Kiora Pharmaceuticals Inc.
03/25/2026 | Press release | Distributed by Public on 03/25/2026 05:02
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following section of this Annual Report on Form 10-K entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains statements that are not statements of historical fact and are forward-looking statements within the meaning of federal securities laws. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Factors that may cause our actual results to differ materially from those in the forward-looking statements include those factors described in "Item 1A. Risk Factors" beginning on page 21of this Annual Report on Form 10-K. You should carefully review all of these factors, as well as the comprehensive discussion of forward-looking statements on page 2of this Annual Report on Form 10-K.
Business Overview
We are a clinical-stage specialty pharmaceutical company developing and commercializing product candidates for the treatment of ophthalmic diseases.
Our first product candidate is KIO-301 with an initial focus on patients with later stages of vision loss due to retinitis pigmentosa (RP, any and all sub-forms). KIO-301 is a potential vision-restoring small molecule that acts as a "photoswitch" specifically designed to restore vision in patients with inherited and age-related degenerative retinal diseases. The molecule is designed to restore the eyes' ability to perceive and interpret light in visually impaired patients through selectively entering viable downstream retinal ganglion cells (no longer receiving electrical input due to degenerated rods and cones) and is intended to turn them into light sensing cells, capable of signaling the brain as to the presence or absence of light. On March 17, 2022, we were granted orphan drug designation by the FDA for the API in KIO-301. We initiated a Phase 1b clinical trial in third quarter of 2022, known as the ABACUS study, and dosed the first patient in November 2022. We completed the last patient dosing of the initial trial in September 2023 with topline results announced on November 4, 2023 at the American Academy of Ophthalmology retina sub-specialty day. In October 2024, we, in collaboration with our partner TOI, announced that we received regulatory approval to initiate a Phase 2 clinical trial to investigate KIO-301 for vision restoration in patients with retinitis pigmentosa. The ABACUS-2 trial is a 36 patient, multi-center, double-masked, randomized, controlled, multiple dose study enrolling patients with ultra-low vision or no light perception regardless of their underlying gene mutation associated with retinitis pigmentosa. Enrollment began in the second quarter of 2025 and dosing began in the third quarter of 2025 following validation of novel functional vision endpoints. These functional assessments may serve as approvable primary endpoints in subsequent registration studies in the United States, Europe and other major regions. KIO-301 (formerly known as B-203) was acquired through the Bayon transaction which closed October 21, 2021.
Our second product candidate is KIO-104, which focuses on patients with retinal inflammation due to diseases including Diabetic Macular Edema, Posterior Non-Infectious Uveitis and more. KIO-104 is a next-generation, non-steroidal, immuno-modulatory and small-molecule inhibitor of DHODH. We believe KIO-104 to be best-in-class with picomolar potency and a validated immune modulating mechanism designed to overcome the off-target side effects and safety issues associated with commercially available DHODH inhibitors. In a 14-day good laboratory practice intravenous repeated dose toxicity study in rats, no adverse or test item related effects were observed in any of the tested parameters (mortality, clinical observations, ophthalmoscopy, body weight and food consumption, hematology and coagulation, clinical biochemistry, organ weight, pathology, and histopathology) at the highest doses tested (1.0 mg/kg). Clinical proof-of-concept of the potential for the active pharmaceutical ingredient in KIO-104 has been demonstrated in multiple non-clinical and clinical studies. This includes a first-in-human, open-label, phase 1 clinical trial, which investigated the use of KIO-104 for treating Posterior Non-Infectious Uveitis. Results, which were reported in October 2022, showed that a single intravitreal injection of KIO-104 decreased intraocular inflammation in a dose-dependent fashion, and improved visual acuity significantly during the duration of the study. Further, KIO-104 reduced macular edema (swelling) which if unchecked, can lead to permanent vision loss. The drug was well tolerated, with no serious side effects on intraocular tissues or other serious adverse events observed. In May 2025, we received approval to start enrolling patients in a Phase 2 trial for KIO-104 in retinal inflammation and began enrollment in the second quarter of 2025. Dosing began in the third quarter of 2025.
In August 2023, we decided to halt development work on our anterior segment assets, specifically KIO-101 and KIO-201. In July 2024, we made a strategic decision to cease future development or partnership leading to commercialization of KIO-201 and impaired the remaining asset balance. We are actively pursuing partnership opportunities for the KIO-101 program.
