Grace Therapeutics, Inc.

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Current wording

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

Previous wording

This management’s discussion and analysis (“MD&A”) is presented in order to provide the reader with an overview of the financial results and changes to our financial position as at June 30, 2025 and for the three months then ended. This MD&A also explains the material variations in our operations, financial positions and cash flows for the three months ended June 30, 2025 and 2024.

Current wording

This management’s discussion and analysis (“MD&A”) is presented in order to provide the reader with an overview of the financial results and changes to our financial position as at September 30, 2025 and for the three and six months then ended. This MD&A also explains the material variations in our operations, financial positions and cash flows for the three and six months ended September 30, 2025 and 2024.

Previous wording

This MD&A should be read in conjunction with our unaudited condensed consolidated interim financial statements for the three months ended June 30, 2025 and 2024 included elsewhere in this quarterly report. Our unaudited condensed consolidated financial statements were prepared in accordance with U.S. GAAP.

Current wording

This MD&A should be read in conjunction with our unaudited condensed consolidated interim financial statements for the three and six months ended September 30, 2025 and 2024 included elsewhere in this quarterly report. Our unaudited condensed consolidated financial statements were prepared in accordance with U.S. GAAP.

Previous wording

On June 25, 2025, we announced the submission of a New Drug Application (“NDA”) to the FDA for GTx-104, a clinical-stage, novel, injectable formulation of nimodipine being developed for IV infusion to address significant unmet medical needs in aneurysmal subarachnoid hemorrhage (“aSAH”) patients.

Current wording

On June 25, 2025, we announced the submission of a New Drug Application (“NDA”) to the FDA for GTx-104, a clinical-stage, novel, injectable formulation of nimodipine being developed for IV infusion to address significant unmet medical needs in aneurysmal subarachnoid hemorrhage (“aSAH”) patients. On August 22, 2025 the FDA accepted our NDA for review and established April 23, 2026 as the Prescription Drug User Fee Act (PDUFA) target date for completing its review of our submission.

Previous wording

In May 2023, we implemented a strategic realignment plan to enhance shareholder value that resulted in engaging a new management team, streamlining our research and development activities, and greatly reducing our workforce. Following the realignment, we are a smaller, more focused organization, based in the United States, and concentrated on the development of our lead product candidate GTx-104. Further development of GTx-102 and GTx-101 will occur at such a time when we are able to secure additional funding or enter strategic partnerships for license or sale with third parties.

Current wording

GTx-101 is a topical bio adhesive film-forming bupivacaine spray for Postherpetic Neuralgia (“PHN”), which can be persistent and often causes debilitating pain following infection by the shingles virus. Four single-dose Phase 1 studies to evaluate the PK, safety, dose proportionality and tolerability of GTx-101 have been performed. In these trials, no serious adverse events were reported and GTx-101 was well tolerated. We believe that GTx-101 could be administered to patients with PHN to treat pain associated with the disease. In May 2023, we implemented a strategic realignment plan to enhance shareholder value that resulted in engaging a new management team, streamlining our research and development activities, and greatly reducing our workforce. Following the realignment, we are a smaller, more focused organization, based in the United States, and concentrated on the development of our lead product candidate GTx-104. Further development of GTx-102 and GTx-101 will occur at such a time when we are able to secure additional funding or enter strategic partnerships for license or sale with third parties.

Previous wording

Furthermore, pharmacoeconomic measures favored the use of GTx-104 for patients with aSAH.

Current wording

Pharmacoeconomic measures favored the use of GTx-104 for patients with aSAH.

Previous wording

Feedback from the FDA informed our data and regulatory packages, and we submitted the NDA for GTx-104 on June 25, 2025. Acceptance of the NDA will be subject to the FDA’s review of the complete filing.

Current wording

Feedback from the FDA informed our data and regulatory packages, and we submitted the NDA for GTx-104 on June 25, 2025. The FDA accepted our NDA for review on August 22, 2025, and established April 23, 2026 as its PDUFA target date.

Previous wording

We have worldwide commercialization rights for all our pipeline drug candidates and plan to maximize the value of each of our drug candidates over time. Currently, we have prioritized the development of GTx-104 over that of GTx-102 and GTx-101. If we receive regulatory approval for GTx-104 in the U.S., we plan to commercialize GTx-104 with a highly experienced and targeted hospital-based sales force. We may seek commercial partnerships to fully exploit the market potential of GTx-104 in the U.S. and in territories outside the U.S. It is possible that we out-license or sell GTx-102 and/or GTx-101 for the U.S. and/or global markets.

