MANNKIND CORP

1. Description of Business

Business— MannKind is a biopharmaceutical company focused on the development and commercialization of patient-centric therapies that address serious unmet medical needs for those living with cardiometabolic and orphan lung diseases. The Company is currently commercializing three products: Afrezza (insulin human) Inhalation Powder, an ultra rapid-acting inhaled insulin indicated to improve glycemic control in adults with diabetes; Furoscix (furosemide injection), to treat fluid buildup in patients with chronic heart failure or chronic kidney disease; and the V-Go wearable insulin delivery device, which provides continuous subcutaneous infusion of insulin in adults that require insulin. The Company also developed Tyvaso DPI (treprostinil) inhalation powder, which is approved for the treatment of pulmonary arterial hypertension (“PAH”) and for the treatment of pulmonary hypertension associated with interstitial lung disease (“PH-ILD”). The Company receives a royalty on net sales and a margin on supplies of Tyvaso DPI that it manufactures for its development and marketing partner, United Therapeutics.

Basis of Presentation — The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated.

Reclassifications — Certain immaterial amounts reported in prior years statement of cash flows have been reclassified to conform with the current year presentation within the cash flow from operating activities.

Segment Information — Operating segments are identified as components of an enterprise which engage in business activities that result in revenue and expenses for which separate discrete financial information is available for evaluation by the chief operating decision-maker (the “CODM”) in making decisions regarding resource allocation and assessing performance on a regular basis. The CODM is comprised of the Company's CEO and CFO. To date, the Company has viewed its operations and manages its business as asingle reportable segment operating in the United States of America. The business and accounting policies of the Company's single reportable segment are further explained below. The measure of segment assets is reported as total assets in the consolidated balance sheets. No intra-entity sales or transfers are transacted within the Company.

The key metric utilized by the CODM to assess resource allocation and performance is the Company’s segment net income, which is the same as the consolidated net income reported in the consolidated statements of operations. The CODM also analyzes the Company's consolidated net income to evaluate its return on segment assets and to establish budgets and forecasts. The table below shows the details of the Company’s segment revenues and significant expense categories regularly provided to and reviewed by the CODM as well as other significant segment items included in consolidated net income in the consolidated statements of operations:

(1)

Amounts include revenue earned from Furoscix and expenses incurred by scPharma beginning on the acquisition date of October 7, 2025.

(2)

Includes primarily loss (gain) on foreign currency transaction, gain on bargain purchase and income tax (benefit) expense.

2. Summary of Significant Accounting Policies

Financial Statement Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. Actual results could differ from those estimates or assumptions. Management considers many factors in selecting appropriate financial accounting policies and in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. These effects could have a material impact on the estimates and assumptions used in the preparation of the consolidated financial statements. The more significant estimates include revenue recognition, including gross-to-net adjustments, stand-alone selling price considerations for recognition of collaboration revenue and measurement of progress related to recognition of deferred revenue for collaboration revenue, the fair value of developed technology and in process research and development ("IPR&D"), assessing long-lived assets for impairment, the fair value of the contingent consideration liability, clinical trial expenses, inventory costing, interest expense on liability for sale of future royalties, stock-based compensation, the determination of the provision for income taxes and corresponding deferred tax assets and liabilities, the valuation allowance recorded against net deferred tax assets, and expected cash flows from royalties received in connection with UT's net revenue for the sale of Tyvaso DPI.

Revenue Recognition — The Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to be entitled in exchange for those goods or services.

To determine revenue recognition for arrangements that are within the scope of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers(“ASC 606”), the Company performs 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. The Company only applies the five-step model to arrangements that meet the definition of a contract under ASC 606, including when it is probable that the entity will collect the consideration to which it is entitled 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, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company has two types of contracts with customers: (i) contracts for commercial product sales with wholesale distributors, specialty and retail pharmacies, and durable medical equipment suppliers ("DMEs") and (ii) collaboration arrangements.

Revenue Recognition– Net Revenue– Commercial Product Sales— The Company sells its products to a limited number of wholesale distributors, specialty and retail pharmacies, DMEs, specialty distributors and direct purchasers in the U.S. and India (collectively, its “Customers”). Wholesale distributors subsequently resell the Company’s products to retail pharmacies and certain medical centers or hospitals. Specialty and retail pharmacies sell directly to patients. In addition to distribution agreements with Customers, the Company enters into arrangements with payers that provide for government mandated and/or privately negotiated rebates, chargebacks, and discounts with respect to the purchase of the Company’s products.

The Company transfers control and recognizes revenue upon delivery of product to wholesale distributors and specialty pharmacies. Product revenues are recorded net of applicable reserves, including discounts, allowances, rebates, returns and other incentives. See Reserves for Variable Consideration below.

Reserves for Variable Consideration— Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, provider chargebacks and discounts, government rebates, payer rebates, and other incentives, such as voluntary patient assistance, and other allowances that are offered within contracts between the Company and its Customers, payers, and other indirect customers relating to the Company’s sale of its products. These reserves, as further detailed below, are based on the amounts earned, or to be claimed on the related sales, and result in a reduction of accounts receivable or establishment of a current liability. Significant judgment is required in estimating gross-to-net adjustments, including historical experience, payer channel mix, current contract prices under applicable programs, unbilled claims, claim submission time lags and inventory levels in the distribution channel.

Where appropriate, these estimates take into consideration a range of possible outcomes, which are probability-weighted in accordance with the expected value method in ASC 606 for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reduce recognized revenue to the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. The Company’s analysis also contemplates application of the constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the current period estimates of gross-to-net adjustments and, therefore, the transaction price was not reduced further during the current period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net revenue from commercial product sales and earnings in the period such variances become known.

Trade Discounts and Allowances— The Company generally provides Customers with discounts which include incentives, such as prompt pay discounts, that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company compensates (through trade discounts and allowances) its Customers for sales order management, data, and distribution services. However, the Company has determined such services received to date are not distinct from the Company’s sale of products to the Customer and, therefore, these payments have been recorded as a reduction of revenue and as a reduction to accounts receivable, net.

Product Returns— Consistent with industry practice, the Company generally offers Customers a right of return for unopened product that has been purchased from the Company for a period beginningsix months prior to and ending 12 months after its expiration date, which lapses upon shipment to a patient. The Company estimates the amount of its product sales that may be returned by its Customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as reductions to accounts receivable, net. The Company currently estimates product returns using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. The Company’s current return reserve percentage is estimated to be in the single digits. Adjustments to the returns reserve are made when changes in the Company's assumptions result in revised estimates to the Company’s assumptions.

Provider Chargebacks and Discounts— Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase products from the Company. Customers charge the Company for the difference between what they pay for products and the ultimate selling price to the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is recorded in accrued expenses and other current liabilities. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by Customers, and the Company generally issues credits for such amounts within a few weeks of the Customer’s notification to the Company of the resale. Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel inventories at each reporting period-end that the Company expects will be sold to qualified healthcare providers, and chargebacks that Customers have claimed, but for which the Company has not yet issued a credit.

Government Rebates— The Company is subject to discount obligations under Medicare and state Medicaid programs. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included in accrued expenses and other current liabilities. Estimates around Medicaid have historically required significant judgment due to timing lags in receiving invoices for claims from states. For Afrezza and Furoscix, the Company also estimates the number of patients in the initial and catastrophic phases of the Part D benefit for whom the Company will owe an additional liability under the Medicare Part D Manufacturer Discount Program. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for products that have been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period. The Company’s estimates include consideration of historical claims experience, payer channel mix, current contract prices, unbilled claims, claim submission time lags and inventory in the distribution channel.

Payer Rebates— The Company contracts with certain private payer organizations, primarily insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of its products. The Company estimates these rebates, including estimates for product that has been recognized as revenue, but which remains in the distribution channel, and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities. The Company’s estimates include consideration of historical claims experience, payer channel mix, current contract prices, unbilled claims, claim submission time lags and inventory in the distribution channel.

Other Incentives— Other incentives which the Company offers include voluntary patient support programs, such as the Company's co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with the products that have been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included in accrued expenses and other current liabilities.

Revenue Recognition – Collaborations and Services — The Company enters into licensing, research or other agreements under which the Company licenses certain rights to its product candidates to third parties, conducts research or provides other services to third parties. The terms of these arrangements may include but are not limited to payment to the Company of one or more of the following: up-front license fees; development, regulatory, and commercial milestone payments; payments for commercial manufacturing and clinical supply services the Company provides; and royalties on net sales of licensed products and sublicenses of the rights. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment such as determining the performance obligation in the contract and determining the stand-alone selling price for each performance obligation identified in the contract. With respect to the Company's significant collaboration and service agreement with UT that includes a long-term commercial supply agreement (as amended, the “CSA”), the Company identified three distinct performance obligations: (1) the license, supply of product to be used in clinical development, and continued development and approval support for Tyvaso DPI (“R&D Services and License”); (2) development activities for the next generation of the product (“Next-Gen R&D Services”); and (3) a material right associated with current and future manufacturing and supply of product (“Manufacturing Services”). Pre-production activities under the CSA, such as facility expansion services and other administrative services, were considered bundled services under the Manufacturing Services performance obligation as required by ASC 606, which were recorded as deferred revenue. Following the FDA’s approval of Tyvaso DPI, UT began issuing purchase orders for the supply of product, which represents distinct contracts and performance obligations under ASC 606. Revenue is recognized for the supply of product at a point in time, once control is transferred to UT, and deferred revenue is recognized as product is delivered over the CSA term using an output method based on the estimate of the measurement of progress. See Note 11 –Collaborations, Licensing and Other Arrangements.

If an arrangement has multiple performance obligations, the allocation of the transaction price is determined from observable market inputs, if available, and the Company uses key assumptions to determine the stand-alone selling price, which may include development timelines, reimbursement rates for personnel costs, discount rates, and probabilities of technical and regulatory success. Revenue is recognized based on the measurement of progress as the performance obligation is satisfied and consideration received that does not meet the requirements to satisfy the revenue recognition criteria is recorded as deferred revenue. Current deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months. Amounts that the Company expects will not be recognized within the next 12 months are classified as long-term deferred revenue. However, this estimate is based on the Company’s current project development plan and, if the development plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period. For further information, see Note 11 – Collaborations, Licensing and Other Arrangements.

The Company recognizes upfront license payments as revenue upon delivery of the license only if the license is determined to be a separate unit of accounting from the other undelivered performance obligations. The undelivered performance obligations typically include manufacturing or development services or research and/or steering committee services. If the license is not considered as a distinct performance obligation, then the license and other undelivered performance obligations would be evaluated to determine if such should be accounted for as a single unit of accounting. If concluded to be a single performance obligation, the transaction price for the single performance obligation is recognized as revenue over the estimated period of when the performance obligation is satisfied. If the license is considered to be a distinct performance obligation, then the estimated revenue is included in the transaction price for the contract, which is then allocated to each performance obligation based on the respective standalone selling prices.

Whenever the Company determines that an arrangement should be accounted for over time, the Company determines the period over which the performance obligations will be performed, and revenue will be recognized over the period the Company is expected to complete its performance obligations. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement, including estimating future revenue to be earned over the CSA contract term to determine the amount of deferred revenue to be recognized in the period.

The Company’s collaboration agreements typically entitle the Company to additional payments upon the achievement of development, regulatory and sales milestones. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as upfront fees and research funding, in the Company’s revenue calculation. If these milestones are not considered probable at the inception of the collaboration, the milestones will typically be recognized in one of two ways depending on the timing of when the milestone is achieved. If the milestone is improbable at inception and subsequently deemed probable of achievement, such will be added to the transaction price, resulting in a cumulative adjustment to revenue, based on measurement of progress.

The Company’s collaboration agreements, for accounting purposes, represent contracts with customers and therefore are not subject to accounting literature on collaboration agreements. The Company grants licenses to its intellectual property, supplies raw materials, semi-finished goods or finished goods, provides research and development services and offers sales support for the co-promotion of products, all of which are outputs of the Company’s ongoing activities, in exchange for consideration. Accordingly, the Company concluded that its collaboration agreements must generally be accounted for pursuant to ASC 606.

For collaboration agreements that allow collaboration partners to select additional optioned products or services, the Company evaluates whether such options contain material rights (i.e., have exercise prices that are discounted compared to what the Company would charge for a similar product or service to a new collaboration partner). The exercise price of these options includes a combination of licensing fees, event-based milestone payments and royalties. When these amounts in aggregate are not offered at a discount that exceeds discounts available to other customers, the Company concludes the option does not contain a material right, and therefore is not included in the transaction price at contract inception. The Company assessed the CSA with UT and determined that a material right existed for the manufacturing services performance obligation. The transaction price is allocated to the material right as well as the remaining performance obligations in accordance with ASC 606. The Company also evaluates grants of additional licensing rights upon option exercises to determine whether such should be accounted for as separate contracts. Any changes in transaction price is assessed by management as follows:

•

To the extent the change in estimated variable consideration relates to performance obligations that have been partially or fully satisfied, the effect of the change is recognized as an adjustment to revenue in the period of the change. This adjustment is recorded on a cumulative catch-up basis, reflecting the amount of revenue that would have been recognized if the revised estimate had been used since contract inception.

•

To the extent the change in estimated variable consideration relates to performance obligations that have not yet been satisfied, the effect of the change is recognized prospectively over the remaining performance period.

Revenue Recognition – Royalties — The Company recognizes royalty revenue for a sales-based or usage-based royalty if it is promised in exchange for an intellectual property license. The royalty revenue is recognized as the subsequent sale of the product occurs or, if later and applicable, the satisfaction or partial satisfaction of the performance obligation to which the royalty has been allocated. The Company’s UT License Agreement (as defined in Note 11– Collaborations, Licensing and Other Arrangements) entitles it to receive a 10% royalty on net sales of Tyvaso DPI for the license of the Company’s IP that was considered to be interdependent with the development activities that supported the approval of Tyvaso DPI. Although the Company recognizes a 10% royalty on net revenue from the sale of Tyvaso DPI as revenue, it only collects 9% of future royalties due to its sale in December 2023 of 1% of future royalties as detailed in Note 16– Commitments and Contingencies. The First Amendment (as defined in Note 11 –Collaborations, Licensing and Other Arrangements) to the UT License Agreement also entitles the Company to receive a 10% royalty on net sales of MNKD-1501, if it is approved.

