Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information included elsewhere in this Annual Report. As used in the discussion below, "we," "our," and "us" refers to the historical financial results of Lipocine.

Forward Looking Statements

This section and other parts of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements may refer to such matters as products, product benefits, pre-clinical and clinical development timelines, clinical and regulatory expectations and plans, expected responses to regulatory actions, anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance, expected research and development and other expenses, future expectations for liquidity and capital resources needs and similar matters. Such words as "may", "will", "expect", "continue", "estimate", "project", and "intend" and similar terms and expressions are intended to identify forward looking statements. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A (Risk Factors) of this Form 10-K. Except as required by applicable law, we assume no obligation to revise or update any forward-looking statements for any reason.

Overview of Our Business

We are a biopharmaceutical company focused on leveraging our proprietary drug delivery technology platform to develop differentiated products through the oral delivery of previously difficult to deliver molecules. Our proprietary delivery technologies are designed to improve patient compliance and safety through orally available treatment options. Our primary development programs are based on oral delivery solutions for poorly bioavailable drugs. We have a portfolio of differentiated innovative product candidates that target high unmet needs for neurological and psychiatric CNS disorders, liver diseases, and hormone supplementation for men and women.

We entered into our first license agreement for the development and commercialization of our product, TLANDO, an oral testosterone replacement therapy comprised of testosterone undecanoate in October 2021. On March 28, 2022, the FDA approved TLANDO as a testosterone replacement therapy ("TRT") in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism and on June 7, 2022, our former commercial partner Antares (a wholly owned subsidiary of Halozyme) announced the commercial launch of TLANDO.

On January 12, 2024, we entered into the Verity License Agreement with Verity, pursuant to which we granted to Verity Pharma an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize the TLANDO product for TRT in the Licensed Verity Territory and Verity Pharma filed a NDS for TLANDO in Canada in June 2025. Any FDA post-marketing studies required will also be the responsibility of our Licensee, Verity Pharma.

In September 2024, we entered into the SPC License Agreement for the development and commercialization of TLANDO with SPC, pursuant to which the Company granted to SPC a non-transferable, exclusive, royalty-bearing license to commercialize our TLANDO product for TRT in the SPC Territory. In October 2024, we entered into the Pharmalink Distribution Agreement with Pharmalink granting a non-transferable, exclusive, license to commercialize our TLANDO product specific to the GCC, including Saudi Arabia, Kuwait, UAE, Qatar, Bahrain, and Oman (the "Pharmalink Territory"). In April 2025, we entered into the Aché License Agreement with Aché pursuant to which we granted to Aché an exclusive license to commercialize our TLANDO product with respect to the Field, specific to the Aché Territory.

Additional clinical development pipeline candidates include: LPCN 1154 for postpartum depression ("PPD"), LPCN 2201 for Major Depressive Disorder ("MDD"), LPCN 2101 for epilepsy, and LPCN 2203 for essential tremor. In addition to our clinical development product candidates, we have assets for which we expect to seek partnerships to enable further development including TLANDO for territories outside of the United States, Canada, South Korea, the GCC, and Brazil, LPCN 2401 for improved body composition in GLP-1 agonist use such as obesity management, LPCN 1148 comprising a novel prodrug of testosterone, testosterone laurate ("TL"), for the management of decompensated cirrhosis, and LPCN 1107, potentially the first oral hydroxy progesterone caproate ("HPC") product indicated for the prevention of recurrent preterm birth ("PTB"), which has completed a dose finding clinical study in pregnant women and has been granted orphan drug designation by the FDA.

To date, we have funded our operations primarily through sales of equity securities, debt and payments received under our license and collaboration arrangements. We have not generated any revenues from product sales and while we expect to generate royalties from our Licensees' sales of TLANDO, we do not expect to generate revenue from product sales from our other product candidates unless and until approval.