In January 2024, we entered into a strategic development and commercialization agreement with Théa Open Innovation (TOI), a sister company of the global ophthalmic specialty company Laboratoires Théa (Théa). Under the agreement, we granted TOI exclusive worldwide development and commercialization rights,
excluding Asia, to KIO-301 for the treatment of degenerative retinal diseases. In exchange, we will receive an up-front, payment of $16 million; will become eligible to receive up to $285 million upon achievement of pre-specified clinical development, regulatory and commercial milestones; tiered royalties of up to low 20% on net sales; and reimbursement of certain KIO-301 research and development expenses.
In March 2025, we entered into a credit line with UBS (the "Credit Line") providing for a $10.0 million revolving line of credit. The Credit Line bears interest at the 30-day Secured Overnight Financing Rate ("SOFR") average, plus 1.5%. The SOFR rate is variable. The Credit Line is secured by a first priority lien and security interest in the Company's marketable securities held in its managed investment accounts with UBS. During 2025, we received $2.8 million in proceeds from the line, and made payments of $2.8 million, resulting in no credit balance as of December 31, 2025.
In May 2025, we entered into an exclusive option agreement (the "Option Agreement") with Senju Pharmaceutical Co., Ltd ("Senju"). Under the agreement, we granted Senju an exclusive option to obtain an exclusive license to the development and commercialization rights of KIO-301 for the treatment of ophthalmic diseases in certain key countries in Asia, including Japan and China. In exchange, we received a nonrefundable payment of $1.25 million. In the future, if the option is exercised and a license agreement is executed, we will be eligible to receive an additional $109.5 million plus tiered royalties of up to high teen percentages on net sales.
From inception through December 31, 2025, our losses from operations have aggregated $154.2 million. Our net loss was $10.8 million for the twelve months ended December 31, 2025. As a result of the collaboration with TOI in 2024, our net income was $3.6 million for the twelve months ended December 31, 2024. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue the development and clinical trials of and seek regulatory approval for our KIO-104 product candidate, and any other product candidates we advance to clinical development. If we obtain regulatory approval for KIO-104, we expect to incur significant expenses to create an infrastructure to support the commercialization of KIO-104 including sales, marketing, and distribution functions.
We will need additional financing to support our continuing operations. We will seek to fund our operations through public or private equity, debt financings, license and development agreements, or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.
Financial Overview
Revenues
To date, we have recognized collaboration revenue from U.S. and foreign government grants made to Jade and Panoptes, as well as from license and research collaboration agreements as performance obligations toward milestones that were met. In the future, we anticipate our revenue to include additional milestone payments under our current and/or future collaboration agreements. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. We expect that any revenue we generate, if at all, will fluctuate from quarter-to-quarter as a result of the timing and amount of payments relating to such services and milestones and the extent to which any of our products are approved and successfully commercialized. We expect to continue to incur significant operating losses as we fund research and clinical trial activities relating to our therapeutic assets, consisting of KIO-301 and KIO-104, or any other product candidate that we may develop. There can be no guarantee that the losses incurred to fund these activities will succeed in generating revenue.
Research and Development Expenses
We expense all research and development expenses as they are incurred. Research and development expenses primarily include:
•non-clinical development, preclinical research, and clinical trial and regulatory-related costs;
•expenses incurred under agreements with sites and consultants that conduct our clinical trials; and
•employee-related expenses, including salaries, bonuses, benefits, travel, and stock-based compensation expense.
We expect our research and development expenses to increase for the near future as we advance KIO-104, KIO-301 (to the extent there are any unreimbursed expenses), and any other product candidate through clinical development, including the conduct of our planned clinical trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We are unable to estimate with any certainty the costs we will incur in the continued development of our KIO-104, KIO-301, and any other product candidate that we may develop. Clinical development timelines, the probability of success and development costs can differ materially from expectations.
We may never succeed in achieving marketing approval for our product candidates.
The costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:
•per patient trial costs;
•the number of sites included in the trials;
•the countries in which the trials are conducted;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the trials;
•the number of doses that patients receive;
•the cost of comparative agents used in trials;
•the drop-out or discontinuation rates of patients;
•potential additional safety monitoring or other studies requested by regulatory agencies;
•the duration of patient follow-up; and
•the efficacy and safety profile of the product candidate.
We do not expect our product candidates to be commercially available, if at all, for the next several years.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related benefits for our full time employees, including stock-based compensation. Other general and administrative expenses include professional fees for investor relations and external communications, auditing, tax, patent costs, and legal services.
