30, 2026 was primarily due to an increase in salaries and related personnel costs of $0.8 million offset by a decrease in franchise fees of $0.1 million.

Impairment of Long-lived Assets

In connection with our acquisition of Pharmagesic (Holdings) Inc., we allocated a portion of the purchase price to goodwill and in-process research and development ("IPR&D") intangible assets. During the first and second quarter of 2026, we experienced a decline in our stock price resulting in market capitalization being less than our stockholders' equity, which we concluded was an impairment indicator. As a result, we performed a quantitative assessment for goodwill and IPR&D impairment and recognized a non-cash impairment charge of $9.2 million for the three and six months ended June 30, 2026 which was partially offset by a reduction in the Company's deferred tax liability of $2.5 million. The net impairment charge of $6.7 million had no bearing on the Company's cash runway.

Liquidity and Capital Resources

Since our inception, we have financed our operations through public offerings of common stock and proceeds from private placements of membership interests and convertible promissory notes. To date, we have not generated any revenue from the sale of products and we do not anticipate generating any revenue from the sales of products for the foreseeable future. We have incurred losses and generated negative cash flows from operations since inception. As of June 30, 2026, our principal source of liquidity was our cash, which totaled $9.6 million.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability. For example, the Russia-Ukraine conflict and the conflict between U.S., Israel and Iran have created extreme volatility in the global capital markets and may continue to have further global economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, if at all.

Equity Financings

In January 2026, we closed the January 2026 Offerings, consisting of the Registered Offering of 2,338,948 shares of our Common Stock and a Private Offering of Pre-funded Warrants to purchase up to 2,047,089 shares of Common Stock and Common Stock Warrants to purchase up to 4,386,037 shares of Common Stock, at a combined offering price of $2.85 per share and accompanying Common Stock Warrant (and $2.8499 per Pre-funded Warrant and accompanying Common Stock Warrant). Gross proceeds were approximately $12.5 million and net proceeds were approximately $11.4 million, after deducting placement agent fees and offering expenses. The Common Stock Warrants have an exercise price of $3.28 per share, and, if exercised in full for cash, would generate up to approximately $14.4 million of additional gross proceeds.

In March 2025, we closed the March 2025 Offering, which was a registered direct offering of 578,950 shares of our Common Stock, raising gross proceeds of approximately $4.78 million and net proceeds of approximately $4.25 million, after deducting placement agent fees and offering expenses.

Debt Financings

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There were no debt financings during the six months ended June 30, 2026. On February 18, 2025, we received $3,000,000 in loan proceeds pursuant to the Loan Agreement dated October 7, 2024 with the Lender. In March 2025, the Company entered into a Debt Exchange and Cancellation Agreement (the "Exchange and Cancellation Agreement") with the Lender. Pursuant to the Exchange and Cancellation Agreement, the principal amount of all loans made to the Company under the Loan Agreement, along with accrued interest through March 12, 2025, was deemed repaid and all of the Company's obligations satisfied in full and cancelled in exchange for 284.2638 shares of the Company's Series A-1 Non-Voting Convertible Preferred Stock, par value $0.0001 per share. There was no debt outstanding at June 30, 2026 and December 31, 2025.

Future Capital Requirements

We anticipate our cash on hand at June 30, 2026 of approximately $9.6 million will fund operations into the fourth quarter of 2026. The Company will need to secure additional financing to fund its ongoing clinical trials and operations beyond the fourth quarter of 2026 to continue to execute its strategy. We will need to finance our cash needs through public or private equity offerings, debt financings, collaboration and licensing arrangements or other financing alternatives. To the extent that we raise additional funds by issuing equity or equity-linked securities, our shareholders will experience dilution. We can give no assurances that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs. As a result, substantial doubt exists regarding our ability to continue as a going concern 12 months from the issuance of this Quarterly Report on Form 10-Q. Failure to secure the necessary financing in a timely manner and on favorable terms could have a material adverse effect on the Company's strategy and value and could require the delay of product development and clinical trial plans.

Summary of Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025, respectively:

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Cash Flows for the six months ended June 30, 2026 and 2025

Operating Activities

For the six months ended June 30, 2026, net cash used in operations was $8.2 million and consisted of a net loss of $16.5 million offset by a net change in operating assets and liabilities of $0.5 million attributable to a decrease in prepaid expenses and other current assets of $0.6 million and an increase in accrued liabilities of $0.2 million offset by a decrease in accounts payable of $0.3 million further offset by non-cash items of $7.8 million attributable to the IPR&D impairment of $9.2 million, share-based compensation of $1.0 million and reduction in the carrying amount of right-of-use asset and loss on foreign exchange of $0.1 million offset by a deferred tax benefit related to the IPR&D impairment of $2.5 million.

For the six months ended June 30, 2025, net cash used in operations was $8.7 million and consisted of a net loss of $14.7 million and a net change in operating assets and liabilities of $0.5 million attributable to a decrease in accounts payable and accrued liabilities of $0.9 million offset by a decrease in prepaid expenses and other current assets of $0.4 million further offset by non-cash items of $6.5 million attributable to loss on conversion of debt with related party of $6.1 million, deferred tax expense of $0.2 million and share-based compensation, depreciation and amortization of $0.2 million.

Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2026 was $11.3 million and was attributable to gross proceeds from our concurrent registered direct and private placement offering in January 2026 of $12.5 million, net of placement fees and offering costs paid by us during the three months ended June 30, 2026 of $1.1 million and the payment of issuance costs associated with the equity distribution agreement that was terminated in January 2026 of $0.1 million.

Net cash provided by financing activities during the six months ended June 30, 2025 was $7.3 million and was attributable to cash proceeds from the Loan Agreement of $3.0 million and gross proceeds from our registered direct offering in March 2025 of $4.8 million, net of placement agent fees and offering costs paid by us during the three months ended March 2025 of $0.5 million.

Off-Balance Sheet Arrangements

As of June 30, 2026, we did not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Discussion of Critical Accounting Policies and Significant Judgments and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in making certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require difficult, subjective and complex judgments by management in order to make estimates about the effect of matters that are inherently uncertain. During the six months ended June 30, 2026, there were no significant changes to our critical accounting policies from those described in our annual financial statements for the year ended December 31, 2025, which we included in our 2025 Annual Report on Form 10-K.

Assessment of Indefinite-Lived Intangible Assets and Goodwill

The Company's most recent impairment assessment, performed as of June 30, 2026, concluded that the certain IPR&D assets were impaired but that goodwill was not impaired. If the Company's market capitalization continues to decline, the Company's remaining IPR&D asset and goodwill may be at risk of future impairment. Events that could cause management to conclude that fair value has declined below carrying value, and that could result in a material impairment charge in a future period, include but are not limited to, (i) a sustained further decline in the Company's stock price or market capitalization; (ii) adverse changes in macroeconomic or capital-market conditions; (iii) unfavorable results; (iv) delays in, or failure to obtain, regulatory approval from the U.S. Food and Drug Administration; and (v) the emergence of competitive therapies or changes in the standard of care for chemotherapy-induced neuropathic pain. Should the market value of the Company's common stock decline further, impairment charges may be recorded in future periods.

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