We have incurred losses in most years since our inception. As of December 31, 2025, we had an accumulated deficit of approximately $209.4 million. Income and losses fluctuate year to year, primarily depending on the nature and timing of research and development occurring on our product candidates. Our net loss was approximately $9.6 million for the year ended December 31, 2025, compared to net income of $8,000 for the year ended December 31, 2024. Substantially all of our operating losses resulted from expenses incurred in connection with our product candidate development programs, our research activities and general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:

	●	subject to resource availability, conduct further development of our other product candidates, including LPCN 1154, LPCN 2201, LPCN 2101, and LPCN 2203;
	●	continue our research efforts;
	●	research new products or new uses for our existing products;
	●	maintain, expand and protect our intellectual property portfolio; and
	●	provide general and administrative support for our operations.

To fund future long-term operations, including the potential commercialization of any of our product candidates, we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including capital market conditions, regulatory requirements and commercial success of TLANDO, regulatory requirements related to our other product development programs, the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs, our ability to license and/or partner our products to third parties, the pursuit of various potential commercial activities and strategies associated with our development programs and related general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources, such as potential license, partnering and collaboration agreements. We cannot be certain that anticipated additional financing will be available to us on favorable terms, in amounts sufficient to fund our operations, or at all. Although we have previously been successful in obtaining financing through public and private equity securities offerings and our license and collaboration agreements, there can be no assurance that we will be able to do so in the future.

Corporate Strategy

The key components of our strategy are to:

Continue to leverage our drug delivery technology platform. Our goal is to become a leading biopharmaceutical company focused on leveraging our drug delivery technology platform to develop and register differentiated products to treat conditions with large unmet medical need through effective oral drug delivery. Our pipeline candidates are based on our drug delivery technology platform, validated through TLANDO, an approved commercial product. Our technology entails lipidic compositions which form an optimal dispersed phase in the gastrointestinal environment for improved absorption of highly water insoluble drugs. The drug loaded dispersed phase presents the drug efficiently at the absorption site (gastrointestinal tract membrane) thus improving or enabling portal and/or lymphatic absorption post oral administration.

Advance LPCN 1154, LPCN 2201, LPCN 2101, LPCN 2203 and other CNS product candidates. We intend to focus on the development of endogenous neuroactive steroids ("NASs") which have broad applicability in treating various CNS conditions where we can leverage our technology platform to develop highly differentiated oral therapeutics. Our priority is on the development of LPCN 1154, a 48-hour treatment duration, fast-acting oral antidepressant for PPD with potential for outpatient use. We are currently evaluating additional NAS candidates LPCN 2201, for MDD, and LPCN 2101, for epilepsy including Drug Resistant Epilepsy ("DRE") and women with epilepsy ("WWE").

Support our partners, Verity, SPC, Pharmalink and Aché, in commercialization and/or development of our licensed oral TRT option. We believe the TRT market needs a differentiated, convenient oral option. We have exclusively licensed rights to TLANDO to Verity Pharma for commercialization of TLANDO in the Licensed Verity Territory, to SPC for commercialization in the SPC Territory, to Pharmalink in the Pharmalink Territory, and to Aché in the Aché Territory. We plan to support Verity's, SPC's, Pharmalink's, and Aché's efforts to effectively enable the availability of TLANDO to patients in a timely manner, in addition to receiving milestone payments and royalty payments associated with TLANDO commercialization as agreed to in the Verity License Agreement, the SPC License Agreement, the Pharmalink Distribution Agreement, and the Aché License Agreement.

Develop partnership(s) to continue the advancement of pipeline assets. We continuously strive to prioritize our resources in seeking partnerships of our pipeline assets. We are currently exploring partnerships for LPCN 1148 for the management of decompensated cirrhosis including prevention of the recurrence of overt hepatic encephalopathy ("OHE"), and we are also exploring partnerships for LPCN 2401 for management of incretin mimetics use and LPCN 1107, our candidate for prevention of pre-term birth. We are also exploring the possibility of licensing LPCN 1021 (known as TLANDO in the United States) to third parties outside of the Licensed Verity Territory, the SPC Territory, the Pharmalink Territory and the Aché Territory, although as of the date of this report, no licensing agreement has been entered into by the Company in any other territories.