The Company’s net revenue and cost of revenue and goods sold as shown on the consolidated statement of operations is comprised of the following(in thousands):

(1)

Amounts represent the revenue from Afrezza, Furoscix and V-Go sales to wholesalers and specialty pharmacies and from the manufacture of Tyvaso DPI delivered to UT.

(2)

Amounts represent revenue generated from the Company’s collaboration arrangements, including Next-Gen R&D Services (as defined in Note 11) for UT as well as arrangements with other collaboration partners. See Note 11 –Collaborations, Licensing and Other Arrangements.

(3)

Amounts represent royalties earned based on UT’s net revenue from Tyvaso DPI sales.

Certain judgments and estimates impact the amount and timing of revenue recognition. For example, in connection with its existing collaboration agreements, the Company has recorded short-term and long-term deferred revenue on its consolidated balance sheets based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months. Amounts that the Company expects will not be recognized within the next 12 months are classified as long-term deferred revenue. However, this estimate is based on the Company’s current project development plan and, if the development plan should change in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period.

Milestone Payments — At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. 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 the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as, or when, the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis.

Cost of Goods Sold—Commercial - Cost of goods sold- commercial is associated with the product revenue for Afrezza, Furoscix and V-Go and includes material, labor costs and manufacturing overhead. Write-offs of inventory and certain other period costs are recorded as expenses in the period in which they are incurred, rather than as a portion of inventory costs. Cost of goods sold excludes the cost of insulin purchased under the Company’s Insulin Supply Agreement (the “Insulin Supply Agreement”) with Amphastar Pharmaceuticals, Inc. (“Amphastar”). The Company incurs a quarterly capacity fee through its agreement with Amphastar which is included in cost of goods sold. See Note 16 -Commitments and Contingencies for additional information on this agreement. All insulin inventory on hand was written off and the full purchase commitment contract to purchase future insulin was accrued as a recognized loss on purchase commitments in prior years.

Cost of Revenues – Collaborations and Services — Cost of revenues for collaborations and services is primarily associated with product revenue for Tyvaso DPI and includes material, labor costs and manufacturing overhead. Write-offs of inventory and certain other period costs are recorded as expenses in the period in which they are incurred, rather than as a portion of inventory costs. Cost of revenues for collaborations and services also includes the cost of product development.

Research and Development ("R&D") — Clinical trial expenses result from obligations under contracts with vendors, consultants and clinical site agreements in addition to internal costs associated with conducting clinical trials. R&D costs are expensed as incurred. Clinical study and certain research costs are recognized over the service periods specified in the contracts and adjusted as necessary based upon an ongoing review of the level of effort and costs actually incurred. Nonrefundable advance payments for services to be received in the future for use in R&D activities are recorded as prepaid assets and expensed in the period when the services are performed.

Cash, Cash Equivalents and Restricted Cash— The Company considers all highly liquid investments with original or remaining maturities of

90 days or less at the time of purchase, that are readily convertible into cash to be cash equivalents. As of December 31, 2025 and 2024, cash equivalents were comprised of interest bearing money market funds, U.S. Treasury securities, corporate bonds and commercial paper with original maturities of 90 days or less from the date of purchase.

The Company records restricted cash when cash and cash equivalents are restricted as to withdrawal or usage. Restricted cash under a letter of credit issued in connection with a facility lease assumed by the Company that will not be available for use in the Company’s operations within 12 months of the reporting date is presented in non-current assets. See Note 3– Business Combinations.

Available-for-Sale Investments — The Company's available-for-sale investments consist primarily of highly liquid money market funds, commercial bonds and paper, and U.S. Treasury securities that are intended to facilitate liquidity and capital preservation. Additionally, the Company had two convertible promissory notes issued by Thirona Bio, Inc. ("Thirona") which were classified as an available-for-sale investment for the year ended December 31, 2024. In September 2025, the Company determined the Thirona investment to be fully impaired and recognized a $6.4 million impairment loss. See Note 4 –Investments. Available-for-sale investments are measured at fair value with realized gains and losses and unrealized losses related to credit risk reported in other income (expense) in the consolidated statements of operations. Unrealized holding gains and losses are excluded from earnings and reported in other comprehensive income until realized. These investments with maturities less than 12 months are included in short-term investments and investments with maturities in excess of 12 months are included in long-term investments in the consolidated balance sheets. The accretion of these investments, net of amortization, is recognized as interest income in the consolidated statements of operations. See Note 4 –Investments.

Concentration of Credit Risk — Financial instruments that potentially subject the Company to concentration of credit risk consisted of cash and cash equivalents and investments. Cash and cash equivalents are held in high credit quality institutions. Cash equivalents consisted of interest-bearing money market funds and U.S. Treasury securities with original or remaining maturities of 90 days or less at the time of purchase. Investments generally consisted of commercial paper, corporate notes or bonds and U.S. Treasury securities. Cash equivalents and investments are regularly monitored by management.

Accounts Receivable and Allowance for Credit Losses — Accounts receivable are recorded at the invoiced amount and are not interest bearing. Accounts receivable are presented net of an allowance for credit losses if there are estimated losses resulting from the inability of its customers to make required payments. The Company makes ongoing assumptions relating to the collectability of its accounts receivable in its calculation of the allowance for credit losses. The allowance for expected credit losses is based primarily on past collections experience relative to the length of time receivables are past due. However, when available evidence reasonably supports an assumption that future economic conditions will differ from current and historical payment collections, an adjustment is reflected in the allowance for expected credit losses. Accounts receivable are also presented net of an allowance for product returns and trade discounts and allowances because the Company’s customers have the right of setoff for these amounts against the related accounts receivable.

Pre-Launch Inventory— An improvement to the manufacturing process for the Company’s primary excipient, fumaryl diketopiperazine (“FDKP”), was demonstrated to be viable and management expects to realize an economic benefit in the future as a result of such process improvement. Accordingly, the Company is required to assess whether to capitalize inventory costs related to such excipient prior to validation of the improved manufacturing process and adoption of the new supplier. In doing so, management must consider a number of factors in order to determine the amount of inventory to be capitalized, including the historical experience of modifying the Company’s manufacturing processes, feedback from technical experts and regulatory agencies on the changes being effected and the amount of inventory that is likely to be used in commercial production. The shelf life of the excipient will be determined as part of the validation process; in the interim, the Company must assess the available stability data to determine whether there is likely to be adequate shelf life to support anticipated future sales occurring beyond the expected adoption date of the new raw material. If management is aware of any specific material risks or contingencies other than the normal regulatory reporting process, or if the criteria for capitalizing inventory produced prior to regulatory approval are otherwise not met, the Company would not capitalize such inventory costs, and would instead recognize such costs as R&D expense in the period incurred. See Note 6– Inventories.

Inventories — Inventories are stated at the lower of cost or net realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s products based on management’s judgment that future economic benefits are expected to be realized; otherwise, such costs are expensed as incurred as cost of goods sold. The Company uses contract manufacturing organizations ("CMOs") in the U.S. and outside the U.S. to produce its Furoscix inventory and a CMO outside of the U.S. for certain stages of V-Go inventory.

The Company periodically analyzes its inventory levels to identify inventory that may expire or has a cost basis in excess of its estimated realizable value and writes down such inventories, as appropriate. In addition, the Company’s products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or may become obsolete or are forecasted to become obsolete due to expiration, the Company will record a charge to write down such unmarketable inventory to its estimated net realizable value.

The Company analyzes its inventory levels to identify inventory that may expire or has a cost basis in excess of its estimated realizable value. The Company performs an assessment of projected sales and evaluates the lower of cost or net realizable value and the potential excess inventory on hand at the end of each reporting period.

Property and Equipment — Property and equipment is recorded at historical cost, net of accumulated depreciation. Depreciation expense is recorded over the assets’ useful lives on a straight-line basis and included in cost of goods sold, research and development, and selling, general and administrative expense in the consolidated statements of operations. See Note 7– Property and Equipment.

Impairment of Long-Lived Assets — Long-lived assets include property and equipment, operating lease right-of-use assets and other intangible assets. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Assets are considered to be impaired if the carrying value is considered to be unrecoverable.

If the Company believes an asset to be impaired, the impairment recognized is the amount by which the carrying value of the asset exceeds the fair value of the asset. Fair value is determined using the market, income or cost approaches as appropriate for the asset. Any write-downs are treated as permanent reductions in the carrying amount of the asset and recognized as an operating loss.

Acquisitions —The Company first determines whether a set of assets acquired constitute a business and should be accounted for as a business combination. If the assets acquired do not constitute a business, the Company accounts for the transaction as an asset acquisition. Business combinations are accounted for by means of the acquisition method of accounting. Under the acquisition method, assets acquired, including developed technology and IPR&D, and liabilities assumed are recorded at their respective fair values as of the acquisition date in the Company’s consolidated financial statements. Leases are recorded at the net present value of the remaining lease payments. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill. A gain on bargain purchase is recorded if the fair value of the net assets acquired exceeds the fair value of the consideration transferred. Contingent consideration obligations incurred in connection with a business combination (including the assumption of an acquiree’s liability arising from an acquisition it consummated prior to the Company’s acquisition) are recorded at their fair values on the acquisition date and remeasured at their fair values each subsequent reporting period until the related contingencies have been resolved. The resulting changes in fair values are recorded in earnings. Measurement period adjustments related to acquired assets and liabilities may be recorded within one year of the acquisition date and are recognized in earnings in the period in which the adjustments are identified. The accompanying consolidated balance sheet as of December 31, 2025 includes certain assets acquired and liabilities assumed based on management’s preliminary estimates of their respective fair values such as valuation of acquired intangible assets, contingent liabilities and deferred tax assets and liabilities. The Company expects to finalize these fair value measurements as additional information becomes available, including completion of its review of acquired contractual arrangements and other relevant facts and circumstances. See Note 3 -Business Combinations.

In contrast, asset acquisitions are accounted for by using a cost accumulation and allocation model. Under this model, the cost of the acquisition is allocated to the assets acquired and liabilities assumed. IPR&D projects with no alternative future use are recorded in R&D expense upon acquisition, and contingent consideration obligations incurred in connection with an asset acquisition are recorded when it is probable that they will occur and they can be reasonably estimated.

Goodwill and Other Intangible Assets —The fair value of acquired intangible assets is determined using either a cost approach or an income approach. The cost approach establishes fair value based on the cost of reproducing or replacing the asset, less depreciation for functional or economic obsolescence. The income approach, referred to as the excess earnings method, utilizes Level 3 fair value inputs to determine the present value of future economic benefits to be derived from ownership of the intangible asset. Market participant valuations assume a global view considering all potential jurisdictions and indications based on discounted after-tax cash flow projections, risk adjusted for estimated probability of technical and regulatory success.

The Company tests for impairment annually on a reporting unit basis, at the beginning of the Company’s fourth fiscal quarter and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. To the extent the carrying amount of a reporting unit is less than its estimated fair value, an impairment charge will be recorded.

Finite-lived intangible assets are amortized on a straight-line basis over the estimated useful life. Estimated useful lives are determined considering the period assets are expected to contribute to future cash flows. Finite-lived intangible assets are tested for impairment when facts or circumstances suggest that the carrying value of the asset may not be recoverable. If the carrying value exceeds the projected undiscounted pretax cash flows of the intangible asset, an impairment loss equal to the excess of the carrying value over the estimated fair value (discounted after-tax cash flows) is recognized.

IPR&D acquired in a business combination is considered an indefinite-lived intangible asset until the completion or abandonment of the associated R&D efforts. During the R&D period, the asset is not amortized but rather is tested for impairment annually, or when facts or circumstances suggest that the carrying value of the asset may not be recoverable. Once the R&D efforts are completed, the Company accounts for the resulting asset as a finite-lived intangible asset. If the R&D efforts are abandoned, the asset balance is written off to R&D expense.

Recognized Loss on Purchase Commitments — The Company reviews the terms of the long-term supply agreements and assesses the need for any accrual for estimated losses, such as lower of cost or net realizable value, that will not be recovered by future product sales. The recognized loss on purchase commitments is reduced as inventory items are received or as the liability is extinguished. See Note 16 –Commitments and Contingencies.

Milestone Rights Liability — In July 2013, in conjunction with the execution of a (now repaid) loan agreement with Deerfield Private Design Fund II, L.P. and Deerfield Private Design International II, L.P. (collectively, “Deerfield”), the Company entered into a Milestone Rights Purchase Agreement (the “Milestone Rights Agreement”) pursuant to which the Company issued certain milestone rights to Deerfield Private Design Fund II, L.P. and Horizon Santé FLML SÀRL, (the “Original Milestone Purchasers”). The foregoing milestone rights provided the Original Milestone Purchasers certain rights to receive payments of up to $90.0 million upon the occurrence of specified strategic and Afrezza sales milestones,$45.0 million of which remains payable as of December 31, 2025, upon achievement of such milestones (collectively, the “Milestone Rights”). In December 2021, the Milestone Rights were purchased by Barings Global Special Situations Credit Fund 4 (Delaware), L.P. and Barings Global Special Situations Credit 4 (LUX) S.ar.l. (together, the “Milestone Purchasers”). As a result, the Milestone Purchasers have assumed the rights and obligations of the Original Milestone Purchasers and are now entitled to all rights under the Milestone Rights Agreement. The Milestone Rights liability is reported at fair value at the date of the agreement which is periodically offset against payments. See Note 12 –Fair Value of Financial Instruments.