We expect that general and administrative expenses will remain consistent for the near future.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income we earn on interest-bearing accounts and interest expense incurred on our outstanding financing arrangements.
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 consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on 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. Our actual results may differ materially from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in Note 2to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.
Revenue Recognition
To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, Revenue from Contracts with Customers, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
We apply the five-step model to contracts when we determine that it is probable we will collect the consideration we are entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
In a contract with multiple performance obligations, we must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each distinct performance obligation which determines how the transaction price is allocated among the performance obligation. The estimation of the stand-alone selling price(s) may include estimates regarding forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. We evaluate each performance obligation to determine if it can be satisfied at a point in time or over time. Any change made to estimated progress towards completion of a performance obligation and, therefore, revenue recognized will be recorded as a change in estimate. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.
Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date are classified as the current portion of deferred revenue. Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date are classified as deferred revenue, net of current portion.
Collaboration Revenue
If a license to our intellectual property is determined to be distinct from the other performance obligations identified in a contract, we recognize revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from the allocated transaction price. We evaluate the measure of progress at each reporting period and, if necessary, adjust the measure of performance and related revenue or expense recognition as a change in estimate.
At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being reached. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or a collaboration partner's control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of milestones that are within our or a collaboration partner's control, such as operational development milestones and any related constraint, and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which will affect collaboration revenues and earnings in the period of adjustment. Revisions to our estimate of the transaction price may also result in negative collaboration revenues and earnings in the period of adjustment.
For arrangements that include sales-based royalties, including commercial milestone payments based on the level of sales, and a license is deemed to be the predominant item to which the royalties relate, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially satisfied.
Collaboration Agreements
We entered into a research agreement that falls under the scope of ASC 808, Collaborative Arrangements. Reimbursements from a collaboration partner are recorded as a reduction to research and development expense. Similarly, amounts that are owed to a collaboration partner are recognized as research and development expense.
Business Combinations
We applied the provisions of Accounting Standards Codification (ASC) Topic 805, Business Combinations, in the accounting for our acquisitions of Bayon and Panoptes. It required us to recognize the assets acquired and the liabilities assumed at their acquisition date fair values, which were determined using market, income, and cost approaches, or a combination. Goodwill as of the respective acquisition date was measured as the excess of consideration transferred over the net of the acquisition date fair value of the assets acquired and the liabilities assumed. Goodwill is generally the result of expected synergies of the combined company or an assembled workforce. Indefinite-lived intangible assets acquired were in-process research and development. The fair value for these intangible assets was determined using the income approach. Under the income approach, fair value reflects the present value of the projected cash flows that are expected to be generated by the products incorporating the in-process research and development, if successful.
Intangible Assets
Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at fair value at the acquisition date. Historically we have tested our indefinite-lived intangible assets for impairment annually as of August 31, or more frequently if events or changes in circumstances indicated that the assets might be impaired. Effective December 31, 2025, we elected to change the annual impairment testing date from August 31 to December 31. Under the applicable accounting guidance, an entity may first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If so, the asset's, fair value is compared with the carrying amount, and an
impairment charge is recognized for the amount by which the carrying amount exceeds fair value. In addition, SEC guidance recommends a reconciliation to market capitalization as a reasonableness check when estimated fair value exceeds a company's market capitalization. We performed an annual quantitative impairment test of our indefinite-lived intangible assets as of August 31, 2025 and concluded that no impairment existed as of that date. Following our election to change the annual testing date, we updated the quantitative impairment analysis as of December 31, 2025. During the period between testing dates, our market capitalization declined largely due to macroeconomic factors, despite clinical progress in both asset programs. Based on the market capitalization reconciliation described above, we concluded that a $4.6 million impairment charge related to KIO-104 was required as of December 31, 2025. There were no adverse changes in clinical progress, development timelines, probability of technical success, or projected cash flows for the KIO-104 program.
Accrued Research and Development Expenses
As part of the process of preparing the consolidated financial statements, we are required to estimate and accrue research and development expenses. This process involves the following:
•communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost;
•estimating and accruing expenses in our consolidated financial statements as of each balance sheet date based on facts and circumstances known to us at the time; and
•periodically confirming the accuracy of our estimates with selected service providers and making adjustments, if necessary.