Financial Operations Overview

Revenue

To date, we have not generated any revenues from product sales and do not expect to do so until our FDA approved product receives regulatory approval outside the U.S. and Canada or until one of our product candidates receives approval from the FDA. Revenues to date have been generated substantially from license fees, royalty and milestone payments and research support from our licensees. Since our inception through December 31, 2025, we have generated $55.1 million in revenue under our various license and collaboration arrangements and from government grants. We have entered into the Verity License Agreement, the SPC License Agreement, the Pharmalink Distribution Agreement, and the Aché License Agreement with the potential for revenue from future milestones, royalties, and/or product sales, but we may never generate revenues from any of our clinical or preclinical development programs or licensed products as we may never succeed in obtaining regulatory approval or commercializing any of these product candidates.

Research and Development Expenses

Research and development expenses consist primarily of salaries, benefits, stock-based compensation and related personnel costs, fees paid to external service providers such as contract research organizations and contract manufacturing organizations, contractual obligations for clinical development, clinical sites, manufacturing and scale-up for late stage clinical trials, formulation of clinical drug supplies, and expenses associated with regulatory submissions. Research and development expenses also include an allocation of indirect costs, such as those for facilities, office expense, and depreciation of equipment based on the ratio of direct labor hours for research and development personnel to total direct labor hours for all personnel. We expense research and development expenses as incurred. Since our inception, we have spent approximately $163.2 million in research and development expenses through December 31, 2025.

We expect to continue to incur significant costs as we develop our product candidates, including our CNS product candidates, as well as the development of future pipeline product candidates.

In general, the cost of clinical trials may vary significantly over the life of a project as a result of uncertainties in clinical development, including, among others:

	●	the number of sites included in the trials;
	●	the length of time required to enroll suitable subjects;
	●	the duration of subject follow-ups;
	●	the length of time required to collect, analyze and report trial results;
	●	the cost, timing and outcome of regulatory review; and
	●	potential changes by the FDA in clinical trial and NDA filing requirements.

Future research and development expenditures are subject to numerous uncertainties regarding timing and cost to completion, including, among others:

	●	the timing and outcome of regulatory filings and FDA reviews and actions for product candidates;
	●	our dependence on third-party manufacturers for the production of satisfactory finished products for registration and launch should regulatory approval be obtained on any of our product candidates;
	●	the potential for future license or co-promote arrangements for our product candidates, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our future plans and capital requirements; and
	●	the effect on our product development activities of actions taken by the FDA or other regulatory authorities.

A change of outcome for any of these variables with respect to the development of our product development candidates could mean a substantial change in the costs and timing associated with these efforts, could require us to raise additional capital, and may require us to reduce operations.

Given the stage of clinical development and the significant risks and uncertainties inherent in the clinical development, manufacturing, and regulatory approval process, we are unable to estimate with any certainty the time or cost to complete the development of LPCN 1154, LPCN 2201, LPCN 2101, LPCN 2203, LPCN 2401, LPCN 1148, LPCN 1107 and other product candidates. Clinical development timelines, the probability of success, and development costs can differ materially from expectations and results from our clinical trials may not be favorable. If we are successful in progressing LPCN 1154, LPCN 2201, LPCN 2101, LPCN 2203, or other future product candidates into later stage development, we will require additional capital. The amount and timing of our future research and development expenses for these product candidates will depend on the pre-clinical and clinical success of both our current development activities and potential development of new product candidates, as well as ongoing assessments of the commercial potential of such activities. We will continue efforts to enter into partnership arrangements for the continued development and/or marketing of LPCN 1154, LPCN 2401, LPCN 1148, LPCN 1107, and for the development and commercialization of TLANDO outside of the United States, Canada, South Korea, the GCC countries and Brazil.

We expect to incur significant research and development expenses in the future as we complete on-going clinical studies, including studies for CNS product candidates, and as we conduct future clinical studies, including when and if we conduct Phase 2 clinical studies with LPCN 2201, LPCN 2101, LPCN 2203, LPCN 2401, and/or Phase 3 clinical studies with LPCN 1148, and/or LPCN 1107. We are also exploring the possibility of licensing all of our product candidates, although we have not entered into a licensing agreement and no assurance can be given that any license agreement will be completed, or, if an agreement is completed, that such an agreement would be on terms favorable to us. If we are unable to raise additional capital or obtain non-dilutive financing, we may need to reduce research and development expenses in order to extend our ability to continue as a going concern.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, and outside consulting services related to our executive, finance, business development, and administrative support functions. Other general and administrative expenses include rent and utilities, travel expenses, and professional fees for auditing, tax, legal and various other services.

