Eloxx Pharmaceuticals, Inc.

1. Nature of the Business

Eloxx Pharmaceuticals, Inc., together with its subsidiaries (collectively “Eloxx” or the “Company”) is a clinical-stage biopharmaceutical company developing novel, small-molecule product candidates designed to modulate the ribosome and promote readthrough of premature stop codons induced by nonsense mutations (“NMs”) to enable the production of full-length proteins. Targeting ribosome subunits provides a therapeutic approach to addressing a number of genetic diseases. According to the Human Gene Mutation Database, NMs account for approximately 10% to 12% of patients with a given genetic disease. There are over 7,000 inherited genetic diseases that collectively affect 350 million people worldwide. The Company’s immediate focus is to advance the clinical development of its product candidate, exaluren, for the treatment of rare kidney diseases. The Company has also exclusively licensed its product candidate, ZKN-013, to Almirall, S.A. (“Almirall”), who is developing it for the treatment of rare skin diseases.

The Company was previously headquartered in Watertown, Massachusetts, with additional operations in Israel and Australia. The Company is currently a remotely headquartered company.

Liquidity and Going Concern

The Company has a history of net losses since inception, and negative cash flows from operating activities during the three months ended March 31, 2026, and as of March 31, 2026, had an accumulated deficit of $304.3 million. The Company expects to continue to incur net losses and negative cash flows from its operations for the foreseeable future. The Company has not generated revenue from the sale of any product or service, other than the license and service revenue generated from its March 2024 exclusive license agreement covering the Company's asset ZKN-013 (the "Almirall License Agreement") with Almirall, and does not expect to generate significant revenue unless it obtains marketing approval for and commercializes one or more of its product candidates currently in development. The Company's performance obligation under the Almirall License Agreement ended in November 2024, although it remains eligible to receive additional payments throughout the potential development phases, including development and sales milestones of up to approximately $470.0 million and tiered royalties based on any potential future global sales. Successful transition to profitable operations is dependent upon achieving a level of revenue adequate to support the Company’s cost structure.

The Company has financed its operations primarily through the sale of equity, license and collaboration agreements, debt securities and, to a lesser extent, grants. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital to fund its operations. Refer to the Company's Annual Report on Form 10-K for the fiscal years ended December 31, 2025, 2024, and 2023, filed with the U.S. Securities and Exchange Commission (the "SEC") on March 16, 2026 (the "2025 Annual Report") for additional information on the Company's recent financing activity.

The Company believes that its cash and cash equivalents of $6.4 million as of March 31, 2026 will not be sufficient to maintain its current and planned operations for at least the next twelve months following the filing of this Quarterly Report on Form 10-Q. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. However, based on the Company’s current working capital, anticipated operating expenses and net losses and the uncertainties surrounding its ability to raise additional capital as needed, as discussed below, the Company believes that these conditions, in aggregate, raise substantial doubt about its ability to continue as a going concern for one year after the date these unaudited condensed consolidated financial statements are issued.

Management intends to fund future operations through private or public debt or equity financing transactions and may seek additional capital through arrangements with strategic partners or from other sources, including licensing arrangements. The availability of sufficient funding to alleviate the conditions that raise substantial doubt is not within management’s control and cannot be assessed as being probable of occurring. If the Company is unable to obtain adequate financing, it will evaluate options which may include curtailing expenses contemplated by its current operating plan, and it may be required to delay, limit, reduce or terminate its product development efforts or grant rights to develop and market product candidates that it would otherwise prefer to develop and market itself, which may have a material adverse effect on the Company’s operations and future prospects.

2. Summary of Significant Accounting Policies

The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).

Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted, as permitted by such rules and regulations. These unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the interim periods ended March 31, 2026 and 2025.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2025, 2024, and 2023, and the notes thereto, which are included in the 2025 Annual Report.

The significant accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with those described in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2025, 2024, and 2023, and the notes thereto, in the Company’s 2025 Annual Report. During the three months ended March 31, 2026, the Company adopted the following significant accounting policy related to deferred offering costs:

Deferred Offering Costs

In accordance with U.S. GAAP, the Company capitalizes deferred offering costs as an asset when they are directly attributable to a planned equity issuance and are expected to provide future economic benefit. These costs typically include legal, accounting, underwriting, and registration fees. Deferred offering costs for equity offerings are recorded in an asset account and, upon completion of the offering, are reclassified as a reduction of additional paid-in capital. If the offering is abandoned, the deferred offering costs are expensed immediately in the statement of operations.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Topic 220-40), which addresses the disaggregation of income statement expenses. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

Although the FASB has issued several ASUs for which adoption dates are pending, the Company does not expect any to have a material impact on its consolidated financial statements.