Examples of estimated research and development expenses that we accrue include:
•fees paid to contract research organizations and investigative sites in connection with clinical studies;
•fees paid to contract manufacturing organizations in connection with non-clinical development, preclinical research, and the production of clinical study materials; and
•professional service fees for consulting and related services.
We base our expense accruals related to non-clinical development, preclinical studies, and clinical trials on our estimates of the services received and efforts expended pursuant to contracts with organizations/consultants that conduct and manage clinical studies on our behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts may depend on many factors, such as the successful enrollment of patients, site initiation, and the completion of clinical study milestones. Our service providers invoice us as milestones are achieved and monthly in arrears for services performed. 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 we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. To date, we have not experienced significant changes in our estimates of accrued research and development expenses after a reporting period.
However, due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities.
Refunds for Research and Development
We, through our Kiora Pharmaceuticals, GmbH and Kiora Pharmaceuticals Pty Ltd. subsidiaries, are eligible to receive certain refundable tax incentives associated with our research and development expenses in Austria
and Australia. These refunds are realized in the form of a cash payment when received, following the incurred research & development expenses. We record the refundable payment as a tax receivable and a reduction in research and development expense in the period in which the research and development expenses are incurred.
Contingent Consideration
We initially value contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows. Key assumptions used to estimate the fair value of contingent consideration include the probability of success, discount rate, and updated timing of payment. After the initial valuation, we will use our best estimate to measure contingent consideration at each subsequent reporting period. Gains and losses are recorded in operating expenses within the consolidated statements of operations and comprehensive loss.
Stock-Based Compensation
We have issued options to purchase our common stock and restricted stock. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service/vesting period. Determining the appropriate fair value model and calculating the fair value of stock-based payment awards require the use of highly subjective assumptions, including the expected life of the stock-based payment awards and stock price volatility.
We estimate the grant date fair value of stock options and the related compensation expense, using the Black-Scholes option valuation model. This option valuation model requires the input of subjective assumptions including: (1) expected life (estimated period of time outstanding) of the options granted, (2) volatility, (3) risk-free rate, and (4) dividends. In general, the assumptions used in calculating the fair value of stock-based payment awards represent management's best estimates, but the estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.
Income Taxes
During the fourth quarter of 2024, we recorded an adjustment to its income tax provision based on new information obtained from the completion of complex tax analyses, specifically a Section 382 study to assess the availability of historical net operating losses (NOLs) and a transfer pricing analysis. These analyses provided additional insight into our tax position and were necessary to accurately determine the tax liability.
Under Accounting Standards Codification (ASC) 250, Accounting Changes and Error Corrections, changes in accounting estimates are accounted for prospectively. As the adjustment resulted from new information that was not reasonably knowable at prior reporting dates and required specialized technical expertise, we have determined that the change constitutes a change in estimate rather than a correction of an error.
As a result, we recognized an increase in our tax liability of $2.3 million in the fourth quarter of 2024. This change in estimate is reflected in our consolidated financial statements for the year ended December 31, 2024.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA or the Act) was signed into law. The Act reinstates and makes permanent 100% first-year bonus depreciation under Section 168(k) for qualified property acquired and placed in service after January 19, 2025. Additionally, the Act allows current expensing of domestic research and experimental expenditures (R&E) starting in 2025 and provides special retroactive relief for "small business taxpayers". We deducted the unamortized R&E expenditures as of December 31, 2024 on its 2024 tax return, resulting in no change in our effective tax rate due to the full valuation allowance; however, the deduction did result in a reduction in our cash tax liability for 2024. We have reflected the effects of the Act in its income tax provision in accordance with ASC 740.
Recent Accounting Pronouncements
Refer to Note 1. Business, Presentation and Recent Accounting Pronouncements, in the Notes to the audited consolidated financial statements of Part IV, Item 15. Exhibits, Financial Statement Schedules of this Annual Report on Form 10-K for detailed information regarding the status of recently issued accounting pronouncements.
Other Information
Net Operating Loss Carryforwards
As of December 31, 2025, we had federal net operating loss carryforwards of approximately $53.8 million, to offset future taxable income. All of the federal NOL carryforwards were generated during the years ended December 31, 2018 and forward and they will carry forward indefinitely, but their utilization will be limited to 80% of taxable income. We have foreign net operating loss carryforwards of $12.6 million as of December 31, 2025, which can be carried forward indefinitely, but their utilization will be limited to 75% of taxable income. We have no state NOL carryforwards.