General and administrative expenses also include expenses for the cost of preparing, filling and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims.

We expect that general and administrative expenses will increase in the future as we continue as a public company. These fees include legal and consulting fees, accounting and audit fees, director fees, directors' and officers' insurance premiums, fees for investor relations services and enhanced business and accounting systems, litigation costs, professional fees and other costs. However, if we are unable to raise additional capital, we may need to reduce general and administrative expenses in order to extend our ability to continue as a going concern.

Other Income and Expense

Other income and expense consists primarily of interest income earned on our cash, cash equivalents and marketable investment securities, and, in 2024, included a gain on our warrant liability resulting from the expiration of the underlying warrants.

Results of Operations

Comparison of the Years Ended December 31, 2025, and 2024

The following table summarizes our results of operations for the years ended December 31, 2025, and 2024:

		Years Ended December 31,
		2025				2024				Variance
Revenue		$	1,976,677			$	11,198,144			$	(9,221,467	)
Research and development expenses			8,583,919				7,351,753				1,232,166
General and administrative expenses			3,764,137				5,001,426				(1,237,289	)
Interest and investment income			744,074				1,146,902				(402,828	)
Unrealized gain on warrant liability			-				17,166				(17,166	)
Income tax expense			(200	)			(681	)			481

Revenue

We recognized revenue of $2.0 million during the year ended December 31, 2025, compared to revenue of $11.2 million during the year ended December 31, 2024. Revenue in 2025 primarily consisted of license revenue from our licenses, Verity and Aché of $1.5 million, and royalty revenue from TLANDO sales of $480,000. Revenue in 2024 primarily consisted of $10.9 million in upfront, one-time, license revenue from our licensees, Verity, SPC and Pharmalink and royalty revenue from TLANDO sales of $298,000.

Research and Development Expenses

We recorded research and development expenses of $8.6 million and $7.4 million, respectively, for the years ended December 31, 2025 and 2024. The increase in research and development expenses during the year ended December 31, 2025 primarily relates to an $894,000 increase in our clinical study costs, a $174,000 increase in other supplies and research costs and a $164,000 increase in personnel-related costs

General and Administrative Expenses

We recorded general and administrative expenses of $3.8 million and $5.0 million, respectively, for the years ended December 31, 2025 and 2024. The decrease in general and administrative expenses during the year ended December 31, 2025 was primarily due to approximately a $1.3 million decrease in business development, strategic advisory services, and corporate legal fees incurred in connection with our various license agreements in 2024, a $121,000 decrease in estimated franchise taxes, a $55,000 decrease in other various professional fees, and a $47,000 decrease in corporate insurance expense, offset by an increase of $165,000 in personnel related expenses, a $104,000 increase in patent related fees and a $25,000 increase in other general and administrative expenses.

Interest and Investment Income

The decrease in interest and investment income of approximately $403,000 during the year ended December 31, 2025 was mainly due to declining cash and marketable investment securities balances in the year ended December 31, 2025 compared to 2024.

Unrealized Gain on Warrant Liability

The warrant liability was extinguished when the November 2019 warrants expired in November 2024, thus there was no warrant liability as of December 31, 2024 or December 31, 2025.

We recorded a non-cash gain of approximately $17,000 on warrant liability during the fiscal years ended December 31, 2024 related to the change in the fair value of outstanding common stock warrants issued in November 2019 as of December 31, 2024 as compared to December 31, 2023. The gain in fiscal year ended December 31, 2024 was attributable to the November 2024 expiration of the warrants issued in the November 2019 Offering. There were no common stock warrants exercised during 2024. The warrants were classified as a liability due to a provision contained within the warrant agreement which allowed the warrant holder the option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a change of control.

Liquidity and Capital Resources

Since our inception, our operations have been primarily financed through sales of our equity securities, issuances of debt and payments received under our license and collaboration arrangements. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities. We have incurred operating losses in most years since our inception and we expect to continue to incur operating losses into the foreseeable future as we advance clinical development of LPCN 1154, LPCN 2201, LPCN 2101, LPCN 2203, and any other future product candidates, including continued research efforts.