3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

As of March 31, 2026 and December 31, 2025, the Company recorded $0.8 million andzero, respectively, in deferred offering costs. The deferred offering costs as of March 31, 2026 related to the Company’s upcoming Form S-1 filing.

4. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

5. Debt

On February 26, 2026, SD MF 4, LLC, a Delaware limited liability company ("Domicilium"), exchanged with the Company the remaining $1.0 million of the Company's outstanding obligations under the Loan and Security Agreement with Hercules Capital, Inc. ("Hercules"), dated as of September 30, 2021 (the "Hercules Loan Agreement"), as amended, in connection with the Coastlands Third Tranche Closing, in return for a pre-funded warrant to purchase up to 2,040,816 shares of Company common stockat an exercise price of $0.01 per share, based on a conversion price of $0.49 per share of underlying common stock. In addition, Domicilium agreed to waive any and all additional accrued and unpaid interest related to the remaining $1.0 million, which was less than $0.1 million as of February 26, 2026. As of February 26, 2026, the Company had no remaining outstanding debt obligations.

During the three months ended March 31, 2025, the Company entered into a non-interest-bearing bridge loan with Domicilium for $0.4 million. The Company recorded interest expense of less than $0.1 million representing imputed interest for the non-interest-bearing bridge loan during the three months ended March 31, 2025. The imputed interest of 13.75% was calculated using the sum of 6.25% plus the prime rate, as published in The Wall Street Journal. In addition, during the three months ended March 31, 2025, the Company repaid $0.3 million for the bridge loans that had been entered into with Domicilium in December 2024, including accrued interest, repaid $0.5 million related to Development and Launch Milestone Payments, in accordance with the terms of the Royalty and Revenue Sharing Agreement, as amended on March 2, 2026 (the “Royalty Agreement”) with Domicilium, and repaid $0.5 million in outstanding debt obligations to Hercules under the Hercules Loan Agreement. Refer to Note 6, "License Agreement, Advances From Collaboration Partners, Legal, and Other Contingencies" for additional information on the Royalty Agreement.

As of March 31, 2026 and December 31, 2025, the carrying value of the Company's debt waszero and $1.0 million, respectively. Interest expense relating to the Company's debt for the three months ended March 31, 2026 and 2025 was less than $0.1 million and $0.5 million, respectively.

6. License Agreement, Advances From Collaboration Partners, Legal and Other Contingencies

Almirall License Agreement and License and Service Revenue

On March 11, 2024, the Company entered into the Almirall License Agreement with Almirall. Under the terms of the Almirall License Agreement, Almirall obtained global rights to develop and commercialize ZKN-013 for the potential treatment of rare dermatological and other diseases associated with nonsense mutations.

In March 2025, Almirall informed the Company of its decision to not exercise the option for continued research and development services under the Almirall License Agreement, as permitted within the Almirall License Agreement, thereby relieving the Company of its remaining responsibilities under the Almirall License Agreement. The Company remains eligible to receive additional payments throughout the potential development phases, including development and sales milestones of up to approximately $470.0 million and tiered royalties based on any potential future global sales.

During the three months ended March 31, 2026 and 2025, the Company recordedno license and service revenue from the Almirall License Agreement.

Cystic Fibrosis Foundation

Asof March 31, 2026 and December 31, 2025, the Company recorded advances from collaboration partners in the accompanying unaudited condensed consolidated financial statements related to funding awards from the Cystic Fibrosis

Foundation(“CFF”). The Company will be required to repay amounts received from the CFF in certain circumstances, including upon the successful commercialization of exaluren or any derivative products. During the three months ended March 31, 2026 and 2025, the Company receivedno funds from the CFF and made no payments to the CFF. In October 2025, the Company entered into an agreement with the CFF to amend a funding award (the “2025 CFF Amendment”), which reduced the royalty rate to less thanone percent in exchange for a payment by the Company to CFF of $0.3 million. The Company is accounting for the $0.3 million payment as a debt discount, which is being amortized over a ten-year period. As of both March 31, 2026 and December 31, 2025, the unamortized debt discount was $0.3 million.