As of December 31, 2025, we had federal and state research and development tax credit carryforwards of $93.2 thousand and $47.0 thousand, respectively, to offset future income taxes. The federal credits will begin to expire in 2045. The state credits can be carried forward indefinitely.
Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, future utilization of our net operating loss and research and development credit carryforwards to offset future taxable income and tax respectively, may be subject to an annual limitation as a result of ownership changes that may have occurred or that could occur in the future. An ownership change occurs when a cumulative change in ownership of more than 50% occurs within a three-year period.
In 2024, we performed a Section 382/383 analysis which determined that multiple ownership changes occurred. As a result, we reduced a portion of our federal and state net operating losses and R&D credit carryforwards. Further, we limited the deduction for amortization of its intangible assets which gave rise to a Net Unrealized Built0in Loss (NUBIL). A portion of the NUBILs were converted to pre-change NOLs which may be carried forward indefinitely subject to the Section 382 annual limitation.
We have not completed a 382 analysis to determine if an ownership change occurred post-2024. If a change in ownership were to have occurred in 2025 or occurs in the future, the use of our federal and state NOL and tax credit carryforwards may be limited or reduced. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact our effective tax rate.
The amounts of cash income taxes paid/(refunded) for the year ended December 31, 2025 is as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
| Federal | $ | 1,125,000 | |||
| State | |||||
| California | 345,512 | ||||
| Other States | 2,180 | ||||
| Foreign | |||||
| Australia | 951,165 | ||||
| Total | $ | 2,423,857 | |||
As of December 31, 2025 we had unrecognized tax benefits of $34.0 thousand. As of December 31, 2024, we had no unrecognized tax benefits. Due to the existence of the valuation allowance, none of the unrecognized benefits would affect the effective tax rate. Our policy is to recognize interest and penalties from uncertain tax positions in income tax expense. We did not record any interest or penalties for the years ended December 31, 2025 or 2024 and had no accrued interest on the balance sheets as of December 31, 2025 or 2024.
We file United States federal and state income tax returns as well as foreign tax returns for our subsidiaries in Austria and Australia. We are not under examination by any jurisdiction for any tax year. We are generally open to federal examination since 2018 due to the carryforward NOLs, state examination since 2021, and foreign examination since 2021 due to the carryforward of NOLs.
Results of Operations
Comparison of Years Ended December 31, 2025 and 2024
The following table summarizes the results of our operations for the years ended December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Revenue: | |||||||||||||||||
| Collaboration Revenue | $ | - | $ | 16,000,000 | $ | (16,000,000) | |||||||||||
| Grant Revenue | - | 20,000 | (20,000) | ||||||||||||||
| Total Revenue | - | 16,020,000 | (16,020,000) | ||||||||||||||
| Operating Expenses: | |||||||||||||||||
| General and Administrative | 5,745,087 | 5,542,324 | 202,763 | ||||||||||||||
| Research and Development | 10,780,397 | 7,842,207 | 2,938,190 | ||||||||||||||
| Collaboration Credits | (7,066,237) | (2,945,350) | (4,120,887) | ||||||||||||||
| In-Process R&D Impairment | 4,624,000 | 2,008,000 | 2,616,000 | ||||||||||||||
| Change in Fair Value of Contingent Consideration | (1,252,174) | (937,469) | (314,705) | ||||||||||||||
| Total Operating Expenses | 12,831,073 | 11,509,712 | 1,321,361 | ||||||||||||||
| Operating (Loss) Income Before Other Income (Expense), Net | (12,831,073) | 4,510,288 | (17,341,361) | ||||||||||||||
| Total Other Income, Net | 713,770 | 1,149,450 | (435,680) | ||||||||||||||
| (Loss) Income Before Income Tax Expense | (12,117,303) | 5,659,738 | (17,777,041) | ||||||||||||||
| Income Tax Benefit (Expense) | 1,282,149 | (2,065,005) | 3,347,154 | ||||||||||||||
| Net (Loss) Income | $ | (10,835,154) | $ | 3,594,733 | $ | (14,429,887) | |||||||||||
Revenue
The decrease of $16.0 million was attributable to the revenue recognized from the up-front payment pursuant the strategic development and commercialization agreement with TOI and from a grant from the Choroideremia Research Foundation in 2024.