As of December 31, 2025, we had $14.9 million of unrestricted cash, cash equivalents and marketable investment securities compared to $21.6 million as of December 31, 2024.

In April 2025, we entered into the Aché License Agreement with Aché pursuant to which we granted to Aché an exclusive license to commercialize our TLANDO product with respect to the Field, specific to Brazil. Under the agreement, we are entitled to receive fees upon the achievement of certain regulatory milestones, royalties on net sales and will supply TLANDO to Aché at an agreed transfer price. Our ability to realize benefits from the Aché License Agreement, including milestone, product sale and royalty payments, is subject to a number of risks. We may not realize milestone, product sale or royalty payments in anticipated amounts, or at all.

In October 2024, we entered into the Pharmalink Distribution Agreement with Pharmalink, pursuant to which we granted to Pharmalink a non-transferable, exclusive, license to commercialize our TLANDO product in the Pharmalink Territory. Pharmalink paid us a one-time non-refundable, non-creditable upfront fee. We are eligible to receive additional payments in regulatory authorization milestones related to the marketing approval in countries in the Pharmalink Territory under the Pharmalink Distribution Agreement and we have agreed to supply TLANDO to Pharmalink at a specified transfer price. Our ability to realize benefits from the Pharmalink Distribution Agreement, including milestone, product sale and royalty payments, is subject to a number of risks. We may not realize milestone, product sale or royalty payments in anticipated amounts, or at all.

In September 2024, we entered into the SPC License Agreement with SPC, pursuant to which we granted to SPC a non-transferable, non-creditable upfront fee in October 2024. We also received a non-refundable payment in consideration for certain TLANDO product inventory, and are eligible to receive additional payments upon the receipt of marketing authorization and achievement of sales milestones, and we will supply TLANDO to SPC and receive a supply price. In addition, we will receive royalties on net sales in the SPC Territory under the SPC License Agreement. Our ability to realize benefits from the SPC License Agreement, including milestone, product sale and royalty payments, is subject to a number of risks. We may not realize milestone, product sale or royalty payments in anticipated amounts, or at all.

On January 12, 2024, we entered into the Verity License Agreement with Verity Pharma, pursuant to which we granted to Verity Pharma an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize our TLANDO product with respect to TRT in the Licensed Verity Territory. Upon execution of the Verity License Agreement in January 2024 and upon transition of the commercialization of TLANDO from Antares to Verity Pharma in February 2024, Verity Pharma paid to us initial payments of $2.5 million and $5 million, respectively. Verity Pharma also paid us $2.5 million on December 30, 2024, and we received payment for the final portion of the initial license of $1.0 million on January 5, 2026. The Verity License Agreement also provides Verity Pharma with a license to develop and commercialize TLANDO XR (LPCN 1111), our potential next generation, once daily oral product candidate for testosterone replacement therapy comprised of TT in the U.S. and Canada. We are also eligible to receive milestone payments of up to $259 million in the aggregate, depending on the achievement of certain development milestones and sales milestones in a single calendar year with respect to all products licensed by Verity Pharma under the Verity License Agreement. In addition, we receive tiered royalty payments at rates ranging from 12% up to 18% of net sales of all products licensed to Verity Pharma in the Licensed Verity Territory. Our ability to realize benefits from the Verity License Agreement, including milestone and royalty payments, is subject to a number of risks. We may not realize milestone or royalty payments in anticipated amounts, or at all.

Previously on March 6, 2017, we entered into a sales agreement ("Cantor Sales Agreement") with Cantor Fitzgerald & Co. ("Cantor") under which we agreed to sell shares of our common stock, having registered up to $50.0 million for sale under the Cantor Sales Agreement. During the year ended December 31, 2024, we sold 32,110 shares of our common stock under the Cantor Sales Agreement at a weighted-average sales price of $6.77 per share, resulting in net proceeds of approximately $209,000, which is net of approximately $8,000 in expenses. On April 24, 2024, we terminated the Cantor Sales Agreement. From the inception to the termination of the Cantor Sales Agreement, we sold in aggregate 996,821 shares of our common stock for $33.5 million.