Prior to October 2025, the funding awards included embedded derivatives arising from provisions that, upon the occurrence of a change of control or sale or license of funded assets (each a disposition event), the Company would be required to make payments to the CFF. The 2025 CFF Amendment terminated this requirement. With the termination of the embedded derivative-related terms under the 2025 CFF Amendment, the value of the related embedded derivatives waszero as of March 31, 2026 and December 31, 2025.

Royalty Commitments to the IIA

To date, the Company has received research and development grants from the Israel Innovation Authority (the “IIA”) totaling $2.6 million. No grants were received for the three months ended March 31, 2026 and 2025.

Under the research and development agreements with the IIA and pursuant to applicable law, the Company is required to pay royalties at a low single-digit percentage on sales to end customers of product candidates developed with funds provided by the IIA, up to an amount equal to 100% of the IIA research and development grants received, plus interest. If the Company does not generate sales of product candidates developed with funds provided by the IIA, the Company is not obligated to pay royalties or repay the grants.

As of March 31, 2026, the Company has not commenced the payment obligation of the royalties and has a contingent obligation with respect to royalty-bearing participation received or accrued amounting to $2.8 million, including accrued interest.

Research and License Agreement with Technion Research and Development Foundation Ltd. ("TRDF")

On August 29, 2013, the Company entered into the Research and License Agreement (the "Technion Agreement") with Technion Research and Development Foundation Ltd. ("TRDF"), which was further amended and supplemented to reflect, among other things, the assignment of patents and extension of research periods, with respect to certain technology relating to aminoglycosides and the redesign of aminoglycosides for the treatment of human genetic diseases caused by premature stop mutations and further results of the research of the technology, in order to develop and commercialize products based on such technology. Under the Technion Agreement, TRDF is obligated to provide the Company with research services for an estimated annual payment of $0.1 million, the precise amount to be agreed by the parties prior to the beginning of each year of the research period. During the three months ended March 31, 2026 and 2025, no expenses were incurred. As of March 31, 2026 and December 31, 2025, no amounts were recorded in accrued expenses.

In addition, TRDF granted the Company a license to use, market, sell or sub-license the rights of the product developed under the TRDF research results (the “Licensed Product”), as fully defined in the Technion Agreement, for the following considerations: (i) aggregate milestone payments up to total consideration of $6.5 million; (ii) certain royalties in the low- to mid-single-digit percentage of net sales; and (iii) a mid-single to low-twenties percentage of any non-royalty sub-license income received by the Company from a sub-licensed entity. The Company made no milestone or royalty payments to the TRDF during the three months ended March 31, 2026 and 2025.

License Agreement between Zikani and President and Fellows of Harvard College ("Harvard")

On February 10, 2015, Zikani entered into an agreement with the President and Fellows of Harvard to license certain patent rights owned by Harvard. This license agreement was subsequently amended and restated on March 31, 2020 and further amended on July 17, 2024 (the "Harvard Agreement"). Under the Harvard Agreement, Harvard is entitled to receive clinical and regulatory milestone payments totaling upto $3.6 million in the aggregate per licensed product approved in the United States, European Union, and Japan. The Company is also obligated to make additional royalty payments to Harvard upon the occurrence of certain sales milestones per licensed product up to a mid-single digit royalty percentage, tiered non-royalty sublicense income payments of mid-single digit to low double-tens percentage of any sublicense income, and pay Harvard a percentage of income associated with transferring a priority review voucher from the FDA.

Almirall has agreed to assume responsibility for the payment and performance obligations under the Harvard Agreement as sublicensee which ultimately depends on Almirall’s development and commercialization of ZKN-013.

In addition to the license agreement, the Company also reimburses Harvard for certain costs related to the maintenance and further development of patents developed through the founding stockholder's research. During the three months ended March 31, 2026 and 2025, the Company incurred less than $0.1 million of patent expenses due to Harvard.

Royalty and Revenue Sharing Agreement

On July 10, 2024, as a condition of Domicilium’s entry into the sixth Hercules Amendment (the "Sixth Hercules Amendment") and in consideration of additional borrowings of $3.2 million from Domicilium, the borrowers and the Company entered into the Royalty Agreement. Capitalized terms under this heading “Royalty and Revenue Sharing Agreement” not otherwise defined herein have the definitions ascribed to them in the Royalty Agreement.