General and Administrative Expenses
The increase of $0.2 million was primarily due to increased personnel and benefit costs of $0.5 million related to market adjustments and higher bonus expenses, increased corporate expenses driven by stock compensation expense for new grants to board directors of $0.3 million, partially offset by lower professional expenses of $0.5 million and corporate insurance of $0.1 million.
Research and Development Expenses
The increase of $2.9 million was primarily due to increased spending on preclinical, CMC and clinical trial related activities for KIO-301 of $3.4 million, which are reimbursed by TOI, travel and research consulting costs of $0.1 million, offset by a net reduction in expenses resulting from an increase in research tax credits expected from Australian and Austrian government programs of $0.6 million.
In-Process R&D Impairment
In-Process R&D impairment increased by $2.6 million due to a partial impairment of KIO-104 While there were no adverse changes in clinical progress, development timelines, probability of technical success, or projected cash flows for the KIO-104 program, the Company's market capitalization declined during the fourth quarter of 2025. In performing a market capitalization reconciliation as a reasonableness check, the Company determined an impairment charge of approximately $4.6 million was necessary for KIO-104. The impairment was driven by changes in market-based inputs, including equity market conditions and discount rate assumptions, rather than changes in underlying program-level projections.
Change in Fair Value of Contingent Consideration
The change in fair value of contingent consideration decreased $1.3 million. The change in fair value of contingent consideration is primarily due to an increased discount period and changes to the development plan which lowered the probability of success to align with a focus initially on a single indication for KIO-301. This reduced probability of success is solely based on the strategic shift in the order in which indications are to be pursued and is completely independent of KIO-301's potential pathway to approval in retinitis pigmentosa.
Other Income (Expense), Net
Other income (expense) decreased by $0.4 million primarily due to decreased net interest income and accrued interest amortization of approximately $0.3 million resulting from lower interest rates and a lower carrying balance of short-term marketable securities and unrealized losses related to foreign currency activity of $0.2 million offset by the write off of an intangible asset related to the SentrX Agreement of $0.1 million .
Income Tax Expense
Income tax expense decreased by $3.3 million due to a tax liability of $2.1 million in 2024 driven by taxable income resulting from the $16 million upfront payment from TOI which was recorded as a change in estimate for the 2024 tax year. Additionally, in 2025 the Company was able record a tax benefit of approximately $1.3 million resulting from new legislation included in the 2025 One Big Beautiful Bill Act.
Research and Development Expenses by Program
The following table summarizes our research and development expenses by program:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Research and Development Expenses by Program | |||||||||||||||||
| KIO-101 | $ | 17,541 | $ | 25,456 | $ | (7,915) | |||||||||||
| KIO-104 | 718,552 | 671,739 | 46,813 | ||||||||||||||
| KIO-201* | - | 30,875 | (30,875) | ||||||||||||||
| KIO-301 | 7,217,067 | 3,836,105 | 3,380,962 | ||||||||||||||
| Unallocated Research and Development Expenses | |||||||||||||||||
| Personnel | 2,612,374 | 2,562,417 | 49,957 | ||||||||||||||
| R&D Tax Expense (Credit) | (587,447) | 17,894 | (605,341) | ||||||||||||||
| Other Research | 802,310 | 697,721 | 104,589 | ||||||||||||||
| Total Research and Development Expenses | $ | 10,780,397 | $ | 7,842,207 | $ | 2,938,190 | |||||||||||
*In July 2024, the Company decided to cease development of KIO-201.
Liquidity and Capital Resources
Since becoming a public company in 2015, we have financed our operations from several registered offerings and private placements of our securities, payments from license agreements, and U.S. and foreign government grants. From inception through December 31, 2025, we have raised a total of approximately $149.0 million from such sales of our equity and debt securities, both as a public company and prior to our initial public offering, as well as approximately $31.1 million in payments received under our license agreements and government grants, $0.3 million received pursuant to the loan under the Paycheck Protection Plan, which was fully forgiven in April 2021, and $3.9 million received in R&D tax credits.
In January 2024, we entered into a license agreement with TOI, whereby we received an up-front payment of $16 million and will become eligible to receive up to $285 million upon achievement of pre-specified clinical development, regulatory and commercial milestones and tiered royalties of up to low 20% on net sales; and reimbursement of all KIO-301 research and development expenses moving forward from the date of the execution of the license agreement. As of December 31, 2025 we have received a cumulative $8.3 million in reimbursements from TOI for KIO-301 research and development expenses.