The initial fair value estimate of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones and discounted to present value using a selected market discount rate. The expected timing and probability of achieving the milestones was developed with consideration given to both internal data, such as progress made to date and assessment of criteria required for achievement, and external data, such as market research studies. The discount rate was selected based on an estimation of required rate of returns for similar investment opportunities using available market data. The Milestone Rights liability is remeasured as the specified milestone events are achieved. Specifically, as each milestone event is achieved, the portion of the initially recorded Milestone Rights liability that pertains to the milestone event being achieved, is remeasured to the amount of the specified related milestone payment. The resulting change in the balance of the Milestone Rights liability due to remeasurement is recorded in the Company’s consolidated statements of operations as interest expense. Furthermore, the Milestone Rights liability is reduced upon the settlement of each milestone payment. As a result, each milestone payment would be effectively allocated between a reduction of the recorded Milestone Rights liability and an expense representing a return on a portion of the Milestone Rights liability paid to the investor for the achievement of the related milestone event. See Note 9 – Accrued Expenses and Other Current Liabilities and Note 16 –Commitments and Contingencies.

Fair Value of Financial Instruments —The Company applies various valuation approaches in determining the fair value of its financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 — Significant inputs to the valuation model are unobservable.

Income Taxes — The provisions for federal, foreign, state and local income taxes are calculated on pre-tax income based on current tax law and include the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce net deferred income tax assets to amounts that are more likely than not to be realized.

For uncertain tax positions, the Company determines whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is “not more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. Penalties, if probable and reasonably estimable, are recognized as a component of income tax expense. The Company has reduced its deferred tax assets for uncertain tax positions but has not recorded liabilities for income tax expense, penalties, or interest.

Contingencies —The Company records a loss contingency for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These accruals represent management’s best estimate of probable loss. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. On a quarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates.

Stock-Based Compensation — Share-based payments to employees, including grants of restricted stock units (“RSUs”), performance-based restricted stock units ("Performance RSUs"), performance-based non-qualified stock options awards (“PNQs”), restricted stock units with market conditions (“Market RSUs”), options and the compensatory elements of employee stock purchase plans, are recognized in the consolidated statements of operations based upon the fair value of the awards at the grant date. RSUs are valued based on the market price on the grant date. Market RSUs are valued using a Monte Carlo valuation model and RSUs with performance conditions are evaluated for the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options and the compensatory elements of employee stock purchase plans. See Note 15 -Stock Award Plans.

Net Income (Loss) Per Share of Common Stock — Basic net income or loss per share ("EPS") is computed by dividing net income or loss by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the effect of potential common stock issuances resulting from assumed stock option exercises and vesting of RSU's, unless the effect is anti-dilutive, when applying the treasury stock method, as well as potential dilution under the if-converted method for convertible debt securities. For periods where the Company has presented a net loss, potentially dilutive securities are excluded from the computation of diluted EPS as they would be anti-dilutive.

Recently Adopted Accounting Standards

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) -Improvements to Income Tax Disclosures, to require enhanced income tax disclosures to provide information to assess how an entity’s operations and related tax risks, tax planning, and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this update provide that a business entity disclose (1) a tabular income tax rate reconciliation, using both percentages and amounts, (2) separate disclosure of any individual reconciling items that are equal to or greater than 5% of the amount computed by multiplying the income (loss) from continuing operations before income taxes by the applicable statutory income tax rate, and disaggregation of certain items that are significant and (3) amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign jurisdictions, including separate disclosure of any individual jurisdictions greater than 5% of total income taxes paid. These amendments are effective for the Company beginning in the annual period ended December 31, 2025, applied prospectively, with early adoption and retrospective application permitted. The Company applied the amendments prospectively for the year ended December 31, 2025, and the impact of the adoption of the amendments in this update was not material to the Company’s consolidated financial position and results of operations for the year ended December 31, 2025, since the amendments require only enhancement of existing income tax disclosures in the footnotes to the Company’s consolidated financial statements.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, which amends ASC 220-40, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), to require disaggregated disclosure of income statement expenses for public entities. This ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The objective of this ASU is to address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. This ASU is effective for all public entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company does not anticipate that adoption of this ASU will have a material impact on its financial position, results of operations or cash flows.

In September 2025, the FASB issued ASU No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides all entities with a practical expedient and allows entities, other than public business entities, an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This ASU is to be applied prospectively and becomes effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods, provided that financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of this ASU on its financial position, results of operations or cash flows.

In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which modifies the accounting for software costs under Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software. The objective of this ASU is to better align the accounting with how software is being developed by removing all references to prescriptive and sequential software development. Instead, an entity is required to start capitalizing software costs when both management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used for its intended purpose. This ASU is effective for all entities subject to the internal-use software guidance in Subtopic 350-40 for annual reporting periods beginning after December 15, 2027. Early adoption is permitted at the start of an annual period. The Company is currently evaluating the potential impact of this ASU on its financial position, results of operations or cash flows.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial position or results of operations upon adoption.

3. Business Combinations

scPharmaceuticals Inc.

On October 7, 2025(the "Merger Date"), the Company completed its merger with scPharmaceuticals Inc. ("scPharma"), a publicly held pharmaceutical company focused on cardiovascular and renal care, at a price of $5.35 per share in cash plusone non-tradable contingent value right ("CVR") per share, which represents the right to receive up to an aggregate amount of $1.00 per CVR in cash upon the achievement of certain regulatory and net sales milestones on or prior to the applicable milestone outside dates, for total consideration of up to $6.35 per share in cash, representing a total equity value of approximately $303.8 million and representing a total deal value of up to approximately $363.5 million if the CVR milestones are achieved at the maximum payment amount. Upon the closing of the transaction, MannKind repaid and extinguished all outstanding indebtedness of scPharma under its credit facility with Perceptive Credit Holdings IV, LP (“Perceptive”) and bought out Perceptive’s rights to receive revenue payments pursuant to its revenue purchase and sale agreement, which equaled an aggregate repayment and buyout amount of $82.6 million.

Through the merger, the Company acquired Furoscix, which was developed by scPharma and is a novel formulation of furosemide that delivers an 80 mg dose via an On-body infusor over a five-hour period.

Accounting Treatment

The merger with scPharma was accounted for as a business combination using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values as of the Merger Date. The excess of purchase price over the fair value of the net assets acquired this transaction was recorded as goodwill. See Note 8 –Goodwill and Other Intangible Assets.

The reconciliation of cash flows included in investing activities on the consolidated statements of cash flows to total purchase price is reflected below (in thousands):

The fair values of identifiable assets acquired and liabilities assumed by the Company from scPharma as of the Merger Date are reflected below (in thousands):

(1) Includes $12.5 million related to employee stock compensation paid out as part of the acquisition.

Bridge Loan

On September 23, 2025, a note receivable was issued to scPharma in the amount of $10.0 million bearing interest at the adjusted term SOFR rate plus 4.75% which was 9.00% at that date. The interest rate was applicable until November 6, 2025. The note receivable, including the interest owed on it, was forgiven as part of the merger and the $10.0 million is included in the total purchase price in the table above.

Inventory

The Company measured the inventory acquired from scPharma at fair value in accordance with ASC 805. Finished goods and work-in-process (“WIP”) inventory were valued using a net realizable value approach, which reflects the estimated selling price of the inventory less the costs to complete, disposal costs, and a reasonable profit allowance for the selling effort. Raw materials were valued at the price a market participant would pay, which approximated their carrying value. As a result of this analysis, the fair value of acquired inventory was determined to be $11.2 million, representing a reduction from the $13.3 million carrying amount on scPharma's opening balance sheet.

Intangible Assets

The fair value of the acquired developed technology related to the on-body infusor and the IPR&D related to the ReadyFlow Formulation were derived using an income approach, specifically a projected discounted cash flow method, adjusted for the probability of regulatory and commercial success. The projected discounted cash flow models used to estimate the Company’s Developed technology and IPR&D reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a commercial drug and a drug development asset, including the following:

•

The extent, character and utility of the intangible assets

•

The cost-savings attributes of the intangible assets

•

The nature of the functional or economic obsolescence of each intangible asset, and,

•

The relative risk and uncertainty associated with an investment in intangible assets

The determination of the fair value of the developed technology and IPR&D intangible assets as such, required management to make significant estimates and assumptions related to future cash flows and the discount rate. The discount rates used in the determination of fair value for developed technology and IPR&D were both 23% and both used a royalty rate of 10%. The developed technology and IPR&D are both level 3 in the fair value hierarchy described above in Note 2 –Summary of Significant Accounting Policies.

The developed technology is amortized over its useful life of 11.2 years and the expense is recorded in amortization of acquired intangible assets on the Company'sconsolidated statements of operations for the year ended December 31, 2025. The IPR&D intangible asset is not amortized, but rather is reviewed for impairment on an annual basis or more frequently if indicators of impairment are present, until the project is completed, abandoned, or transferred to a third party.

Contingent Value Right ("CVR")

The contingent consideration for the CVR is included in Contingent consideration - short term and Contingent consideration - long term in the table above and in the consolidated balance sheets and is achieved through the following milestones:

Milestone 1: Receipt of FDA approval of a drug-device combination product comprising SCP-111 delivered either in an autoinjector or scPharma’s device supplier-developed Self-Dose injection delivery system (such product, an “Injection Product” and, such milestone, “Milestone 1”) with (a) $0.75 per CVR if Milestone 1 is achieved by September 30, 2026, (b) $0.50 per CVR if Milestone 1 is achieved by December 31, 2026 and (c) $0.25 per CVR if Milestone 1 is achieved by June 30, 2027.

Milestone 2: Achievement in any trailing consecutive 12-month period ending prior to and including December 31, 2026 of at least $110.0 million of worldwide net sales of all Injection Products and Furoscix Infusors (collectively, the “Products”) in such 12-month period (“Milestone 2”) with (a) $0.25 per CVR upon the achievement of $120.0 million of worldwide net sales in such period and (b) between $0.10 and $0.25 per CVR if, as of December 31, 2026, the highest worldwide net sales in any trailing 12-month period were between $110.0 million and $120.0 million, which payment will be calculated on a straight-line basis such that the payment per CVR increases proportionally as worldwide net sales increase from $110.0 million to $120.0 million. Milestone 2 will not be achieved if trailing worldwide net sales are less than $110.0 million during this period. For the avoidance of doubt, no payment shall be made if the highest worldwide net sales in any trailing twelve-month period are less than $110.0 million.

The CVR was valued using both a Scenario-Based Method for Milestone 1 and a Monte Carlo Simulation Method for Milestone 2 to estimate the probability of success. The probability adjusted cash flow included significant estimates and assumptions pertaining to commercialization events and net sales received by the Company during the term of the CVR Agreement (as discussed above). See Note 12 –Fair Value of Financial Instruments for the key assumptions used in determining fair value.

The contingent consideration liability is remeasured each subsequent reporting period until the related contingencies have been resolved. For the year ended December 31, 2025, the Company recorded $1.0 million to other expense as a result of the remeasurement of the fair value of the contingent consideration liability obtained from the acquisition of scPharma. The following table summarizes the activities within the account balance as of December 31, 2025(in thousands):

Goodwill

The goodwill of $65.7 million is not tax deductible and represents the excess of the consideration paid over the fair value of assets acquired and liabilities assumed. Goodwill is attributable to theeconomic benefits arising from other assets acquired in the business combination that are not individually identified and separately recognized, including scPharma's assembled workforce and market participant synergies.

Supplemental pro forma information (unaudited)

The Company filed the required pro forma financial information under Item 9.01 of Form 8‑K on December 15, 2025. The effects of the acquisition are reflected in the Company’s consolidated financial statements from the Merger Date forward. The Company's consolidated statement of operations included $23.2 million of net revenue and $9.9 million of net operating losses related to scPharma's operations for the year ended December 31, 2025.

Thefollowing unaudited pro forma summary presents consolidated total revenue and net losses of MannKind as if the scPharma business combination had occurred on January 1, 2024 (in thousands). The unaudited supplemental pro forma information is presented for informational purposes only and is not indicative of the actual results of operations that would have been achieved if the scPharma acquisition had taken place on January 1, 2024 or of future results. Such unaudited pro forma financial information is based on the historical financial statements of MannKind and the acquired scPharma’s operations. The unaudited pro forma financial information is based on estimates and assumptions that have been made solely for the purpose of developing such unaudited pro forma financial information, including, without limitation, purchase accounting adjustments, acquisition-related transaction costs, and debt financing adjustments together with their consequential tax effects. The pro forma adjustments were based upon information available at the time they were prepared and certain assumptions that the Company believes are reasonable under the circumstances. The unaudited pro forma financial information does not reflect any future anticipated synergies or operating cost reductions that may be achieved from integrating the acquired operations into the rest of the Company.

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the scPharma acquisition that were included in the pro forma information.

Transaction costs totaling $9.7 million were expensed as incurred and reflected in the consolidated statements of operations within selling, general and administrative expense for the year ended December 31,2025.

Pulmatrix, Inc.

On May 28, 2024, the Company executed a bill of sale and assignment agreement with Pulmatrix, Inc. ("Pulmatrix") whereby the Company acquired from Pulmatrix certain lab assets and assumed certain liabilities, including the lease for an R&D facility in Bedford, Massachusetts. Concurrently, the Company and Pulmatrix entered into a cross-license agreement (the "Cross License Agreement") and a master service agreement. The parties and the landlord also entered into an amendment to lease and consent to assignment of the lease. Each of these agreements became effective upon the closing of the collective transaction (the "Pulmatrix Transaction") on July 8, 2024 (the "Effective Date"). The Company also entered into employment agreements with 13 Pulmatrix R&D employees who began employment with the Company on the Effective Date.