On April 26, 2024, we entered into a sales agreement (the "A.G.P. Sales Agreement") with A.G.P./Alliance Global Partners ("A.G.P.") pursuant to which we could issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to the amount we registered on an effective registration statement pursuant to which the offering is being made. As of February 26, 2026, we have registered up to $50,000,000 of common shares for sale under the A.G.P. Sales Agreement, pursuant to the Registration Statement on Form S-3, as amended (File No. 333-275716) (the "Form S-3"), through A.G.P. as sales agent. A.G.P. may sell our common stock by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415(a)(4) of the Securities Act, including sales made directly on or through the Nasdaq Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. A.G.P. will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell shares under the A.G.P. Sales Agreement. We will pay A.G.P. 3.0% of the aggregate gross proceeds from each sale of shares under the A.G.P. Sales Agreement. In addition, we have also provided A.G.P. with customary indemnification rights. Our shares of common stock to be sold under the A.G.P. Sales Agreement will be sold and issued pursuant to the Form S-3, as amended, which was previously declared effective by the SEC, and the related prospectus and one or more prospectus supplements. We are not obligated to make any sales of our common stock under the A.G.P. Sales Agreement. The offering of common stock pursuant to the A.G.P. Sales Agreement will terminate upon the termination of the A.G.P. Sales Agreement as permitted therein. We and A.G.P. may each terminate the A.G.P. Sales Agreement at any time upon ten days' prior notice. During the year December 31, 2025, we sold 806,878 shares of our common stock for gross proceeds of approximately $3.0 million and net proceeds of approximately $2.9 million under the A.G.P. Sales Agreement. Since December 31, 2025, we have sold 1,138,710 shares of our common stock for gross proceeds of approximately $10.9 million and net proceeds of $10.6 million under the A.G.P. Sales Agreement.

We believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements through at least March 31, 2027 which include research and development activities and compliance with regulatory requirements. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect if additional activities are performed by us including new clinical studies for LPCN 2201, LPCN 2101, LPCN 2203, LPCN 2401, LPCN 1148, and/or LPCN 1107. While we believe we have sufficient liquidity and capital resources to fund our projected operating requirements through at least March 31, 2027, we will need to raise additional capital at some point through the equity or debt markets or through additional out-licensing activities, either before or after March 31, 2027, to support our operations. If we are unsuccessful in raising additional capital as necessary, our ability to continue as a going concern will be limited. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development, regulatory compliance and clinical trial activities sooner than planned. In addition, our capital resources may be consumed more rapidly if we pursue additional clinical studies for LPCN 1154, LPCN 2201, LPCN 2101, LPCN 2203, LPCN 2401, LPCN 1148, and/or LPCN 1107. Conversely, our capital resources could last longer if we reduce expenses, reduce the number of activities currently contemplated under our operating plan or if we terminate, modify or suspend on-going and/or planned clinical studies. We can raise capital pursuant to the A.G.P. Sales Agreement but may choose not to issue common stock if our market price is too low to justify such sales in our discretion. There are numerous risks and uncertainties associated with the development and, subject to approval by the FDA, commercialization of our product candidates. There are numerous risks and uncertainties impacting our ability to enter into collaborations with third parties to participate in the development and potential commercialization of our product candidates. We are unable to precisely estimate the amounts of increased capital outlays and operating expenditures associated with our anticipated or unanticipated clinical studies and ongoing development efforts. All of these factors affect our need for additional capital resources. To fund future operations, we will need to ultimately raise additional capital and our requirements will depend on many factors, including the following:

	●	the scope, rate of progress, results and cost of our clinical studies, pre-clinical testing and other related activities for all of our product candidates including LPCN 1154, LPCN 2201, LPCN 2101, LPCN 2203, LPCN 2401, LPCN 1148, and LPCN 1107;
	●	the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we may develop;

	●	the cost and timing of establishing sales, marketing and distribution capabilities, if any;
	●	the terms and timing of any collaborative, licensing, settlement and other arrangements that we may establish;
	●	the number and characteristics of product candidates that we pursue;
	●	the cost, timing and outcomes of regulatory approvals;
	●	the timing, receipt and amount of sales, profit sharing or royalties, if any, from our potential products;
	●	the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
	●	the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions; and
	●	the extent to which we grow significantly in the number of employees or the scope of our operations.