In March 2025, we entered into a credit line with UBS (the "Credit Line") providing for a $10.0 million revolving line of credit. We had no credit balance as of December 31, 2025.
In May 2025, we entered into an exclusive option agreement with Senju. Under the agreement, we received a nonrefundable payment of $1.25 million. In the future, if the option is exercised and a license agreement is executed, we will be eligible to receive an additional $109.5 million plus tiered royalties of up to high teen percentages on net sales.
At December 31, 2025, we had unrestricted cash and cash equivalents of approximately $8.7 million, short-term investments of $8.4 million and an accumulated deficit of $154.2 million. Prior to the license agreement with TOI in 2024, we had incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash and short-term investments on hand at December 31, 2025, we anticipate having sufficient cash to fund planned operations into late 2027 and do not currently anticipate an immediate need to raise additional capital to fund operations.
Comparison of Years Ended December 31, 2025 and 2024
The following table sets forth the primary sources and uses of cash for the years ended December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net Cash (Used in)/Provided by Operating Activities | $ | (9,961,176) | $ | 8,559,115 | |||||||
| Net Cash Provided by/(Used in) Investing Activities | $ | 14,426,645 | $ | (22,662,611) | |||||||
| Net Cash Provided by Financing Activities | $ | 265,655 | $ | 15,498,155 | |||||||
Operating Activities
During the year ended December 31, 2025, we recorded net loss of $10.8 million and adjusted primarily for non-cash expense for stock-based compensation in the amount of $0.9 million, a decrease in the change in fair value of contingent consideration of $1.3 million, an increase of $4.6 million due to an impairment of in-process R&D, a decrease in prepaid expenses and other assets of $0.4 million, decrease in accounts payable of $1.1 million and increase in accrued expenses of $2.3 million, which was partially offset by an increase in tax and other receivables of $1.5 million. During the year ended December 31, 2024, we recorded net income of $3.6 million and adjusted primarily for non-cash expense for stock-based compensation in the amount of $0.7 million, a decrease in the change in fair value of contingent consideration of $0.9 million, an increase of $2.0 million due to an impairment of in-process R&D, an increase in prepaid expenses and other assets of $1.8 million, decreases in accounts payable of $0.2 million and accrued expenses of $3.3 million, which was partially offset by a decrease in tax credits receivable of $1.6 million.
Investing Activities
During the years ended December 31, 2025, there was $14.4 million net cash provided by investing activities related to the purchase and maturity of short-term investments. During the year ended December 31, 2024, there was $22.7 million net cash provided by investing activities related to the purchase and maturity of short-term investments.
Financing Activities
During the year ended December 31, 2025, we received net proceeds of $0.3 million from the exercise of warrants. During the year ended December 31, 2024, we received net proceeds of $1.7 million from the exercise of warrants, and $15.0 million from the completion of a private placement.
Funding Requirements and Other Liquidity Matters
Our KIO-104 and KIO-301 product pipeline is still in various stages of clinical development. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:
•seek marketing approval for our KIO-301 product outside of the territory already partnered with TOI;
•seek marketing approval for our KIO-104 product or any other products that we successfully develop;
•establish a sales and marketing infrastructure to commercialize our KIO-301 product outside of the territory already partnered with TOI;
•establish a sales and marketing infrastructure to commercialize our KIO-104 product, if approved;
•seek partnerships for our KIO-101 product to continue our development activities; and
•add operational, financial, and management information systems and personnel, including personnel to support our product development and future commercialization efforts.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates, including our KIO-301 (outside of the territory already partnered with TOI), and KIO-104 products, on terms that may not be favorable to us. For our active programs, if we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market KIO-301 outside of the territory already partnered with TOI and KIO-104 products, or any other products that we would otherwise prefer to develop and market ourselves.
Based on our cash on hand and short-term investments at December 31, 2025, we believe that we will have sufficient cash to fund planned operations into late 2027. However, the acceleration or reduction of cash outflows by management can significantly impact the timing needed for raising additional capital to complete development of our products. To continue development, we will need to raise additional capital through debt and/or equity financing, grants and other arrangements. Although historically we have been successful at raising capital, additional capital may not be available on terms favorable to us, if at all. We do not know if our future offerings will succeed. Accordingly, no assurances can be given that management will be successful in these endeavors. Our consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We had no material off-balance sheet arrangements at December 31, 2025.
Kiora Pharmaceuticals Inc. published this content on March 25, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 25, 2026 at 11:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]