Under the Royalty Agreement, the Company agreed to pay to Domicilium an amount equal to (i) (x) low-thirties percentage of the Development and Launch Milestone Payments for the several next occurring Development and Launch Milestone Events (as defined in the Almirall License Agreement), minus (y) the amounts required to be paid by the Company pursuant to certain vendors as defined in the Royalty Agreement, and (ii) (x) mid-twenties percentage of (1) each subsequent Development and Launch Milestone Payment plus (2) any Priority Review Voucher Income (as defined in the Almirall License Agreement) realized by Eloxx, less (y) any amount of such Development and Launch Milestone Payments which are due to Harvard University pursuant to the Harvard License Agreement, provided the aggregate amount paid to Domicilium shall not exceed an amount in the mid-double-digit millions. Each Milestone Sharing Payment shall be applied as a repayment or prepayment, as applicable, of the Loans (as defined in the Amended Loan Agreement) (including all interest and fees thereon) owed to Domicilium, if any such Loans remain outstanding. On January 3, 2025, the Company paid Domicilium $0.5 million related to Development and Launch Milestone Payments, in accordance with the terms of the Royalty Agreement, which was applied as a repayment of the Loans.

The Royalty Agreement provides for an amount based on a percentage of the aggregate of (without duplication) the net sales, royalties and any other income or revenue realized by the Company solely related to or arising from the exaluren compound or any exaluren product, calculated in accordance with U.S. GAAP (collectively, the “exaluren Revenue”) (the “exaluren Revenue-Based Payment”). The exaluren Revenue-Based Payment with respect to each fiscal quarter shall be less than one percent of exaluren Revenue during the applicable fiscal quarter. Commencing on the ZKN-013 royalty commencement date, the Company promises to pay to Domicilium an amount based on a percentage of the aggregate of (without duplication) the net sales, royalties and any other income or revenue realized by the Company solely related to or arising from the ZKN-013 compound, calculated in accordance with U.S. GAAP (collectively, the “ZKN-013 Revenue”). The ZKN-013 revenue-based payment with respect to each fiscal quarter shall be less than one percent of ZKN-013 Revenue during the applicable fiscal quarter. The value of the royalty liability for the sales of future revenues was determined to be zero at issuance, at December 31, 2025, and at March 31, 2026, as royalty payments were considered to not be probable.

Contingencies

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. The Company is currently unaware of any material pending legal proceedings to which it is a party or of which its property is the subject. However, the Company may at times in the future become involved in litigation in the ordinary course of business, which may include actions related to or based on its intellectual property and its use, customer claims, employment practices and employee complaints and other events arising out of its operations. When appropriate in management’s estimation, the Company will record adequate reserves in its financial statements for pending litigation. Litigation is subject to inherent uncertainties, and an adverse result in any such matters could adversely impact its reputation, operations, and its financial operating results or overall financial condition.

The Company accounts for contingent liabilities in accordance with ASC Topic 450, “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of March 31, 2026 and December 31, 2025, the Company was not a party to any litigation that is reasonably possible to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. Legal costs incurred in connection with loss contingencies are expensed as incurred.

7. Stockholders’ Deficit

As of March 31, 2026, the Company had 500,000,000 shares authorized of common stock, $0.01 par value, of which 5,072,935 shares were outstanding and 5,000,000 shares authorized of preferred stock, $0.01 par value, of which no shares were issued or outstanding.

2026 Equity Issuance to Coastlands, Exchange of Outstanding Debt for Equity to Domicilium, and Equity Issuance to Domicilium

On February 20, 2026, the securities purchase agreement (the "Coastlands Securities Purchase Agreement") the Company had entered into with Coastlands Capital Partners LP ("Coastlands") on August 20, 2025, as amended on September 25, 2025 and December 11, 2025, was amended, and, on February 26, 2026, the Company received $5.0 million from Coastlands in return for a pre-funded warrant to purchase up to 10,204,081 shares of its common stock at an exercise price of $0.01 per share, based on a purchase price of $0.49 per share of underlying common stock.

On February 26, 2026, Domicilium exchanged with the Company the remaining $1.0 million of the Company's outstanding obligations under the Hercules Loan Agreement, as amended, in connection with the Coastlands Third Tranche Closing, in return for a pre-funded warrant to purchase up to 2,040,816 shares of Company common stock at an exercise price of $0.01 per share, based on a conversion price of $0.49 per share of underlying common stock. In addition, Domicilium agreed to waive any and all additional accrued and unpaid interest related to the remaining $1.0 million, which was less than $0.1 million as of February 26, 2026. As of February 26, 2026, the Company hadno remaining outstanding debt obligations.