Pursuant to the Cross License Agreement, the Company granted to Pulmatrix certain exclusive and non-exclusive rights to develop, use, manufacture, market, offer and sell its single-use disposable dry powder inhaler (the "Cricket Device") for the inhaled delivery of dihydroergotamine in any formulation whatsoever (including Pulmatrix's PUR3100 treatment of acute migraine), and the inhaled delivery of one or more active pharmaceutical ingredients formulated with iSPERSE for the treatment of neurological disease in humans (collectively, the “Cricket License”).

In return, Pulmatrix granted to the Company certain exclusive and non-exclusive rights to develop, use, manufacture, market, offer and sell iSPERSE formulations of clofazimine and insulin, and formulations of iSPERSE with one or more active pharmaceutical ingredients for the treatment of nontuberculous mycobacteria lung disease in humans, endocrine disease in humans, and interstitial lung diseases in humans (collectively, the “iSPERSE License”).

The Company may also provide certain development services to Pulmatrix under the Master Services Agreement, including but not limited to, activities to develop a dry powder formulation of the active pharmaceutical ingredient that Pulmatrix provides to the Company for oral inhalation using iSPERSE.

Accounting Treatment

The Pulmatrix Transaction was accounted for as a business combination using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed to be recognized at their respective fair values as of the Effective Date. The excess of the fair value of the net assets acquired over the purchase price in this non-cash transaction was recorded as a gain on bargain purchase.

The fair values of identifiable assets acquired and liabilities assumed by the Company from Pulmatrix as of the Effective Date are reflected below (in thousands):

The fair value of the Cricket License transferred to Pulmatrix was determined to be immaterial based on the current market availability of numerous third party single-dose dry powder inhalers and the significant time, cost, and risk required to potentially commercialize the Cricket Device. The transfer of the Cricket License was within the scope of ASC 606 as a sale of functional intellectual property, however, since no value was attributed to the Cricket License, no revenue was recognized by the Company.

The fair value of the iSPERSE License was determined by applying a cost approach, which assesses current replacement cost to acquire or construct a substitute asset of comparable utility as of the Effective Date. The iSPERSE License was deemed to have a fair value of $4.3 million based on the estimate of internal and external costs to recreate the underlying technology, which are inputs not observable in the market and therefore considered Level 3 measurements. The iSPERSE technology is being utilized in the Company's continuing R&D efforts and accounted for as IPR&D.

The fair values of the right-of-use asset and lease liability for the assumed R&D facility operating lease were assessed in accordance with ASC 842, Leases, based on discounted cash flows from future lease payments, utilizing the Company’s incremental borrowing rate of 7.25%. In June 2024, in anticipation of the facility lease assumption on the Effective Date, the Company transferred $0.7 million to a depository account at a financial institution to collateralize a conditional stand-by letter of credit as required under the lease. This amount is reflected as long-term restricted cash as of December 31,2025. The lease term extends from the Effective Date through November 30, 2033 with monthly payments of $0.1 million increasing 3% annually starting on December 1, 2024. See Note 16 –Commitments and Contingencies.

Property and equipment were assessed for monetary benefit, remaining economic life, and relative risk based on the Company's industry knowledge and analysis of sales of comparable equipment to arrive at fair value.

Pro forma results of operation for the Transaction have not been presented, as the effects of the Transaction were not material to the consolidated financial statements.

4. Investments

Cash Equivalents— Cash equivalents consist of highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase that are readily convertible into cash.

Available-for-Sale Investments Portfolio—The Company's investments portfolio consists of highly liquid money market funds, commercial bonds and paper, and U.S. Treasury securities (collectively, the "Investments") for which the Company historically accounted as held-to-maturity. Effective October 1, 2024, the Company has reclassified its held-to-maturity investments to available-for-sale to align with potential business needs. Cumulative unrealized gains were recorded in other comprehensive income.

The contractual maturities of the Investments are summarized below (in thousands):

(1)

The investments due in one year or less include cash equivalents of $36.4 million as of December 31,2025 and $14.7 million as of December 31,2024.

The fair values of the Investments are disclosed below (in thousands):

The accretion of the Investments, net of amortization, was recognized as interest income in the consolidated statements of operations and was approximately $2.7 million, $7.3 million, and $1.6 million for the years ended December 31,2025, 2024, and 2023, respectively. As of December 31, 2025 and 2024, there was $0.7 million and $1.0 million, respectively, of accrued interest receivable on the Investments included in prepaid expense and other current assets in the Company's consolidated balance sheets. No allowance for credit losses on the Investments was required as of December 31,2025 or 2024.

Available-for-Sale Investment — Thirona — In June 2021, the Company purchased a $3.0 million convertible promissory note issued by Thirona. In January 2022, the Company purchased an additional $5.0 million convertible promissory note issued by Thirona (the "Thirona convertible notes"). The Thirona convertible notes are general unsecured obligations of Thirona and initially accrued interest at a rate of 6% per annum. Unless earlier converted into conversion shares pursuant to the note purchase agreement, the aggregate principal of $8.0 million and accrued interest shall be due and payable by Thirona on demand by the Company at any time after the maturity date. The Thirona convertible notes were amended in February 2023 to extend the maturity date from December 31, 2022 to June 30, 2024, and again on June 27, 2024 to extend the maturity date to June 30, 2026 and increase the interest rate to 10% per annum.

The Thirona convertible notes were included in prepaid expense and other current assets as of December 31, 2024 in the consolidated balance sheets. In September 2024, the Company recognized a loss of $1.6 million on its investment in Thirona as a result of modification of the Thirona convertible notes. As of December 31, 2024, the fair value of the Company's investment in Thirona was $6.3 million which was calculated using Level 3 inputs including assumptions on market yield. In September 2025, Thirona initiated a cessation of operations following recent clinical trial results. The Company deemed this to be other-than-temporary and determined its available-for-sale investment in Thirona to be fully impaired and recognized a $6.6 million impairment loss, inclusive of the write off of previously recorded unrealized gains of$1.3 million, representing the fair value at the time. The Company also wrote off approximately $1.1 million of interest receivable on the Thirona convertible notes. The impairment was recorded in other income (expense) in the Company's consolidated statements of operations for the year ended December 31, 2025.

5. Accounts Receivable

Accounts receivable, net consists of the following (in thousands):

(1)

The balance as of December 31, 2024 includes the $1.1 million regulatory milestone payment receivable from Cipla. See Note 11– Collaborations, Licensing and Other Arrangements – Cipla License and Distribution Agreement.

As of December 31, 2025 , there was ade minimis amount of allowance for credit losses and doubtful accounts for commercial accounts receivable. As of December 31, 2024, there wasno allowance forcredit losses and doubtful accounts for commercial accounts receivable. The Company hadthree wholesale distributors representing approximately 11%,11% and 8% of total consolidated revenues in 2025,13%,13% and 9% of total consolidated revenues in 2024, and 17%,13% and 16% of total consolidated revenues in 2023, respectively. As of December 31, 2025 and 2024, the Company hadthree wholesale distributors representing approximately 39% and 88%, respectively, of commercial accounts receivable.

As of December 31, 2025 and 2024, there wasno allowance for credit losses for accounts receivable for collaborations and services. The Company's collaboration partner, UT, comprised 94% of the collaboration and services net accounts receivable as of December 31,2025. UT and Cipla comprised 50% each of the collaboration and services net accounts receivable as of December 31,2024. Approximately 30% and 35% of consolidated revenues for the years ended December 31,2025 and 2024, respectively, was attributable to UT.

The Company recognizes revenue net of gross-to-net adjustments. The activities and ending reserve balance consists of the following (in thousands):

6. Inventories

Inventories consist of the following (in thousands):

Work-in-process and finished goods as of December 31, 2025 and 2024 include conversion costs and exclude the cost of insulin and furosemide. All insulin inventory on hand was written off and the projected loss on the purchase commitment contract to purchase future insulinwas accrued in prior years. Raw materials inventory included $1.0 and $0.8 million of pre-launch inventory as of December 31,2025 and 2024, respectively, which consisted of FDKP and furosemide.

The Company analyzed its inventory levels to identify inventory that may expire or has a cost basis in excess of its estimated realizable value. The Company also performed an assessment of projected sales and evaluated the lower of cost or net realizable value and the potential excess inventory on hand as of December 31, 2025 and 2024. Inventory that did not meet acceptable standards or was forecasted to become obsolete due to expiration is reserved for inventory obsolescence in the consolidated balance sheets and recorded in costs of goods sold in the consolidated statements of operations. As a result of these assessments, there were inventory write-offs of $10.4 million and $3.9 million for the years ended December 31,2025 and 2024, respectively.

7. Property and Equipment

Property and equipment consisted of the following (dollars in thousands):

Depreciation expense related to property and equipment for the years ended December 31, 2025, 2024 and 2023 was$8.1 million,$7.3 million and$4.5 million, respectively. During the years ended December 31, 2025 and 2024, the Company retired $1.6 million and $2.2 million, respectively of manufacturing equipment, computer hardware and software, computer equipment, lab equipment, and building improvements, as it was no longer in service. The net book value for the disposed assets during the years ended December 31,2025 and 2024 was $0.1 million and $0.1 million, respectively.

8. Goodwill and Other Intangible Assets

Goodwill — Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. Goodwill is tested at least annually for impairment by assessing qualitative factors in determining whether it is more likely than not that the fair value of net assets is below their carrying amounts. Because the Company operates as asingle reporting segment, goodwill is tested at the consolidated reporting unit level. As of October 1, 2025, our annual impairment test date, we assessed goodwill and no impairment of goodwill was indicated. There wasno impairment of goodwill in fiscal years 2025 and 2024. See Note 2 –Summary of Significant Accounting Policies.

In 2022, the Company recorded additions of $1.9 million to Goodwill related to its acquisition of V-Go. In 2025, the Company recorded additions of $65.7 million to Goodwill related to its merger with scPharma. See Note 3 –Business Combinations.

The changes in goodwill for the years ended December 31, 2025 and 2024 were as follows (in thousands):

Intangible Assets— Intangible assets consisted of the following (dollars in thousands):

(1)

Included within Other intangible assets on the consolidated balance sheets.

Amortization expense related to the Developed technology - V-Go was$0.2 million and $0.1 million for the years ended December 31,2025 and 2024, respectively. Amortization expense related to the Developed technology - on-body infusor ("on-body infusor") was $4.0 million for the year ended December 31,2025. The on-body infusor was acquired from scPharma in October 2025. See Note 3 – Business Combinations.

The estimated annual amortization expense for the Company's developed technology is as follows (in thousands):

The iSPERSE License– IPR&D is an indefinite-lived intangible asset, and as such is not amortized but rather is tested for impairment annually, or when facts or circumstances indicate the carrying value of the asset may not be recoverable. Upon completion of the underlying R&D efforts, the intangible asset will be accounted for as a finite-lived intangible asset. If the R&D efforts are abandoned, the IPR&D asset balance will be written off to R&D expense. The iSPERSE License– IPR&D was acquired from Pulmatrix in July 2024. See Note 3 – Business Combinations.

The ReadyFlow Formulation is an indefinite-lived intangible asset, and as such is not amortized but rather is tested for impairment when facts or circumstances indicate the carrying value of the asset may not be recoverable. Once available for use, the intangible asset will be accounted for as a finite-lived intangible asset. If the R&D efforts are abandoned, the IPR&D asset balance will be written off to R&D expense. The ReadyFlow Formulation was acquired from scPharma in October 2025. See Note 3 – Business Combinations.

The Company evaluates its other intangible assets for potential impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. See Note 2 – Summary of Significant Accounting Policies.

9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities were comprised of the following (in thousands):

(1)

See Note 16– Commitments and Contingencies under Contingencies– Milestone Rights.

(2)

See Note 16– Commitments and Contingencies under Loss Contingencies– Returns Reserve for Acquired Product.

The provision for discounts and allowances for commercial product sales is reflected as a component of net revenues. The activities and ending balances consisted of the following (in thousands):

10. Borrowings

Carrying amount of the Company’s borrowings consisted of the following (in thousands):

The following table provides a summary of the Company’s principal balance of debt and key terms:

(1)

Represents the stated rate as of December 31, 2025. Term loans bear interest at a rate per annum equal to, (i) in the case of a Base Rate Loan (as defined below), the greatest of (a) the prime rate in effect on such day, (b) the federal funds rate in effect on such day plus 0.5%, (c) Adjusted Term SOFR (defined below) for a one-month’s tenor in effect on such day plus 1%, and (d)3.0% plus a margin of 3.75%, or (ii) in the case of a SOFR Loan, the one, three or six month term SOFR (at the Company’s election), subject to a 2.00% floor (the “Adjusted Term SOFR”), plus a margin of 4.75%. In addition, upon the occurrence and continuation of an event of default under the Amended Credit Agreement, interest on the term loans accrues at the applicable rate plus 2.00% per annum. Interest is paid quarterly or, if the Company elects 1-month SOFR, monthly. The interest rate margin increases to 4.00% in the case of a Base Rate Loan and 5.00%in the case of a SOFR Loan at any time the Company’s ratio of indebtedness to adjusted EBITDA (measured on atrailing four quarter basis) is greater than or equal to 5.00:1.00 as of the most recent fiscal quarter for which the Company has delivered financial statements. The term loans had an average stated interest rate of 8.79% for the year ended December 31, 2025.

(2)

Partial exchange in December 2024.

The maturities of the Company’s borrowings as of December 31, 2025 are as follows (in thousands):

Amortization of debt issuance costs and debt discounts related to the Company's borrowings were as follows (in thousands):

(1)

Amounts represent the amortization of a debt discount related to the MidCap credit facility as further explained below.