Funding may not be available to us on favorable terms, or at all. Also, market conditions may prevent us from accessing the debt and equity capital markets, including sales of our common stock through the A.G.P. Sales Agreement. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies, research and development programs or, if any of our product candidates receive approval from the FDA, commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, including the A.G.P. Sales Agreement, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. These arrangements may not be available to us or available on terms favorable to us. To the extent that we raise additional capital through marketing and distribution arrangements, other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences, warrants or other terms that adversely affect our stockholders' rights or further complicate raising additional capital in the future. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable, for any reason, to raise needed capital, we will have to reduce costs, delay research and development programs, liquidate assets, dispose of rights, commercialize products or product candidates earlier than planned or on less favorable terms than desired or reduce or cease operations.

Sources and Uses of Cash

The following table provides a summary of our cash flows for the years ended December 31, 2025 and 2024.

		Years Ended December 31,
		2025				2024
Cash used in operating activities		$	(9,760,721	)		$	(1,221,233	)
Cash provided by investing activities			5,891,085				2,446,061
Cash provided by financing activities			2,869,552				209,340

Net Cash Used in Operating Activities

During each of the years ended December 31, 2025 and 2024, net cash used in operating activities was $9.8 million and $1.2 million, respectively.

Net cash used in operating activities during 2025 was primarily attributable to cash outlays primarily related to our LPCN 1154 Phase 3 clinical studies and expenses to support on-going operations, offset by cash provided by TLANDO license fees of $500,000 and royalties of $477,000. Net cash used in operating activities during 2024 was primarily attributable to cash outlays to support on-going operations, including research and development expenses primarily related to our LPCN 1154 clinical studies and manufacturing scale up, in addition to general and administrative expenses. These cash outlays were offset by cash provided by license fees from the licensee and distribution agreements we entered into during 2024 of $10.9 million in addition to royalties received of approximately $298,000.

Net Cash Provided by Investing Activities

During the years ended December 31, 2025 and 2024, net cash provided by investing activities was $5.9 million and $2.4 million.

Net cash provided by investing activities during 2025 and 2024 was primarily the result of the maturity of marketable investment securities of $20.6 million and of $35.4 million, respectively offset by the purchase of marketable investment securities of $14.7 million and $32.9 million, respectively. There were no capital expenditures for the year ended December 31, 2025. Capital expenditures during the year ended December 31, 2024 were $90,000.

Net Cash Provided by Financing Activities

During the years ended December 31, 2025 and 2024, net cash provided by financing activities was $2.9 million and $209,000, respectively, and the result of proceeds from the sales of our common stock under the ATM sales agreements.

Net cash provided by financing activities during the year ended December 31, 2025 was related to the sale of 806,878 shares of our common stock in 2025 for net proceeds of $2.9 million under the AGP Sales Agreement. Net cash provided by financing activities in 2024 was related to the sale of 32,110 shares of our common stock for net proceeds of $209,000 under the Cantor Sales Agreement.

Contractual Commitments and Contingencies

Purchase Obligations

We enter into contracts and issue purchase orders in the normal course of business with clinical research organizations for clinical trials and clinical and commercial supply manufacturing and with vendors for pre-clinical research studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice and are cancellable obligations.

Operating Leases

In August 2004, we entered into an agreement to lease our facility in Salt Lake City, Utah, consisting of office and laboratory space which serves as our corporate headquarters. On December 12, 2025, we modified and extended the lease through February 28, 2027.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with U.S. GAAP. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe 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. We concluded that licensing revenue recognized in conjunction with the Verity License Agreement, the SPC License Agreement, the Pharmalink Distribution Agreement and the Aché License Agreement met the requirements under ASC 606, Revenue from Contracts with Customers. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. License revenue from payments to be received in the future will be recognized when it is probable that we will receive license payments under the terms of the Verity License Agreement, the SPC License Agreement, the Pharmalink Distribution Agreement or the Aché License Agreement .

We have identified the following accounting policies that we believe require application of management's most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results could differ from these estimates and such differences could be material.