On March 12, 2026, the Company received $2.0 million, net of issuance costs of less than $0.1 million, from Domicilium, in return for a pre-funded warrant to purchase up to 4,081,632 shares of its common stock at an exercise price of $0.01 per share, based on a purchase price of $0.49 per share of underlying common stock.

Warrants

As of March 31, 2026 and December 31, 2025, outstanding and exercisable warrants consisted of the following:

*Indicates the perpetual warrants that are excluded from the weighted average remaining contractual life (years) calculation.

8. Stock-based Compensation

Stock Incentive Plans

On March 12, 2018, the board of directors adopted the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan became effective on April 20, 2018 upon approval by the stockholders of the Company with the outstanding options and shares available for future grant under any prior plans being assumed by the 2018 Plan. During September 2025, the board of directors approved to reset the number of shares of common stock reserved under the 2018 Plan to be 20,000,000 shares. As of March 31, 2026, there were 9,162,042 shares remaining and available for issuance under the 2018 Plan.

Stock options granted have aten-year contractual life and, upon termination of service, vested options are generally exercisable betweenoneand three months following the termination date, while unvested options are forfeited immediately

Summary of Stock Option Activity

Transactions related to stock options awarded to employees and directors during the three months ended March 31, 2026 were as follows:

The aggregate intrinsic value represents the total intrinsic value (the difference between the fair value of the common stock as of March 31, 2026 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2026.

Summary of Restricted Stock Unit Activity

Activity related to restricted stock units awarded to employees during the three months ended March 31, 2026 were as follows:

Summary of Restricted Stock Award Activity

Activity related to restricted stock awards awarded to employees during thethree months ended March 31, 2026 were as follows:

Stock-based Compensation

Stock-based compensation relates to employees, non-employee directors and non-employee consultants, time-based stock options, performance-based stock options, restricted stock awards, and restricted stock units granted. Total stock-based compensation expense related to all of the Company’s stock-based awards was recognized as follows (in thousands):

9. Recurring Fair Value Measurements

The following tables summarize the Company's fair value hierarchy for its financial assets and liabil ities measured at fair value on a recurring basis (in thousands):

The Company is party to certain funding awards with the CFF. Prior to October 2025, the funding awards included embedded derivatives arising from provisions that, upon the occurrence of a change of control or sale or license of funded assets (each a disposition event), the Company would be required to make payments to the CFF. In October 2025, this requirement was terminated. With the termination of the embedded derivative-related terms, the value of the related embedded derivatives was zero as of March 31, 2026 and December 31, 2025.

The table below provides a summary of the fair value of the derivative liabilities, which were Level 3 fair value estimates (in thousands), for the three months ended March 31, 2026 and 2025:

10. Other (Income) Expense, Net

Other (income) expense, net, consisted of the following (in thousands):

11. Segment and Geographic Information

The Company has one operating and reportable segment: life science. The life science segment consists of the development of clinical and preclinical product candidates for the development of the Company's proprietary new therapies to enhance the engagement of the science of ribosomal modulation. The Company's chief operating decision maker ("CODM") is its President and Chief Executive Officer.

The significant expense categories regularly reviewed by the CODM for the three months ended March 31, 2026 and 2025 are the same as the significant expense categories included in the Company's income statement. While the Company operates in three geographic regions (the U.S., Israel, and Australia), substantially all of the Company's long-lived assets are located in the U.S.

The table below summarizes the significant expense categories regularly provided to, and reviewed by, the CODM for the three months ended March 31, 2026 and 2025 (in thousands):

12. Net Loss Per Share

The net loss and the weighted average number of shares of common stock and pre-funded warrants used in computing basic and diluted net loss per share for the three months ended March 31, 2026 and 2025, are as follows (in thousands, except share and per share data):

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as their effect would be anti-dilutive:

The outstanding pre-funded warrants are exercisable for only a de minimis cash consideration with no substantive exercise contingencies, accordingly, the Company included pre-funded warrants in the weighted average shares outstanding for both basic and diluted EPS calculations.

13. Subsequent Events

In April 2026, Coastlands and Domicilium exercised a portion of their pre-funded warrants for 1,250,000 shares each, for a total of 2,500,000 shares of the Company’s common stock, at an exercise price of $0.01 per share, for proceeds of less than $0.1 million.