Blackstone Credit Facility

On August 6, 2025 (the “Closing Date”), the Company entered into a senior secured term loan agreement (the “Credit Agreement”) with Blackstone Alternative Credit Advisors LP, as Blackstone Representative and Lead Arranger (in such capacity, “Blackstone”), the lenders party thereto from time to time, the subsidiary guarantors party thereto from time to time, and Wilmington Trust, National Association, as administrative agent and collateral agent for the lenders (in such capacity, the “Agent”). The Credit Agreement originally provided for up to $500 million in term loans, consisting of (i) a $75 million initial term loan, which was funded on the Closing Date, (ii) $125 million in delayed draw term loan commitments, which the Company may draw at its option during the 24 months immediately following the Closing Date, subject to customary conditions set forth in the Credit Agreement, and (iii) up to $300 million in the form of uncommitted delayed draw term loans, which the Company may borrow in the future subject to mutual agreement with Blackstone and the lenders under the Credit Agreement.

In connection with the execution of the Merger Agreement, on August 24, 2025, the Company entered into an amendment to the Credit Agreement (the “Credit Agreement Amendment”) with Blackstone, the lenders party thereto, the subsidiary guarantors party thereto, and the Agent, which amended the Credit Agreement (the Credit Agreement as amended by the Credit Agreement Amendment, the “Amended Credit Agreement”; and the credit facility provided for thereunder, the “Blackstone Credit Facility”). Pursuant to the Credit Agreement Amendment, among other things, the lenders party thereto agreed to provide an additional $175.0 million delayed draw term loan solely to finance a portion of the fees, premiums, expenses and other transaction costs incurred in connection with the transactions contemplated by the Merger Agreement (the “Transaction Funding”), subject to certain customary draw down conditions as set forth in the Credit Agreement Amendment. In addition, pursuant to the Credit Agreement Amendment, the lenders under the Amended Credit Agreement agreed to limit the conditions precedent to the Company’s borrowing of up to $75.0 million of delayed draw term loans (out of the aggregate $125.0 million in delayed draw term loan commitments available under the Credit Agreement) to certain customary draw down conditions as set forth in the Credit Agreement Amendment to the extent such loans are used solely for the Transaction Funding. In connection with the completion of the merger with scPharma, on October 7, 2025, the Company borrowed $250.0 million of delayed draw term loans. After giving effect to the transactions on October 7, 2025, the aggregate principal amount of outstanding term loans under the Amended Credit Agreement was $325.0 million.

The Blackstone Credit Facility will mature on August 6, 2030 (the “Maturity Date”). The term loans thereunder bear interest at a rate per annum equal to, (i) in the case of a Base Rate Loan, the greatest of (a) the prime rate in effect on such day, (b) the federal funds rate in effect on such day plus 0.5%, (c) Adjusted Term SOFR (defined below) for a one-month’s tenor in effect on such day plus 1%, and (d)3.0% plus a margin of 3.75%, or (ii) in the case of a SOFR Loan, the one, three or six month term SOFR (at the Company’s election), subject to a 2.00% floor (the “Adjusted Term SOFR”), plus a margin of 4.75%. In addition, upon the occurrence and continuation of an event of default under the Amended Credit Agreement, interest on the term loans accrues at the applicable rate plus 2.00% per annum. As of December 31, 2025, the effective interest rate is 9.35% per annum. Interest is paid quarterly or, if the Company elects 1-month SOFR, monthly. The interest rate margin increases to 4.00% in the case of a Base Rate Loan and 5.00% in the case of a SOFR Loan at any time the Company’s ratio of indebtedness to adjusted EBITDA (measured on a trailing four quarter basis) is greater than or equal to 5.00:1.00 as of the most recent fiscal quarter for which the Company has delivered financial statements. Term loans under the Amended Credit Agreement are funded net of an upfront fee payable by the Company. The Company shall pay the delayed draw term loan lenders a ticking fee at a rate per annum equal to 1.00%of the daily unused portionof the delayed draw term loan commitments beginning on the one year anniversary of the agreement through the end of the delayed draw commitment period, payable quarterly in arrears.

All term loans under the Blackstone Credit Facility, as well as any accrued and unpaid interest and fees, are repayable on the Maturity Date. The Company has the option to prepay the loans under the Blackstone Credit Facility in whole or in part, subject to early prepayment fees in an amount equal to (a) the greater of (i) the present value of the sum of (x)3.00% of the principal amount to be prepaid as if that amount would otherwise be prepaid on the first anniversary of the Closing Date, and (y) the amount of all interest which would otherwise have accrued under the Amended Credit Agreement for the period from the date of such prepayment to the first anniversary of the Closing Date, assuming an interest rate for such period equal to the sum of the applicable margin for SOFR Loans plus Adjusted Term SOFR as of the date of determination, computed using a discount rate equal to the treasury rate as of such date plus 50 basis points (the “Make Whole Premium”) and (ii)3.00% of the principal amount to be prepaid if prepayment occurs on or prior to the first anniversary of the Closing Date, (b)3.00% of principal prepaid if prepayment occurs after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date, (c)1.00% of principal prepaid if prepayment occurs after the second anniversary of the Closing Date and prior to or on the third anniversary of the Closing Date and (d)0.00% after the date that is the third anniversary of the Closing Date. In addition, subject to the terms and conditions of the Amended Credit Agreement, the Company is required to make a mandatory prepayment of the term loans upon occurrence of certain events such as upon certain assets sales, events of loss, incurrence of debt not permitted to be incurred under the Amended Credit Agreement, or a change of control of our company.

The Company’s obligations under the Blackstone Credit Facility are guaranteed by each of the Company’s subsidiaries and any future subsidiaries, subject to limited exceptions set forth in the Amended Credit Agreement, and are secured by a security interest on substantially all of the assets of the Company and the subsidiary guarantors, including intellectual property.

The Amended Credit Agreement includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein. The Amended Credit Agreement also contains a financial covenant for the benefit of the lenders, which requires the Company to have liquidity of at least $40.0 million as of the last business day of each fiscal quarter ending after the Closing Date, with liquidity defined as our unrestricted cash and cash equivalents.

As of December 31, 2025, the Company’s net proceeds from the Blackstone Credit Facility were approximately $317.7 million, after deducting the initial transaction costs payable by the Company. As of December 31, 2025, the unamortized debt issuance cost were $6.6 million. As of December 31, 2025, there were no events of default and the Company was in compliance with all covenants under the Amended Credit Agreement.

Senior convertible notes

In March 2021, the Company issued $230.0 million aggregate principal amount of senior convertible notes (the “senior convertible notes”) in a private offering. The senior convertible notes were issued pursuant to an indenture, dated March 4, 2021 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The senior convertible notes are general unsecured obligations of the Company and will mature on March 1, 2026, unless earlier converted, redeemed or repurchased by the Company. The senior convertible notes bear cash interest from March 4, 2021 at an annual rate of 2.50% payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021.

On December 17, 2024, the Company entered into separate, privately negotiated exchange agreements (the "Exchange Agreements") with certain holders (the “Holders”) of the senior convertible notes. Under the terms of the Exchange Agreements, the Holders agreed to exchange an aggregate principal amount of approximately $193.7 million of the senior convertible notes in exchange for an aggregate of 26,749,559 shares of the Company’s common stock. In addition, pursuant to the exchange agreements, the Company made an aggregate cash payment of approximately $89.2 million to the Holders for additional exchange consideration. Immediately following the exchange, approximately $36.3 million in aggregate principal amount of the senior convertible notes remained outstanding.

The senior convertible notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 1, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, par value $0.01 per share, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the senior convertible notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period in which the trading price (as defined in the Indenture) per $1,000 principal amount of the senior convertible notes for each trading day of the measurement period was less than 98%of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; (3) if the Company calls such senior convertible notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the senior convertible notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events as set forth in the Indenture. On or after December 1, 2025 untilthe close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their senior convertible notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture.

The initial conversion rate is 191.8281 shares of common stock per $1,000 principal amount of senior convertible notes (equivalent to an initial conversion price of approximately $5.21 per share of common stock). The initial conversion price of the senior convertible notes represents a premium of approximately 30% to the last reported sale price of the common stock on the Nasdaq Global Market on March 1, 2021. The conversion rate for the senior convertible notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date of the senior convertible notes or if the Company delivers a notice of redemption in respect of the senior convertible notes, the Company will, in certain circumstances, increase the conversion rate of the senior convertible notes for a holder who elects to convert its senior convertible notes in connection with such a corporate event or convert its senior convertible notes called for redemption during the related redemption period (as defined in the Indenture), as the case may be.

The Company may redeem for cash all or any portion of the senior convertible notes, at its option, on or after March 6, 2024 and prior to the 36th scheduled trading day immediately preceding the maturity date, if the last reported sale price of common stock has been at least 130% of the conversion price for the senior convertible notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the senior convertible notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company elects to redeem less than all of the outstanding senior convertible notes, at least $75.0 million aggregate principal amount of senior convertible notes must be outstanding and not subject to redemption as of the relevant redemption notice date. No sinking fund is provided for the senior convertible notes.

If the Company undergoes a fundamental change (as defined in the Indenture), then, subject to certain conditions and except as described in the Indenture, holders may require the Company to repurchase for cash all or any portion of their senior convertible notes at a fundamental change repurchase price equal to 100% of the principal amount of the senior convertible notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture includes customary covenants and sets forth certain events of default after which the senior convertible notes may be declared immediately due and payable.

If certain bankruptcy and insolvency-related events of default involving the Company (and not just any of its significant subsidiaries) occur,100% of the principal of and accrued and unpaid interest on the senior convertible notes will automatically become due and payable. If an event of default with respect to the senior convertible notes, other than certain bankruptcy and insolvency-related events of default involving the Company (and not just any of its significant subsidiaries), occurs and is continuing, the trustee, by notice to the Company, or the holders of at least 25% in principal amount of the outstanding senior convertible notes by notice to the Company and the trustee, may, and the trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest, if any, on all the senior convertible notes to be due and payable. Notwithstanding the foregoing, the Indenture provides that, to the extent the Company so elects, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will, for the first 365 days after the occurrence of such an event of default consist exclusively of the right to receive additional interest on the senior convertible notes as set forth in the Indenture.

The Indenture provides that the Company shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of the consolidated properties and assets of the Company and its subsidiaries, taken as a whole, to, another person (other than any such sale, conveyance, transfer or lease to one or more of the Company’s direct or indirect wholly owned subsidiaries), unless: (i) the resulting, surviving or transferee person (if not the Company) is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such corporation (if not the Company) expressly assumes by supplemental indenture all of the Company’s obligations under the senior convertible notes and the Indenture; and (ii) immediately after giving effect to such transaction, no default or event of default has occurred and is continuing under the Indenture.

The Company’s net proceeds from the March 2021 offering were approximately $222.7 million, after deducting the initial purchasers’ discounts and commissions and the estimated offering expenses payable by the Company. As of December 31, 2025 and December 31, 2024, the unamortized debt issuance cost was less than $0.1 million and $0.3 million, respectively.

MidCap credit facility

In August 2019, the Company entered into the MidCap credit facility and borrowed the first advance of $40.0 million (“Tranche 1”) in August 2019 and the second advance of $10.0 million (“Tranche 2”) in December 2020. In April 2021, $10.0 millionwas prepaid. During the three months ended March 31, 2024, the Company made $5.0 million in principal payments on the MidCap credit facility. On April 1, 2024, the Company exercised its option to prepay in full all outstanding indebtedness.

Tranche 1 and Tranche 2 accrued interest at an annual rate equal to the lesser of (i)8.25% and (ii) the one-month Secured Overnight Financing Rate ("SOFR") (subject to a one-month floor of 1.00%) plus 6.25%. Interest on each term loan advance was due and payable monthly in arrears. Principal on each term loan advance under Tranche 1 and Tranche 2 was payable in 24 equal monthly installments that began September 1, 2023.

In April 2024, the Company prepaid in full the remaining $28.3 million in principal and $0.2 million in accrued interest, and terminated all commitments and obligations under the MidCap credit facility that would have matured on August 1, 2025 in exchange for a payment of $31.6 million, including an exit fee of $2.8 million which is 7.00% of the initial Tranche 1 balance of $40.0 million, and a prepayment fee of $0.3 million which is 1.00% of principal prepaid. Additionally, unamortized debt discount and capitalized prepayment fees totaling $0.2 million were written off, resulting in a loss on early extinguishment of debt of $3.3 million included in loss on settlement of debt in the consolidated statements of operations. In connection with the repayment of outstanding indebtedness by the Company, all liens, mortgages and security interests in any assets or property securing the obligations under the MidCap credit facility were automatically terminated and released and the Company was automatically released from all guarantees.

Mann Group convertible note

In August 2019, the Company issued a $35.0 million note that was convertible into shares of the Company’s common stock at $2.50 per share (the “Mann Group convertible note”) as part of a restructuring of its then existing indebtedness to Mann Group. On April 2, 2024, the Company and Mann Group agreed to discharge and terminate the Mann Group convertible note.

The Mann Group convertible note accrued interest at the rate of 2.5% per year on the principal amount, payable quarterly in arrears on the first day of each calendar quarter, with a maturity date of December 31, 2025.

As of April 2, 2024, the outstanding principal balance of the Mann Group convertible note plus accrued interest was $8.9 million and was convertible at Mann Group’s option into 3,554,198 shares of common stock of the Company. The Company and Mann Group agreed to terminate all outstanding indebtedness, rights and obligations under the Mann Group convertible note in exchange for (i) the Company’s issuance to Mann Group of 1,500,000 shares of the Company’s common stock converted at the contractual rate of $2.50 per share and (ii) the Company’s payment to Mann Group of $8.9 million, which represented the market value of 2,054,198 shares of common stock of the Company on April 2, 2024 to settle the remaining principal and interest of $5.1 million, after the conversion noted in (i) above. Termination of the Mann Group convertible note resulted in a loss on early extinguishment of debt of $3.7 million included in loss on settlement of debt in the consolidated statements of operations.

11. Collaborations, Licensing and Other Arrangements

Revenue from collaborations and services were as follows (in thousands):

(1)

Amounts consist of revenue recognized for Manufacturing Services to UT for the periods presented.