Current wording

If we receive regulatory approval for GTx-104 in the U.S., we plan to commercialize GTx-104 with a highly experienced and targeted hospital-based sales force. We may seek commercial partnerships to fully exploit the market potential of GTx-104 in the U.S. and in territories outside the U.S.

Previous wording

On February 13, 2025, we announced FDA’s written responses to our GTx-102 End of Phase 1 meeting request where FDA made recommendations on the path toward an NDA. They provided guidance on the design of a single pivotal efficacy and safety trial, including the neurological assessment scale for the primary endpoint, that could, with appropriate confirmatory evidence, support an NDA. We plan to collaborate with our scientific advisory board and FDA (via Type C meeting) on the design of a potential pivotal efficacy and safety trial and will determine the next steps after that time. Further clinical development work will be contingent on additional funding for GTx-102 or the signing of a strategic partnership. It is also possible that we may license or sell our GTx-102 drug candidate.

Current wording

The further development of GTx-102 has been deprioritized in favor of our focus on development of GTx-104. On February 13, 2025, we announced FDA’s written responses to our GTx-102 End of Phase 1 meeting request where FDA made recommendations on the path toward an NDA. They provided guidance on the design of a single pivotal efficacy and safety trial, including the neurological assessment scale for the primary endpoint, that could, with appropriate confirmatory evidence, support an NDA. We plan to collaborate with our scientific advisory board and FDA (via Type C meeting) on the design of a potential pivotal efficacy and safety trial and will determine the next steps after that time. Further clinical development work will be contingent on additional funding for GTx-102 or the signing of a strategic partnership. It is also possible that we may out-license or sell our GTx-102 drug candidate for the U.S. and/or global markets.

Previous wording

The further development of GTx-101 has been deprioritized in favor of our focus on development of GTx-104. Pending additional funding for GTx-101 or the signing of a strategic partnership, we plan to follow this successful PK trial with the next step of the clinical development plan including a multiple ascending dose trial. Results from these non-clinical studies and clinical trials are required before the initiation of our Phase 2 program in PHN patients. It is also possible that we may license or sell our GTx-101 drug candidate.

Current wording

The further development of GTx-101 has been deprioritized in favor of our focus on development of GTx-104. Pending additional funding for GTx-101 or the signing of a strategic partnership, we plan to follow this successful PK trial with the next step of the clinical development plan including a multiple ascending dose trial. Results from these non-clinical studies and clinical trials are required before the initiation of our Phase 2 program in PHN patients. It is also possible that we may out-license or sell our GTx-101 drug candidate for the U.S. and/or global markets.

Previous wording

Our assets as of June 30, 2025 include cash and cash equivalents of $20,005 and intangible assets and goodwill of $49,266. Our current liabilities of $2,315 as of June 30, 2025 were comprised primarily of amounts due to or accrued for creditors.

Current wording

Our assets as of September 30, 2025 include cash and cash equivalents of $16,862 and intangible assets and goodwill of $49,266. Our current liabilities of $1,245 as of September 30, 2025 were comprised primarily of amounts due to or accrued for creditors.

Previous wording

In February 2025, we completed a private placement of Company securities with certain institutional and accredited investors. Net proceeds to the Company were $13,705. Refer to Note 6, Stockholders’ Equity - 2025 Private Placement, in the accompanying unaudited condensed consolidated financial statements elsewhere in this document for additional information. We believe our existing cash and cash equivalents will be sufficient to sustain planned operations through at least 12 months from the issuance date of these unaudited condensed consolidated financial statements.

Current wording

In February 2025, we completed a private placement of Company securities with certain institutional and accredited investors. Net proceeds to the Company were $13,705. Refer to Note 5, Stockholders’ Equity - 2025 Private Placement, in the accompanying unaudited condensed consolidated financial statements elsewhere in this document for additional information. In October 2025, the Company received $4,000 in gross proceeds from exercises of common warrants that were previously issued in a private placement in September 2023. We believe our existing cash and cash equivalents will be sufficient to sustain planned operations through at least 12 months from the issuance date of these unaudited condensed consolidated financial statements.

Previous wording

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

Current wording

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

Previous wording

The net loss of $3,362, or $0.21 per share, for the three months ended June 30, 2025, increased by $745 from the net loss of $2,617, or $0.24 per share, for the three months ended June 30, 2025. The increase in net loss was primarily due to a $1,882 difference in the change in fair value of derivative warrant liabilities, a $30 decrease in interest and other income, net, and a $724 decrease in income tax benefit, partially offset by a $1,753 decrease in research and development expenses and a $120 decrease in general and administrative expenses.