While our significant accounting policies are described in more detail in Note 2 of our annual financial statements included in this filing, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) with amendments in 2015 (ASU 2015-14) and 2016 (ASU 2016-8, ASU 2016-10, ASU 2016-12 and ASU 2016-20). The updated standard is a new comprehensive revenue recognition model that requires revenue to be recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted this pronouncement effective January 1, 2017. We recognized license and royalty revenue of $2.0 million and $11.2 million during the years ended December 31, 2025 and 2024, respectively.

We may provide research and development services under collaboration arrangements to advance the development of jointly owned products. We record the expenses incurred and reimbursed on a net basis in research and development expense.

As of December 31, 2025, we do not have any active collaboration agreements.

Research and Development Expenses

We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on the facts and circumstances known to us at that time. Our expense accruals for contract research, contract manufacturing and other contract services are based on estimates of the fees associated with services provided by the contracting organizations. Payments under some of the contracts we have with such parties depend on factors such as successful enrollment of patients, site initiation and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If possible, we obtain information regarding unbilled services directly from these service providers. However, we may be required to estimate these services based on other information available to us. If we underestimate or overestimate the activity or fees associated with a study or service at a given point in time, adjustments to research and development expenses may be necessary in future periods. Subsequent changes in estimates may result in a material change in our accruals.

Stock-Based Compensation

We recognize stock-based compensation expense for grants of stock option awards, restricted stock units and restricted stock under our Incentive Plan to employees, nonemployees and nonemployee members of our board of directors based on the grant-date fair value of those awards. The grant-date fair value of an award is generally recognized as compensation expense over the award's requisite service period. In addition, in the past we have granted performance-based stock option awards and restricted stock grants, which vest based upon our satisfying certain performance conditions. Potential compensation cost, measured on the grant date, related to these performance options or stock grants will be recognized only if, and when, we estimate that these options or stock grants will vest, which is based on whether we consider the awards' performance conditions to be probable of attainment. Our estimates of the number of performance-based awards that are expected to vest will be revised, if necessary, in subsequent periods.

We use the Black-Scholes model to compute the estimated fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of our common stock price, (ii) the periods of time over which employees and members of the board of directors are expected to hold their options prior to exercise (expected term), (iii) expected dividend yield on the common stock, and (iv) risk-free interest rates. Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited. This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

As of December 31, 2025, there was $473,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company's stock option plan.

Warrant Liability

In connection with the November 2019 public offering, we issued warrants to purchase common stock. The warrants would have required us to pay such holders an amount of cash in the event of a fundamental transaction, as defined in the warrant agreement. As the cash payment was at the option of the warrant holder, we accounted for the common stock warrants as a liability, which was adjusted to fair value each reporting period as well as upon exercise of such warrants. The Company estimated the fair value of the warrant liability based on a hypothetical payout associated with a fundamental transaction. The fair value estimate utilized a pricing model and unobservable inputs. Unlike the fair value of other assets and liabilities which are readily observable and therefore more easily independently corroborated, the warrants were not actively traded, and fair value was determined based on significant judgments regarding models, unobservable inputs and valuation methodologies.

The warrants issued under the November 2019 public offering expired in November 2024, and there were no warrants from the November 2019 offering outstanding as of December 31, 2024, and the warrant liability was fully extinguished.

Accounting Standards Issued Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on our financial disclosures.

In January 2025, the FASB issued ASU 2025-01 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024. ASU 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in an annual reporting period. The FASB's intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Management is currently evaluating this ASU to determine its impact on our financial disclosures.

In July 2025, the FASB issued ASU 2025-05 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets to improve the measurement of credit losses for accounts receivable and contract assets. The guidance provides a practical expedient for all entities to assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the assets. The update aims to reduce the cost and complexity of estimating credit losses while maintaining decision-useful information for financial statement users. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025. Management is currently evaluating the impact that the adoption of this update may have on its financial statements.

In December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270): Narrow-Scope Improvements with the purpose of updating the form, content and disclosure requirements for interim financial reporting and the overall application of Topic 270. ASU 2025-11 is effective for public business entities for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Management is currently evaluating this ASU to determine its impact on the Company's financial disclosures.

Also in December 2025, the FASB issued 2025-12 Codification Improvements to clarify existing guidance by removing errors and outdated references and to improve consistency across Topics. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, as well as interim periods within those years. Management is currently evaluating this ASU to determine its impact on the Company's financial disclosures.