The activities and ending deferred balance for collaborations and services revenue is as follows (in thousands):

United Therapeutics License Agreement — In September 2018, the Company and UT entered into an exclusive global license and collaboration agreement (the “UT License Agreement”), pursuant to which UT is responsible for global development, regulatory and commercial activities with respect to Tyvaso DPI.

Total revenue from UT was as follows (in thousands):

(1)

Amounts consist of royalties associated with the UT License Agreement. The contract asset related to the royalties receivable of $30.2 million, $24.3 million and $21.7 million as of December 31, 2025, 2024 and 2023, respectively, was included in prepaid expense and other current assets in the consolidated balance sheets and collected in the following quarter.

Pursuant to the UT License Agreement, the Company receives a 10% royalty on net sales of Tyvaso DPI. In December 2023, the Company sold a 1% royalty on future net sales of Tyvaso DPI to a royalty purchaser, with the Company retaining a 9% royalty. In August 2021, the Company and UT entered into the CSA, pursuant to which the Company is responsible for manufacturing and supplying to UT, and UT is responsible for purchasing from the Company on a cost-plus basis. In addition, UT is responsible for supplying treprostinil at its expense in quantities necessary to enable the Company to manufacture Tyvaso DPI as required by the CSA.

The activities and deliverables under the CSA and UT License Agreement resulted in distinct performance obligations which include the: (1) R&D Services and License, (2) Next-Gen R&D Services, and (3) Manufacturing Services. The revenue recognized under the CSA for manufacturing services is comprised of the sale of product to UT, recognition of previously deferred revenue, as well as reimbursements from other agreements for individual performance obligations. The portion of revenue related to each deliverable included in UT CSA revenue (in thousands) is as follows:

(1)

Sale of product included revenue related to fully reimbursable costs associated with product sales and other miscellaneous charges of $0.9 million and $9.4 million for the years ended December 31, 2025 and 2024, respectively.

There have been various amendments to the CSA since inception. As amended, the term of the CSA continues until December 31, 2031 (unless earlier terminated) and is thereafter renewed automatically for additional, successive two-year terms unless (i) UT provides notice to the Company at least 24 months in advance of such renewal that UT does not wish to renew the CSA or (ii) the Company provides notice to UT at least 48 months in advance of such renewal that the Company does not wish to renew the CSA. The Company and UT each have normal and customary termination rights, including termination for material breach that is not cured within a specific timeframe or in the event of liquidation, bankruptcy or insolvency of the other party.

During 2024, the Company also entered into additional agreements for individual performance obligations which are accounted for separately as they are distinct from Manufacturing Services and offered at a standalone selling price, for which we recognized revenue of $1.6 million and $7.1 million for the years ended December 31, 2025 and 2024, respectively. There wasno revenue recognized from additional agreements for the year ended December 31, 2023. Revenue is recognized at a point in time as services are rendered.

Also during 2024, the Company fully recognized the Next-Gen R&D Services performance obligation. The pre-production activities under the CSA, such as facility expansion services that were bundled services under the Manufacturing Services performance obligation were completed in 2024 and are being amortized over the CSA contractual term. Historically, the Company has also fully recognized revenue related to R&D Services and License performance obligation, except for royalties which is recognized on a sales-based or usage-based royalty method.

Under the terms of the UT License Agreement, UT has an option to develop additional dry powder inhalation therapies. In August 2025, UT exercised its right, which was memorialized in an amendment to the UT License Agreement (the "First Amendment"), and is treated as a separate contract for revenue recognition purposes under ASC 606. Under the First Amendment, the Company will formulate MNKD-1501, an investigational molecule using its proprietary Technosphere platform, and United Therapeutics will conduct preclinical and clinical development. Per the First Amendment, the Company received an upfront payment of $5.0 million in 2025 and is eligible to receive up to $35.0 million in development milestones, of which approximately $10.0 million is probable of being earned based on the current stage of development and achievement criteria. The remaining $30.0 million in development milestones is considered constrained due to the inherent uncertainty in the timing and likelihood of achieving the associated milestones. The Company is also eligible to receive 10% royalties on net sales of any resulting product. As of December 31, 2025, $1.0 million of the initial upfront payment was recognized as revenue, based on the input measure of progress, and the remaining $4.0 million is included within deferred revenue - short term on the Company's consolidated balance sheets.

As of December 31, 2025, deferred revenue from UT consisted of$55.3 million, of which$15.3 million was classified as current and$40.0 million was classified as long-term on the consolidated balance sheet. As of December 31, 2024, deferred revenue consisted of $62.4 million, of which $12.3 million was classified as current and $50.1 million was classified as long-term on the consolidated balance sheet. The deferred revenue balance included $52.2 million and $61.3 million of UT funded pre-production activities under the CSA, such as facility expansion services and other administrative services as of December 31, 2025 and December 31, 2024, respectively. The Company determined that the deferred revenue should be combined with the Manufacturing Services performance obligation and relates solely to a single partially satisfied performance obligation pursuant to the CSA which will be recognized using an output method based on an estimate of measurement of progress as units of product are delivered over the CSA term.

Thirona Collaboration Agreement — In June 2021, the Company and Thirona entered into a collaboration agreement to evaluate the therapeutic potential of Thirona’s compound for the treatment of fibrotic pulmonary diseases. If initial studies had proven promising, the Company would have had the rights to seek a full license to the compound for clinical development and commercialization. The parties performed their respective obligations and provided reasonable support for research, clinical development and regulatory strategy. The collaboration agreement was accounted for under ASC 808, Collaborative Agreements; however, no consideration was exchanged between the parties. The costs incurred by the Company were expensed as R&D in the consolidated statements of operations. In September 2025, Thirona initiated a cessation of operations following recent clinical trial results. The Company does not anticipate additional work to be performed or expenses to be incurred related to this agreement.

Cipla License and Distribution Agreement—In May 2018, the Company and Cipla Ltd. (“Cipla”) entered into an exclusive agreement for the marketing and distribution of Afrezza in India and the Company received a $2.2 million nonrefundable license fee. Under the terms of the agreement, Cipla is responsible for obtaining regulatory approvals to distribute Afrezza in India and for all marketing and sales activities of Afrezza in India. The Company is responsible for supplying Afrezza to Cipla, and began recording commercial product sales from this agreement in the fourth quarter of 2025. The Company is entitled to an additional regulatory milestone payment, minimum purchase commitment revenue and royalties on Afrezza sales in India once cumulative gross sales have reached a specified threshold. In December 2024, the Central Drugs Standard Control Organisation ("CDSCO") in India approved Afrezza for adults and, accordingly, the Company was entitled to the regulatory milestone payment from Cipla totaling $1.1 million, which was recognized as revenue from collaborations and services in the year ended December 31, 2024.

As of December 31, 2024, the deferred revenue balance related to the $2.2 million nonrefundable license fee was $1.2 million, of which $0.1 million was classified as current and $1.1 million was classified as long term in the consolidated balance sheets. The $1.2 million remaining balance was fully recognized in net revenue – collaborations as of December 31, 2025, since the performance obligation was deemed to have been met. The Company recorded$0.6 million of revenue from commercial product sales to Cipla in India for the year ended December 31, 2025. There wereno commercial product sales to India in 2024 or 2023.

Amphastar — In November 2024, the Company entered into a co-promotion agreement which provides the terms and conditions upon which the Company's sales force shall promote Baqsimi (glucagon) nasal powder to designated health care professionals where the Company currently promotes Afrezza. Per the terms of the co-promotion agreement, Amphastar was obligated to pay fixed quarterly payments to the Company through December 2025. Either party could terminate the agreement or suspend performance upon written notice to the other party at any time during the contract term. The co-promotion agreement may be renewed or extended only upon the mutual written agreement of both parties. In December 2025, the first amendment to the co-promotion agreement was executed which extends the term to December 31, 2026. All other terms of the agreement remain in effect and unchanged.

The Company identified a single performance obligation that the Company will satisfy over time. The total transaction price of $2.5 million is considered fixed consideration of which $2.0 million and $0.5 million was recognized as revenue from collaborations and services in our consolidated statement of operations for the years ended December 31, 2025 and 2024, respectively.

12. Fair Value of Financial Instruments

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement. The Company uses the exit price method for estimating the fair value of loans for disclosure purposes. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 — Significant inputs to the valuation model are unobservable.

The carrying amounts reported in the consolidated financial statements for cash, accounts receivable, accounts payable, and accrued expenses and other current liabilities (excluding the Milestone Rights liability) approximate their fair value due to their relatively short maturities. As the Blackstone term loan is subject to variable interest rates that are based on market rates which regularly reset, the Company believes that the carrying value of the term loan approximates its fair value. The fair value of the senior convertible notes, Milestone Rights liability, Financing liability, Liability for sale of future royalties and Contingent consideration liability are disclosed below.

Financial Liabilities —The following tables set forth the fair value of the Company’s financial instruments (Level 3 in the fair value hierarchy) (in millions):

(1)

Fair value was determined by applying a discounted cash flow analysis to the straight note with a hypothetical yield of 5.0%, volatility of 40.3% and a Monte Carlo simulation for the value of the conversion feature. A change in yield of + or –2% would result in a fair value of $39.0 million and $39.5 million, respectively.

(2)

Fair value was determined by applying a Monte Carlo simulation method for the calculation of the potential payment and the Geometric Brownian Motion forecasting model to estimate the underlying revenue. Market based inputs and other Level 3 inputs were used to forecast future revenue. The key inputs used included a risk-free rate of 3.94%, dividend yield of 0%, volatility of 43.0%, period of 7 years and credit risk of 10%.

(3)

Fair value was determined by applying a discounted cash flow analysis with a hypothetical yield of 7.0%. A change in yield of + or –2% would result in a fair value of $106.7 million and $140.6 million, respectively.

(4)

Fair value was determined by applying a discounted cash flow analysis with a hypothetical yield of 8%. A change in yield of + or –2% would result in a fair value of $148.3 million and $192.3 million, respectively.

(5)

Fair value was determined to be $23.7 million for Milestone 1 using a probability weighted expected return methodology based on the Company's estimate of probability of achievement of regulatory approval which was 85% across various timepoints and a discount rate of 10%. A change in estimate of probability and discount rate for Milestone 1 of + or –2% would result in a fair value of $24.7 million and $22.7 million, respectively. Fair value was determined to be $2.6 million for Milestone 2 using a Monte Carlo simulation method based on a 25.2% volatility and 10% discount rate. Market based inputs and other Level 3 inputs were used to forecast future revenue. A change in discount rate on Milestone 2 of + or –2% would result in a fair value of $2.6 million and $2.7 million, respectively.

(1)

Fair value was determined by applying a discounted cash flow analysis to the straight note with a hypothetical yield of 7.5%, volatility of 49.5% and a Monte Carlo simulation for the value of the conversion feature. A change in yield of + or –2% would result in a fair value of $46.2 million and $47.6 million, respectively.

(2)

Fair value was determined by applying a Monte Carlo simulation method for the calculation of the potential payment and the Geometric Brownian Motion forecasting model to estimate the underlying revenue. Market based inputs and other Level 3 inputs were used to forecast future revenue. The key inputs used included a risk-free rate of 4.5%, dividend yield of 0%, volatility of 45.0%, period of 7 years and credit risk of 11.0%.

(3)

Fair value was determined by applying a discounted cash flow analysis with a hypothetical yield of 8.0%. A change in yield of + or –2% would result in a fair value of $103.1 million and $135.2 million, respectively.

(4)

Fair value was determined by applying a discounted cash flow analysis with a hypothetical yield of 9.0%. A change in yield of + or –2% would result in a fair value of $137.9 million and $180.0 million, respectively.

Milestone Rights Liability — The fair value measurement of the Milestone Rights liability is sensitive to the discount rate and the timing of achievement of milestones. The Company utilized a Monte-Carlo Simulation Method to simulate the Afrezza net sales under a neutral framework to estimate the potential payments and the Geometric Brownian Motion forecasting model to estimate the underlying revenue. The Company then discounted the future expected payments at cost of debt with a term equal to the simulated time to payout based on cumulative sales. See Note 16 –Commitments and Contingencies.

Financing Liability — The Sale-Leaseback Transaction in November 2021 resulted in a financing liability. See Note 16 –Commitments and Contingencies.

Liability for Sale of Future Royalties —The sale of a portion of our royalty rights in December 2023 resulted in a liability for sale of future royalties. See Note 16 –Commitments and Contingencies.

Contingent Consideration Liability — The acquisition of scPharma in October 2025 resulted in a contingent consideration liability. See Note 3 –Business Combinations.

13. Common and Preferred Stock

The Company is authorized to issue 800,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.01 per share, issuable in one or more series as designated by the Company’s board of directors. No other class of capital stock is authorized. As of December 31,2025 and 2024,307,832,587 and 302,959,782 shares of common stock, respectively, were issued and outstanding andno shares of preferred stock were outstanding.

In February 2018, the Company entered into a controlled equity offering sales agreement with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”), as sales agent, pursuant to which the Company may offer and sell, from time to time, through Cantor Fitzgerald, shares of the Company’s common stock, which was amended and restated in February 2025 (as amended, the “CF Sales Agreement”). Under the Sales Agreement, Cantor Fitzgerald may sell shares by any method deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. In February 2022, the Company filed a sales agreement prospectus under a registration statement on Form S-3 covering the sale of up to $50.0 million of common stock through Cantor Fitzgerald under the CF Sales Agreement, which registration statement expired on February 24, 2025. On February 26, 2025, the Company filed a sales agreement prospectus under a registration statement on Form S-3, which became effective upon filing, covering the sale of up to $200.0 million of our common stock through Cantor Fitzgerald under the CF Sales Agreement. There wereno sales under the CF Sales Agreement during the years ended December 31, 2025 and 2024. During the year ended December 31, 2023, the Company sold 1,478,090 shares of common stock at a weighted average purchase price of $4.66 per share for gross proceeds of approximately $6.9 million pursuant to the CF Sales Agreement.