Current wording

The net loss of $938, or $0.06 per share, for the three months ended September 30, 2025, decreased by $2,494 from the net loss of $3,432, or $0.30 per share, for the three months ended September 30, 2024. The decrease in net loss was primarily due to a $2,408 decrease in research and development expenses, partially offset by increases in general administrative expenses of $106 and an increase in the change of fair value of derivative warrant liabilities of $1,065. The net loss of $4,301, or $0.27 per share, for the six months ended September 30, 2025, decreased by $1,748 from the net loss of $6,049, or $0.53 per share, for the six months ended September 30, 2024. The decrease in net loss was primarily due to a $4,161 decrease in research and development expenses, a $13 decrease in general and administrative expenses, partially offset by $1,576 decrease in income tax benefit and a $816 difference in the change in fair value of derivative warrant liabilities.

Previous wording

Our research and development during the three months ended June 30, 2025 were focused primarily on completing the clinical development program for our GTx-104 drug candidate and preparation and submission of our GTx-104 NDA to the FDA. Our research and development during the three months ended June 30, 2024 were focused primarily on our clinical development program for our GTx-104 drug candidate.

Current wording

Our research and development activities during the three and six months ended September 30, 2025 were focused primarily on completing the clinical development program for our GTx-104 drug candidate and preparation and submission of our GTx-104 NDA to the FDA. Our research and development activities during the three and six months ended September 30, 2024 were focused primarily on our clinical development program for our GTx-104 drug candidate.

Previous wording

Total research and development expenses for the three months ended June 30, 2025 were $955, compared to $2,708 for the three months ended June 30, 2024. The decrease of $1,753 was primarily due to a $1,961 decrease in research activities mainly due to completion of our GTx-104 pivotal Phase 3 STRIVE-ON safety clinical trial, offset in part by a $99 increase on professional fees in connection with the preparation and submission of our NDA to the FDA, and a $116 increase in salaries and benefits due to merit increases.

Current wording

Total research and development expenses for the three months ended September 30, 2025 were $568, compared to $2,976 for the three months ended September 30, 2024. The decrease of $2,408 was primarily due to a $2,515 decrease in research activities mainly due to completion of our GTx-104 pivotal Phase 3 STRIVE-ON safety clinical trial, partially offset by a $109 increase in salaries and benefits due to merit increases.

Previous wording

General and administrative expenses were $2,135 for the three months ended June 30, 2025, a decrease of $120 from $2,255 for the three months ended June 30, 2024. The decrease was primarily a result of decreased legal, accounting, tax, audit and other professional fees related to Continuance and Domestication, offset in part by an increase in salaries and benefits due to merit increases, increased in other general and administrative expenses primarily due to costs for the GTx-104 commercial assessment, and an increase in stock-based compensation due to the issuance of new stock option awards.

Current wording

General and administrative expenses were $4,096 for the six months ended September 30, 2025, a decrease of $13 from $4,109 for the six months ended September 30, 2024. The decrease was primarily a result of decreased legal, accounting, tax, audit and other professional fees related to Continuance and Domestication, partially offset by an increase in other general and administrative expenses primarily due to costs for the GTx-104 commercial assessment, and pre-commercial planning, and an increase in stock-based compensation due to the issuance of new stock option awards.

Previous wording

The change in the fair value of derivative warrant liabilities was mainly attributable to the increase in our stock price.

Current wording

The change in the fair value of derivative warrant liabilities was mainly attributable to a decrease in the expected term as the 2023 Common Warrants expired on the 60th day after the date of the acceptance by the FDA of the NDA for the Company’s product candidate GTx-104 or October 21, 2025.

Previous wording

Interest and other income, net was $205 for the three months ended June 30, 2025, compared to $235 for the three months ended June 30, 2024. The $30 decrease in our interest and other income was due to withdrawals of short-term investments upon their maturity used to fund operations, and a decrease in interest rates.

Current wording

Interest and other income, net was $172 and $375 for the three and six months ended September 30, 2025, compared to $172 and $407 for the three and six months ended September 30, 2024. The $32 decrease in our interest and other income was due to decreased interest rates.

Previous wording

For the three months ended June 30, 2025 and 2024, the Company recorded an income tax provision of $0 and a tax benefit of approximately $724, respectively. The period-over-period change is primarily attributable to the establishment of a partial valuation allowance against the Company’s net domestic deferred tax assets. This allowance reflects management’s determination that realization of these assets is not more likely than not at this time. No such valuation allowance was recorded in the prior period.