During the year ended December 31, 2023, the Company paid interest on the Mann Group convertible note by issuing 50,844 shares of common stock.

During the year ended December 31, 2023, the Company received $0.2 million from the market price stock purchase plan ("MPSPP") for 36,004 shares of common stock.

During the year ended December 31, 2024, Mann Group converted $3.8 million of principal into 1,500,000 shares of common stock. In addition, the Company paid interest by issuing Mann Group 15,285 shares of common stock.

During the year ended December 31, 2024, the Company exchanged an aggregate principal amount of approximately $116.4 million of the senior convertible notes for the issuance of 26,749,559 shares of common stock.

During the year ended December 31, 2024, the Company received $1.4 million from the MPSPP for 416,099 shares of common stock.

During the year ended December 31, 2025, the Company received $0.4 million from the MPSPP for 86,684 shares of common stock.

For shares of common stock issued pursuant to the Company's 2004 employee stock purchase plan ("ESPP"), see Note 15 –Stock Award Plans.

14. Earnings per Common Share

The following tables summarize the components of the basic and diluted EPS computations (in thousands, except per share amounts):

For the year ended December 31, 2025, diluted net income per share excluded the weighted average effect of 3.2 million shares of common stock underlying RSUs and Market RSUs,0.2 million shares of common stock underlying options and PNQs, and 7.0 million shares of common stock issuable upon conversion of the senior convertible notes, as they were antidilutive.

For the year ended December 31, 2024, diluted net income per share excluded the weighted average effect of 9.9 million shares of common stock underlying RSUs and Market RSUs,0.6 million shares of common stock underlying options and PNQs, and 7.0 million shares of common stock issuable upon conversion of the senior convertible notes, as they were antidilutive.

Common shares issuable for the year ended December 31, 2023 represent incremental shares of common stock which consist of RSUs, stock options, warrants, and shares that could be issued upon conversion of the senior convertible notes and the Mann Group convertible notes. Potentially dilutive securities outstanding which were considered antidilutive due to net losses are summarized as follows (in shares):

15. Stock Award Plans

In May 2023, the Company’s stockholders, upon recommendation of the Company’s board of directors, approved an amendment to the Company’s 2018 Equity Incentive Plan (the "2018 Plan") to increase the number of shares of common stock that may be issued under the 2018 Plan by 25,000,000 shares.

Effective upon the approval of the 2018 Plan by the Company’s stockholders in May 2018, no additional awards have been or may be granted under the 2013 Equity Incentive Plan (the "2013 Plan"). Any Prior Plans’ (as defined below) returning shares will increase the number of shares issuable under the 2018 Plan. The Prior Plans’ returning shares are shares subject to outstanding stock awards granted under the 2013 Plan or the 2004 Equity Incentive Plan (collectively, “Prior Plans”) that, from and after the effective date of the 2018 Plan, (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited, cancelled or otherwise returned to the Company because of the failure to meet a contingency or condition required for the vesting of such shares, or (iii) other than with respect to outstanding stock options and stock appreciation rights granted under the Prior Plans with an exercise or strike price of at least 100% of the fair market value of the underlying common stock on the date of grant, are reacquired or withheld (or not issued) by the Company to satisfy a tax withholding obligation in connection with a stock award.

The 2018 Plan provides for the granting of stock awards including stock options and RSU's to employees, directors and consultants.

The Company’s board of directors or its compensation committee determines eligibility, vesting schedules and criteria, and exercise prices for stock awards granted under the 2018 Plan. Options and RSU awards under the 2018 Plan, or the Prior Plans expire not more thanten years from the date of the grant and are exercisable upon vesting. Stock options that vest over time generally vest over four years. Current time-based vesting stock option grants vest and become exercisable at the rate of 25% after one year and ratably on a monthly basis over a period of 36 months thereafter. The Company also issues PNQ awards with performance conditions. For PNQs, the Company evaluates the probability that the performance conditions will be met and estimates the service period for recognition of the associated expense. RSUs with time-based vesting generally vest at a rate of 25% per year over four years with consideration satisfied by service to the Company. Certain RSUs issued to non-employee directors vest immediately upon grant, but the underlying shares of common stock will not be delivered until there is a separation of service such as resignation, retirement or death. The Company also issues Market RSUs. The grant date fair value and the effect of the market conditions are estimated using a Monte Carlo valuation.

Market RSUs issued during the year ended December 31, 2025 had a grant date fair value of $10.84 per share and will vest on July 15, 2028. The fair value of the Market RSUs was determined using a share price of $4.72, risk-free interest rate of 3.96%, volatility of 52.12%, and a dividend yield of 0%. The number of shares delivered on the vesting date is determined by the percentile ranking of MannKind total shareholder return ("TSR") over the period from July 1, 2025 until June 30, 2028 relative to the TSR of the Russell 3000 Pharmaceutical & Biotechnology Index over the same period, as follows: less than 25 th percentile=0% of target,25 th percentile=50% of target,50 th percentile=100% of target,75 th percentile=200% of target,90 th percentile or higher=300% maximum. Payout values will be interpolated between the percentile rankings above. The resulting stock-based compensation expense will be recognized over the service period regardless of whether the market conditions are achieved, as long as the service condition is satisfied.

The following table summarizes information about the Company’s stock-based award plans as of December 31,2025:

Share-based payment transactions are recognized as compensation cost based on the fair value of the instrument on the date of grant. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options. The expected term of an option granted is based on combining historical exercise data with expected weighted time outstanding. Expected weighted time outstanding is calculated by assuming the settlement of outstanding awards is at the midpoint between the remaining weighted average vesting date and the expiration date. The Company recognizes forfeitures as they occur. During the years ended December 31, 2025, 2024 and 2023, the Company recorded RSU and option-based stock compensation expense of $23.6 million, $20.6 million and $17.0 million, respectively, and ESPP compensation of $0.6 million, $0.7 million and $0.6 million, respectively.

Total stock-based compensation expense recognized in the consolidated statements of operations is included in the following categories (in thousands):

The following table summarizes information relating to stock options:

There wereno options granted in the years ended December 31,2025 and 2024. There wereno stock options that vested during the year ended December 31, 2025. Total fair value of stock options vested during the year ended December 31, 2024 and 2023 wasde minimis and $2.8 million, respectively. The total intrinsic value of options exercised during the years ended December 31,2025, 2024 and 2023 was $4.7 million, $3.5 million and $1.3 million, respectively. Intrinsic value is measured using the fair market value at the date of exercise for options exercised or as of December 31 for outstanding options, less the applicable exercise price.

Cash received from the exercise of options during the years ended December 31, 2025, 2024 and 2023 was approximately $6.4 million, $2.9 million and $1.2 million, respectively.

The Company recognized ade minimis amount of compensation costs related to PNQs for the years ended December 31, 2025 and 2024, respectively, and $0.3 million for the year ended December 31,2023. As of December 31, 2025 and 2024, there were no unrecognized compensation costs related to PNQs subject to performance conditions.

The following table summarizes information relating to RSUs:

Total fair value of RSUs vested during the years ended December 31, 2025, 2024 and 2023 was $21.8 million, $23.0 million and $20.6 million, respectively. The total grant date fair value of RSUs outstanding as of December 31,2025, 2024 and 2023 was $95.9 million, $77.6 million and $57.0 million, respectively.

As of December 31, 2025, there wasno unrecognized compensation expense related to options and PNQs and $56.5 million of unrecognized compensation expense related to RSUs, Market RSUs and Performance RSUs, which are expected to be recognized over the weighted average period of 2.12 years. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and uses that information to estimate the date at which those performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period.

Employee Stock Purchase Plan



The Company provides all employees, including executive officers, the ability to purchase common stock at a discount under the ESPP. The ESPP is designed to comply with Section 423 of the Internal Revenue Code and provides all employees with the opportunity to purchase up to $25,000 worth of common stock (based on the undiscounted fair market value at the commencement of the offering period) each year at a purchase price that is the lower of 85% of the fair market value of the common stock on either the date of purchase or the commencement of the offering period. An employee may not purchase more than 5,000 shares of common stock on any purchase date. The executives’ rights under the ESPP are the same as those of all other employees.

In May 2023, the Company’s stockholders, upon recommendation of the Company’s board of directors, approved an amendment to the Company’s ESPP to increase the number of shares of common stock authorized for issuance under the ESPP by an additional 3,000,000 shares.

The Company issued 0.5 million,0.5 million and 0.5 million shares of common stock pursuant to the ESPP for the years ended December 31,2025, 2024 and 2023, respectively. There were approximately 1.9 million shares of common stock available for issuance under the ESPP as of December 31,2025.

16. Commitments and Contingencies

Guarantees and Indemnifications— In the ordinary course of its business, the Company makes certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal and therefore has not recorded any liability for these indemnities in the consolidated balance sheets. The Company accrues for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and the amount can be reasonably estimated. No such losses have been recorded to date.

Litigation— The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. The Company does not anticipate the final disposition of any matters will have a material adverse effect on the results of operations, financial position, or cash flows of the Company. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s policy is to accrue for legal expenses in connection with legal proceedings and claims as they are incurred.

Contingencies– Milestone Rights— In July 2013, the Company entered into the Milestone Rights Agreement with the Original Milestone Purchasers, pursuant to which the Company granted the Milestone Rights to receive payments up to $90.0 million upon the occurrence of specified strategic and sales milestones, of which$45.0 million remains payable to the Milestone Purchasers as of December 31, 2025.

The Milestone Rights Agreement includes customary representations and warranties and covenants by the Company, including restrictions on transfers of intellectual property related to Afrezza. The Milestone Rights are subject to acceleration in the event the Company transfers its intellectual property related to Afrezza in violation of the terms of such agreement.

During the years ended December 31, 2025 and 2024, the Company achieved an Afrezza net sales milestone as specified by the Milestone Rights, and recognized approximately $0.6 million and $0.8 million, respectively, of the $5.0 million payment as a reduction to the Milestone Rights liability on our consolidated balance sheets, which represents the fair value as determined in 2013 (the most recent measurement date).

As of December 31, 2025, the remaining Milestone Rights liability balance was$2.5 million and consisted of$0.5 million of current liability, which was presented as accrued expenses and other current liabilities, and$2.0 million of long-term liability, which was presented as milestone liabilities in our consolidated balance sheets. As of December 31, 2024, the remaining Milestone Rights liability balance was$3.2 million and consisted of$0.7 million of current liability, which was presented as accrued expenses and other current liabilities, and$2.5 million of long-term liability, which was presented as milestone liabilities in the consolidated balance sheets. The value of the Milestone Rights liability was based on initial fair value estimates calculated using the income approach and reduced by milestone achievement payments made.

Loss Contingencies – Returns Reserve for Acquired Product —During the year ended December 31, 2024, the Company reassessed its previously-determined estimate for product returns associated with sales of V-Go that pre-date the Company's acquisition of the product and recorded an additional$1.4 million, which was recorded in accrued expenses and other current liabilities in the consolidated balance sheet. The return accrual is being reduced as product returns are received. Related losses on estimated returns of acquired product were recorded in selling, general and administrative expenses in the consolidated statements of operations.

Liability for Sale of Future Royalties—In December 2023, the Company executed a Purchase and Sale Agreement (the “PSA”) with Sagard Healthcare Partners Funding Borrower SPE 2, LP (“Sagard”). Pursuant to the PSA, Sagard paid the Company $150.0 million (the “Upfront Proceeds”), net of $0.4 million in reimbursements of Sagard’s fees and expenses (the “Reimbursements”), for the purchase of a 1% royalty on future net sales of Tyvaso DPI by UT under the terms of the UT License Agreement (the “Sagard Royalty”). Sagard will also pay the Company a milestone of $50.0 million if net sales of Tyvaso DPI meet or exceed $1.9 billion for any 12 consecutive months on or prior to December 31, 2026 (“Net Sales Threshold A”), or a milestone of $45.0 million if net Sales Threshold A is not met and net sales of Tyvaso DPI meet or exceed $2.3 billion for any 12 consecutive months on or prior to September 30, 2027 (“Net Sales Threshold B”), resulting in a purchase price not to exceed $200.0 million (the “Purchase Price”). If Net Sales Thresholds A and B are not met and net sales of Tyvaso DPI meet or exceed $3.5 billion for any calendar year after September 30, 2027, no royalties will be payable to Sagard for the remainder of that year. The PSA applies to net sales of Tyvaso DPI generated during October 1, 2023 through December 31, 2042 (the “Termination Date”) and will automatically terminate upon payment of the final royalty owed to Sagard thereafter. Upon the Termination Date, ownership of the Sagard Royalty will revert to the Company.

Given the Company’s continuing involvement with the generation of Tyvaso DPI revenue under the UT License Agreement and CSA, which includes the Company’s supply and manufacture of Tyvaso DPI, and the Company’s retention and associated defense and maintenance obligations of the intellectual property required in the manufacture of Tyvaso DPI, the Upfront Proceeds were recorded as a liability for sale of future royalties (the “Royalty Liability”) on the consolidated balance sheets, and any proceeds from future milestones will be added to the Royalty Liability balance upon receipt. Although the Company is not obligated to repay any portion of the Purchase Price to Sagard, the Royalty Liability under the PSA is secured by a security interest granted to Sagard in the underlying 1% royalty rights and any proceeds therefrom. As a result of the PSA, transaction costs totaling $4.4 million (including the Reimbursements) are reported net of the Royalty Liability balance and amortized to interest expense in the consolidated statements of operations over the life of the PSA using the effective interest method. Unamortized transaction costs totaled $3.9 million and $4.1 million at December 31,2025 and 2024, respectively.