Current wording

For the three and six months ended September 30, 2025, the Company did not record an income tax benefit. For the three and six months ended September 30, 2024, the Company recorded an income tax benefit of $852 and $1,576. The period-over-period change is primarily attributable to the establishment of a partial valuation allowance against the Company’s net domestic deferred tax assets. This allowance reflects management’s determination that realization of these assets is not more likely than not at this time. No such valuation allowance was recorded in the prior period.

Previous wording

Cash flows and financial condition for the three months ended June 30, 2025 and 2024

Current wording

Cash flows and financial condition for the six months ended September 30, 2025 and 2024

Previous wording

As of June 30, 2025, cash and cash equivalents were $20,005, a net decrease of $2,218 compared to cash and cash equivalents of $22,133 at March 31, 2024.

Current wording

As of September 30, 2025, cash and cash equivalents were $16,862, a net decrease of $5,271 compared to cash and cash equivalents of $22,133 at March 31, 2025.

Previous wording

As described below, in February 2025, we completed a private placement of our securities with certain institutional and accredited investors. Net proceeds to us were $13,705. We believe our existing cash and cash equivalents will be sufficient to sustain planned operations through at least 12 months from the issuance date of the unaudited condensed consolidated financial statements included with this Form 10-Q.

Current wording

As described below, in February 2025, we completed a private placement of our securities with certain institutional and accredited investors. Net proceeds to us were $13,705. In October 2025, we received $4,000 in gross proceeds from exercises of common warrants that were previously issued in a private placement in September 2023. We believe our existing cash and cash equivalents will be sufficient to sustain planned operations through at least 12 months from the issuance date of the unaudited condensed consolidated financial statements included with this Form 10-Q.

Previous wording

We will require additional capital to fund our daily operating needs beyond that time. We do not expect to generate revenue from product sales unless we obtain regulatory approval, which is subject to significant uncertainty. To date, we have financed our operations primarily through public offerings and private placements of our common equity, warrants and convertible debt and the proceeds from research tax credits. Until such time that we can generate significant revenue from drug product sales, if ever, we will require additional financing, which is expected to be sourced from a combination of public or private equity or debt financing or other non-dilutive sources, including fees, milestone payments and royalties from collaborations with third parties. Arrangements with collaborators or others may require us to relinquish certain rights related to our technologies or drug product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategy. We plan to raise additional capital in order to maintain adequate liquidity. Negative results from studies or trials, if any, or depressed prices of our Common Stock could impact our ability to raise additional financing. Raising additional equity capital is subject to market conditions that are not within our control.

Current wording

We will require additional capital to fund our daily operating needs beyond that time. We do not expect to generate revenue from product sales unless we obtain regulatory approval, which is subject to significant uncertainty. To date, we have financed our operations primarily through public offerings and private placements of our common equity, warrants and convertible debt, warrant exercises and the proceeds from research tax credits. Until such time that we can generate significant revenue from drug product sales, if ever, we will require additional financing, which is expected to be sourced from a combination of public or private equity or debt financing or other non-dilutive sources, including fees, milestone payments and royalties from collaborations with third parties. Arrangements with collaborators or others may require us to relinquish certain rights related to our technologies or drug product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategy. We plan to raise additional capital in order to maintain adequate liquidity. Negative results from studies or trials, if any, or depressed prices of our Common Stock could impact our ability to raise additional financing. Raising additional equity capital is subject to market conditions that are not within our control.

Previous wording

Net cash used in operating activities for the three months ended June 30, 2025 was $1,801, compared to $3,596 for the three months ended June 30, 2025, a decrease of $1,795. The decrease in net cash used in operating activities was primarily due to a $1,753 decrease in research and development activities mainly due to completion of our GTx-104 pivotal Phase 3 STRIVE-ON trial and changes in prepaid expenses of $292, offset in part by a change in receivables of $ 220, and change in trade and other payables of $203.

Current wording

Net cash used in operating activities for the six months ended September 30, 2025 was $4,944, compared to $7,835 for the six months ended September 30, 2024, a decrease of $2,891. The decrease in net cash used in operating activities was primarily due to a $4,248 decrease in research and development activities mainly due to completion of our GTx-104 pivotal Phase 3 STRIVE-ON trial and changes in prepaid expenses of $231, offset in part by change in trade and other payables of $1,506.

Previous wording

There were no investing activities for the three months ended June 30, 2025. Net cash used in investing activities for the three months ended June 30, 2024 was from the purchase of short-term investments of $15.

Current wording

There were no investing activities for the six months ended September 30, 2025. Net cash used in investing activities for the six months ended September 30, 2024 was from the purchase of short-term investments of $15.

Previous wording

Net cash used in financing activities for the three months ended June 30, 2025 was from the payment of stock issuance costs in connection with the 2025 Private Placement. There were no financing activities for the three months ended June 30, 2024.