The Company will continue to recognize the full 10% of future royalty revenues in its consolidated statements of operations, with the Sagard Royalty being non-cash revenue for the Company. As royalty payments are earned by and remitted to Sagard, the balance of the Royalty Liability will be effectively repaid as it is amortized over the life of the PSA. To amortize the Royalty Liability, the Company estimated the total amount of future royalty payments to be made to Sagard over the life of the PSA. The excess of those future estimated royalty payments over the Purchase Price proceeds received is recognized in the consolidated statements of operations as non-cash interest expense over the life of the PSA utilizing an imputed effective interest rate. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate may vary during the term of the agreement depending on a number of factors, including the amount and timing of forecasted royalty payments which affects the timing and ultimate amount of reductions to the liability. The Company will evaluate the effective interest rate periodically based on its forecasted royalty payments utilizing the prospective method.

The Company periodically assesses the forecasted royalty payments using a combination of historical results, internal projections and forecasts from external sources. To the extent such payments, or the timing of such payments, are materially different than original estimates, the Company will prospectively adjust the effective interest rate and amortization of the Royalty Liability.

The following table shows the activity within the Royalty Liability account as well as the effective interest rate (dollars in thousands):

Sale-Leaseback Transaction— In November 2021, the Company sold certain land, building and improvements located in Danbury, CT (the "Property") to an affiliate of Creative Manufacturing Properties (the "Purchaser") for a sales price of $102.3 million, subject to terms and the conditions contained in a purchase and sale agreement.

Effective with the closing of the Sale-Leaseback Transaction, the Company and the Purchaser entered into a lease agreement (the “Lease”), pursuant to which the Company leased the Property from the Purchaser for an initial term of 20 years, with four renewal options of five years each. The total annual rent under the Lease starts at approximately $9.5 million per year, subject to a 50% rent abatement during the first year of the Lease, and will increase annually by (i) 2.5% in the second through fifth year of the Lease and (ii) 3% in the sixth and each subsequent year of the Lease, including any renewal term, utilizing a weighted average discount rate of 9.0%. The Company is responsible for payment of operating expenses, property taxes and insurance for the Property. The Purchaser will hold a security deposit of $2.0 million during the Lease term. Pursuant to the terms of the Lease, the Company has four options to repurchase the Property, in 2026, 2031, 2036 and 2041, for the greater of (i) $102.3 million or (ii) the fair market value of the Property.

Effective with the closing of the Sale-Leaseback Transaction, the Company and the Purchaser also entered into a right of first refusal agreement (the “ROFR”), pursuant to which the Company has a right to re-purchase the Property from the Purchaser in accordance with terms and conditions set forth in the ROFR. Specifically, if the Purchaser receives, and is willing to accept, a bona fide purchase offer for the Property from a third-party purchaser, the Company has certain rights of first refusal to purchase the Property on the same material terms as proposed in such bona fide purchase offer.

As of December 31, 2025, the related financing liability was$103.4 million, which was recognized in the Company’s consolidated balance sheet and of which$93.1 million was long-term and$10.3 million was current. As of December 31, 2024, the related financing liability was$103.9 million, of which$93.9 million was long-term and$10.1 million was current.

Financing liability information was as follows (dollars in thousands):

The Company's remaining financing liability payments were as follows (in thousands):

Commitments— In July 2014, the Company entered into the Insulin Supply Agreement pursuant to which Amphastar manufactures for and supplies to the Company certain quantities of recombinant human insulin for use in Afrezza. Under the terms of the Insulin Supply Agreement, Amphastar is responsible for manufacturing the insulin in accordance with the Company’s specifications and agreed-upon quality standards.

In December 2023, the Company and Amphastar amended the Insulin Supply Agreement to extend the term, restructure the annual purchase commitments and include a capacity fee for certain future periods. The Company's remaining purchase commitments and estimated capacity fee liability as of December 31,2025 were as follows:

(1)

During the year ended December 31, 2025, the Company incurred a capacity fee of €1.5 million, or $1.8 million which was recognized as cost of goods sold for commercial sales in our consolidated statement of operations. For each quarter that the Company decides to delay purchases beyond the first quarter of 2026, the Company is subject to an additional capacity fee of €750,000 per quarter.

Pursuant to the amendment, the term of the Insulin Supply Agreement expires on the later of December 31, 2034 or until the completion of the total remaining purchase commitment quantities, unless terminated earlier, and can be renewed for additional, successivetwo-year terms upon 12 months’ written notice given prior to the end of the initial term or any additional two-year term. The Company and Amphastar each have normal and customary termination rights, including termination for a material breach that is not cured within a specific time frame or in the event of liquidation, bankruptcy or insolvency of the other party. In addition, the Company may terminate the Insulin Supply Agreement upon two years’ prior written notice to Amphastar without cause or upon 30 days’ prior written notice to Amphastar if a controlling regulatory authority withdraws approval for Afrezza, provided, however, in the event of a termination pursuant to either of the latter two scenarios, the provisions of the Insulin Supply Agreement require the Company to pay the full amount of all unpaid purchase commitments due over the initial term within 60 calendar days of the effective date of such termination.

The Company periodically reviews the terms of the long-term Insulin Supply Agreement and assesses the need for any accrual for estimated losses, such as lower-of-cost or net-realizable-value that will not be recovered by future product sales. The recognized loss on purchase commitments of$66.0 million and$58.2 million is included in our consolidated balance sheets as of December 31, 2025 and 2024, respectively, and is reduced as inventory items are received or such liability is extinguished.

As a result of the increase in future cash outflows for the excess capacity fees and extended term included in the amendment of the Insulin Supply Agreement, the Company analyzed the need for additional estimated losses and concluded that an increase in the recognized loss on purchase commitments was not required as the net realizable value of inventory resulting from the purchase commitment was in excess of the carrying value. Increases in costs associated with the amendment will be recognized through inventory as incurred.

Vehicle Leases— During the second quarter of 2018, the Company entered into a master lease agreement with Enterprise Fleet Management Inc. The monthly payment inclusive of maintenance fees, insurance and taxes is approximately $0.1 million. The lease expense is included in selling, general and administrative expenses in the consolidated statements of operations.

Office Leases — In May 2017, the Company executed an office lease with Russell Ranch Road II LLC for the Company’s corporate offices in Westlake Village, California, which was renewed in April 2022. Pursuant to the renewal, the monthly lease payments of $79,543 began in February 2023 and are subject to 3% annual increases, plus the estimated cost of maintaining the property and common areas by the landlord, and are further subject to a six-month base rent concession beginning February 2023. The Company was also entitled to a one-time allowance up to $0.9 million as reimbursement for tenant improvements or the purchase of furniture, fixtures or equipment. Of the $0.9 million allowance, an amount up to $0.7 million may be applied as an additional base rent concession. The Company has no further right to extend the lease term beyond July 31, 2028.

In May 2022, the Company assumed certain leased real property (the “Marlborough Lease”) in connection with the V-Go acquisition. The Marlborough Lease pertains to certain premises in a building located in Marlborough, Massachusetts. The monthly payments of $28,895 began in June 2022, subject to approximately 3% annual increases through February 28, 2026.

The Company also acquired rights to a manufacturing service agreement where V-Go is manufactured using Company-owned equipment located at the manufacturing facility. The Company determined that this arrangement results in an embedded lease which granted the Company exclusive use of space within the manufacturing facility. The Company assessed the embedded lease cost to be $14,370 per month through February 28, 2026.

In July 2024, the Company assumed certain leased real property (the "Bedford Lease") in connection with the Pulmatrix Transaction. The Bedford Lease pertains to certain premises in a building located in Bedford, Massachusetts. The monthly base rent payments of $101,282 are subject to 3% annual increases, plus the estimated cost of maintaining the property and common areas by the landlord. The Company also assumed from Pulmatrix a $0.7 million obligation to repay landlord-funded tenant improvements at a rate of $6,000 per month through the end of the lease term in November 2033. The Company has the right to extend the lease term for an additional five-year term.

In October 2025, the Company assumed a 9,342 square foot facility in Burlington, Massachusetts in connection with the merger with scPharma which was previously entered into as a sublease in August 2023 and extends through August 2029. The monthly lease payments are $28,805 and are subject to fixed annual increases of $779.

Lease information was as follows (dollars in thousands):

(1)

Operating right-of-use assets related to vehicles, offices and the manufacturing facility for V-Go are included in other assets in the consolidated balance sheets.

(2)

Operating lease liability–current is included in accrued expenses and other current liabilities in the consolidated balance sheets.

The Company's future minimum office and vehicle lease payments were as follows (in thousands):

17. Employee Benefit Plans

The Company administers a defined contribution 401(k) savings retirement plan for its employees. The Company may make discretionary matching contributions. For the years ended December 31, 2025, 2024 and 2023, the Company matched each participant’s deferral at the rate of 50% of each participant’s deferral up to the first 10% of compensation. Participants hired after March 31, 2021 became vested in Company contributions at 100% after two years of service. Participants are vested in Company contributions at 50% after one year of service and are 100% vested after two years of service.

The Company’s total discretionary matching contributions were $2.6 million, $2.4 million and $2.9 million for the years ended December 31,2025, 2024 and 2023, respectively.

18. Income Taxes

Income (loss) from continuing operations before provision for income taxes for the Company’s domestic and international operations was as follows (in thousands):

As of December 31, 2025, the Company has concluded that it is more likely than not that the Company may not realize the benefit of its deferred tax assets due to its history of losses. Accordingly, the net deferred tax assets have been fully reserved. The provision for income taxes consists of the following (in thousands):

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows(dollars in thousands):

(1)

During the year ended December 31, 2025, the state and local jurisdiction of Minnesota comprised the majority (greater than 50%) of the tax effect in this category.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:

The amounts of cash income taxes paid by the Company were as follows (in thousands):

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when uncertainty exists as to whether all or a portion of the net deferred tax assets will be realized. Components of the net deferred tax asset as of December 31, 2025 and 2024 are approximately as follows (in thousands):

As of December 31, 2025 and 2024, management assessed the realizability of deferred tax assets. Management evaluated the need for an amount of any valuation allowance for deferred tax assets on a jurisdictional basis. This evaluation utilizes the framework contained in ASC 740, Income Taxes, wherein management analyzes all positive and negative evidence available at the balance sheet date to determine whether all or some portion of our deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more likely than not (a probability level of more than 50%) that they will not be realized.

In concluding on the evaluation, management placed significant emphasis on guidance in ASC 740. As of December 31, 2024 and prior to the acquisition of scPharma, the Company maintained a full valuation allowance on its U.S. deferred tax assets due to cumulative losses. Upon the acquisition of scPharma in October 2025, it recognized $323.6 million of deferred tax liabilities (primarily on differences between the fair value and tax basis of scPharma's identifiable intangible assets). These deferred tax liabilities will generate future taxable income, which strengthened the Company's evidence for the realizability of a portion of its existing NOL and credit carryforwards. Accordingly, the Company reversed $5.0 million of its valuation allowance, resulting in a $5.0 million income tax benefit. After this release, its remaining valuation allowance is $708.9 million, related to net operating loss carryforwards and research and development credits. During the year ended December 31, 2025 the valuation allowance increased by $14.5 million and during the year ended December 31, 2024 the valuation allowance decreased by $3.9 million.

A reconciliation of beginning and ending amounts of the Company's valuation allowance for deferred tax assets was as follows (in thousands):

As of December 31, 2025, the Company had federal and state net operating loss carryforwards of approximately $2.2 billion and $1.5 billion available, respectively, to reduce future taxable income. $520.5 million of the federal losses do not expire and the remaining federal losses have started expiring, beginning in 2026 through various future dates.

Pursuant to IRC Sections 382 and 383, annual use of the Company’s federal and certain state net operating losses and research and development credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50% occurs within a three-year period. As a result of the Company's initial public offering, an ownership change within the meaning of IRC Section 382 occurred in August 2004. As a result, federal net operating loss and credit carryforwards of approximately $105.8 million are subject to an annual use limitation of approximately $13.0 million. The annual limitation is cumulative and therefore, if not fully utilized in a year, can be utilized in future years in addition to the Section 382 limitation for those years. All of these attributes are now available for use for the tax year ended December 31, 2024 under Section 382. The Company is in the process of completing a Section 382 analysis beginning from the date of our initial public offering through December 31, 2025, to determine whether additional limitations may be placed on the net operating loss carryforwards and other tax attributes and does not anticipate any additional changes in ownership that meet Section 382 study ownership change threshold. There is a risk that changes in ownership may occur in tax years after December 31, 2025. If a change in ownership were to occur, our net operating loss carryforwards and other tax attributes could be further limited or restricted. If limited, 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, related to the Company’s operations in the U.S. will not impact the Company’s effective tax rate.

As of December 31, 2025, the Company had $59.5 million of U.S. federal research and development credits which expire beginning in 2026, and $24.5 million of state research and development credits.

The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business, the Company is subject to examination by taxing authorities throughout the country. These audits could include examining the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state, and local tax laws. The Company's tax years since 2022 and 2021 remain subject to examination by federal and state tax authorities.

A reconciliation of beginning and ending amounts of unrecognized tax benefits was as follows (in thousands):

The Company has assessed its position with regards to uncertainty in tax positions and has not recognized a liability for unrecognized tax benefits. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2025, 2024 and 2023, the Company didnot recognize any interest and/or penalties.

In June 2024, California enacted Senate Bills 167 and 175 ("SB 167" and "SB 175"). SB 167 suspends the use of net operating losses ("NOLs") and limits the use of business credits to $5.0 million for the 2024-2026 tax years. Under SB 175, the NOL suspension and credit limitations will not apply for the 2025 and 2026 tax years if certain budget goals are met. Although the Company does not expect this legislation to have a material effect on its results of operations or cash flows, management continues to evaluate any potential impact.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States, which includes a new Internal Revenue Code ("IRC") Section 174A. Under Section 174A, commencing with tax years beginning after December 31, 2024, domestic research or experimental expenditures may be deducted in the current period rather than capitalized and amortized over multiple years, as previously required under IRC Section 174. As a result of this legislation, we are deducting our domestic Section 174A expenditures beginning in our 2025 taxable year. OBBBA does not have a material impact on our effective tax rate, financial condition, or results of operations in 2025.