Current wording

Net cash used in financing activities for the six months ended September 30, 2025 was from the payment of stock issuance costs of $327 in connection with the 2025 Private Placement. There were no financing activities for the six months ended September 30, 2024.

Previous wording

In September 2023, we entered into a securities purchase agreement (the “2023 Purchase Agreement”) with certain institutional and accredited investors in connection with a private placement offering of our securities (the “2023 Private Placement”). Pursuant to the 2023 Purchase Agreement, we sold 1,951,371 Common Shares, at a purchase price of $1.848 per Common Share and pre-funded warrants (the “2023 Pre-Funded Warrants”) to purchase up to 2,106,853 Common Shares at a purchase price equal to the purchase price per Common Share less $0.0001. Each 2023 Pre-Funded Warrant is exercisable for one Common Share at an exercise price of $0.0001 per Common Share, is immediately exercisable, and will expire once exercised in full. Pursuant to the 2023 Purchase Agreement, we also issued to such institutional and accredited investors common warrants (the “Common Warrants”, and together with the 2023 Pre-Funded Warrants, the “Warrants”) to purchase Common Shares, exercisable for an aggregate of 2,536,391 Common Shares. Under the terms of the 2023 Purchase Agreement, for each Common Share and each 2023 Pre-Funded Warrant issued in the 2023 Private Placement, an accompanying five-eighths (0.625) of a Common Warrant was issued to the purchaser thereof. Each whole Common Warrant is exercisable for one Common Share at an exercise price of $3.003 per Common Share, is immediately exercisable, and will expire on the earlier of (i) the 60th day after the date of the acceptance by the FDA of an NDA for our product candidate GTx-104 or (ii) five years from the date of issuance. The 2023 Private Placement closed on September 25, 2023. The net proceeds to us from the 2023 Private Placement were $7,338, after deducting fees and expenses.

Current wording

In September 2023, we entered into a securities purchase agreement (the “2023 Purchase Agreement”) with certain institutional and accredited investors in connection with a private placement offering of our securities (the “2023 Private Placement”). Pursuant to the 2023 Purchase Agreement, we sold 1,951,371 Common Shares, at a purchase price of $1.848 per Common Share and pre-funded warrants (the “2023 Pre-Funded Warrants”) to purchase up to 2,106,853 Common Shares at a purchase price equal to the purchase price per Common Share less $0.0001. Each 2023 Pre-Funded Warrant is exercisable for one Common Share at an exercise price of $0.0001 per Common Share, is immediately exercisable, and will expire once exercised in full. Pursuant to the 2023 Purchase Agreement, we also issued to such institutional and accredited investors common warrants (the “2023 Common Warrants”, and together with the 2023 Pre-Funded Warrants, the “Warrants”) to purchase Common Shares, exercisable for an aggregate of 2,536,391 Common Shares. Under the terms of the 2023 Purchase Agreement, for each Common Share and each 2023 Pre-Funded Warrant issued in the 2023 Private Placement, an accompanying five-eighths (0.625) of a 2023 Common Warrant was issued to the purchaser thereof. Each whole 2023 Common Warrant is exercisable for one Common Share at an exercise price of $3.003 per Common Share, is immediately exercisable, and will expire on the earlier of (i) the 60th day after the date of the acceptance by the FDA of an NDA for our product candidate GTx-104 or (ii) five years from the date of issuance. The 2023 Private Placement closed on September 25, 2023. The net proceeds to us from the 2023 Private Placement were $7,338, after deducting fees and expenses. In October 2025, the Company received $4,000 in gross proceeds from exercises of 1,345,464 2023 Common Warrants that were issued in the 2023 Private Placement. for 1,345,464 shares of Common Stock. The remaining 1,190,927 2023 Common Warrants issued in the 2023 Private Placement have expired in accordance with the terms of the common warrants as the 60th day after the FDA’s acceptance for review of our NDA for GTx-104 has passed.

Previous wording

We utilize CMOs for the development and production of clinical materials, and CROs to perform services related to our clinical trials. Pursuant to the agreements with CMOs and CROs, we have either the right to terminate the agreements without penalties or under certain penalty conditions. As of June 30, 2025, we had $184 of commitments to CMOs for the next twelve months.

Current wording

We utilize CMOs for the development and production of clinical materials, and CROs to perform services related to our clinical trials. Pursuant to the agreements with CMOs and CROs, we have either the right to terminate the agreements without penalties or under certain penalty conditions. As of September 30, 2025, the Company has $185 of commitments to CMOs and $150 of commitments to CROs for the next twelve months.