Citius Pharmaceuticals, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations for the three and six months ended March 31, 2026 and 2025 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Pharmaceuticals, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended on January 28, 2026. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report.

Current wording

The following discussion and analysis of our financial condition and results of operations for the three and nine months ended June 30, 2026 and 2025 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Pharmaceuticals, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended on January 28, 2026. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report.

Previous wording

**Mino-Lok® **- LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok on an exclusive, worldwide sub-licensable basis, as amended. Since May 2014, LMB has paid an annual maintenance fee, which began at $30,000 and has increased over five years to $90,000, where it will remain until the commencement of commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with a low double digit royalty rate (within a range of 10% to 15%). In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low to mid-single digits (within a range of 2% to 7%). After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $100,000 in the first commercial year which is prorated for a less-than-12-month period, increasing $25,000 per year to a maximum of $150,000 annually. LMB must also pay NAT up to $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub-licensees.

Current wording

Mino-Lok® - LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok on an exclusive, worldwide sub-licensable basis, as amended. Since May 2014, LMB has paid an annual maintenance fee, which began at $30,000 and has increased over five years to $90,000, where it will remain until the commencement of commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with a low double-digit royalty rate (within a range of 10% to 15%). In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low to mid-single digits (within the range of 2% to 7%). After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $100,000 in the first commercial year which is prorated for a less-than-12-month period, increasing $25,000 per year to a maximum of $150,000 annually. LMB must also pay NAT up to $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub-licensees.

Previous wording

At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $17.65 million remains due as of March 31, 2026. Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.

Current wording

At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $15.65 million remains due as of June 30, 2026. Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.

Previous wording

On March 28, 2025, Citius Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. We agreed to pay Eisai $2,535,318 on July 15, 2025, $2,350,000 on the 15 th of each of the subsequent four months, and make a final payment of $2,197,892 on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of payment at the rate of 2% per annum. During the six months ended March 31, 2026, we recorded $78,872 in interest expense under the agreement. The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or related to our failure to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. On December 15, 2025, we paid Eisai the balance of the outstanding milestone approval fee and accumulated interest on the license fee. At March 31, 2026, we owe Eisai approximately $6.3 million for certain other unpaid invoices.

Current wording

On March 28, 2025, Citius Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. We agreed to pay Eisai $2,535,318 on July 15, 2025, $2,350,000 on the 15 th of each of the subsequent four months, and make a final payment of $2,197,892 on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of payment at the rate of 2% per annum. During the nine months ended June 30, 2026, we recorded $112,270 in interest expense under the agreement. The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or related to our failure to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. On December 15, 2025, we paid Eisai the balance of the outstanding milestone approval fee and accumulated interest on the license fee. At June 30, 2026, we owe Eisai approximately $6.3 million for certain other unpaid invoices.

Previous wording

On February11, 2026, Citius Oncology announced an exclusive distribution agreement with Uniphar ("Uniphar"), a leading international healthcare services company, to support access to LYMPHIR. Under the agreement, Uniphar will serve as Citius Oncology’s uexclusive distribution partner in designated international territories in Western and stern Europe. Citius Oncology will supply finished product and provide ongoing support in accordance with the agreement. LYMPHIR is not approved for commercial use outside the U.S. and, will be provided solely through country-specific managed access programs, which do not constitute marketing authorization or a commercial launch.

Current wording

On February 11, 2026, Citius Oncology announced an exclusive distribution agreement with Uniphar (“Uniphar”), a leading international healthcare services company, to support access to LYMPHIR. Under the agreement, Uniphar will serve as Citius Oncology’s exclusive distribution partner in designated international territories in Western and Eastern Europe. Citius Oncology will supply finished product and provide ongoing support in accordance with the agreement. LYMPHIR is not approved for commercial use outside the U.S. and will be provided solely through country-specific managed access programs, which do not constitute marketing authorization or a commercial launch.

Previous wording

Product revenues for the three months ended March 31, 2026 were $1,667,298, as Citius Oncology began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the three months ended March 31, 2026 was approximately 80%.

Current wording

Product revenues for the three months ended June 30, 2026 were $1,493,788, as Citius Oncology began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the three months ended June 30, 2026 was approximately 67%.

Previous wording

For the three months ended March 31, 2026, research and development expenses were $1,633,518, as compared to $3,766,525 during the three months ended March 31, 2025, a decrease of $2,133,007.

Current wording

For the three months ended June 30, 2026, research and development expenses were $1,053,869, as compared to $1,621,325 during the three months ended June 30, 2025, a decrease of $567,456.

Previous wording

Research and development costs for Halo-Lido were $1,750 for the three months ended March 31, 2026, as compared to no costs for the three months ended March 31, 2025. The Phase 2 study was completed in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.

Current wording

Research and development costs for Halo-Lido were $2,027 for the three months ended June 30, 2026, as compared to $3,994 for the three months ended June 30, 2025. The Phase 2 study was completed in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.

Previous wording

For the three months ended March 31, 2026, general and administrative expenses were $26,391,101, as compared to $4,792,122 during the three months ended March 31, 2025. General and administrative expenses increased by $21,598,979 in comparison with the prior period. The increase was primarily related to a notice of termination from a contract manufacturing organization received in February 2026. In March 2026, we recorded a contract cancellation fee of $19,733,307. Other general and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.

Current wording

For the three months ended June 30, 2026, general and administrative expenses were $6,149,173, as compared to $4,447,008 during the three months ended June 30, 2025. General and administrative expenses increased by $1,702,165 in comparison with the prior period. The increase was primarily related to the expansion of Citius Oncology’s commercial organization. General and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.

Previous wording

For the three months ended March 31, 2026, stock-based compensation was $3,788,275 as compared to $2,702,031 for the three months ended March 31, 2025. Stock-based compensation increased by $1,086,244 primarily due to the Citius Oncology restricted stock awards granted in September 2025.

Current wording

For the three months ended June 30, 2026, stock-based compensation was $3,810,665 as compared to $2,719,674 for the three months ended June 30, 2025. Stock-based compensation increased by $1,090,991 primarily due to the Citius Oncology restricted stock units granted in September 2025.

Previous wording

For the three months ended March 31, 2026, interest income was $53,584, as compared to interest income of $13,413 for the three months ended March 31, 2025. We have invested the remaining proceeds of our equity offerings in money market accounts.

Current wording

For the three months ended June 30, 2026, interest income was $116,691, as compared to interest income of $20,637 for the three months ended June 30, 2025. We have invested the remaining proceeds of our equity offerings in money market accounts.

Previous wording

For the three months ended March 31, 2026, interest expense was $33,031, as compared to $0 for the three months ended March 31, 2025 all related to the March 28, 2025 letter agreement with Eisai.

Current wording

For the three months ended June 30, 2026, interest expense was $231,732, as compared to $172,262 for the three months ended June 30, 2025 primarily related to Citius Oncology’s new loan agreement.

Previous wording

The Company recorded a deferred income tax benefit of $231,210 in the three months ended March 31, 2026 and a deferred income tax expense of $264,240 in the three months ended March 31, 2025. Deferred income tax expense or benefit is related to the difference in amortization for taxable purposes of our in-process research and development asset and the financial statement amortization.

Current wording

The Company recorded a deferred income tax benefit of $107,347 in the three months ended June 30, 2026 and a deferred income tax expense of $264,240 in the three months ended June 30, 2025. Deferred income tax expense or benefit is related to the difference in amortization for taxable purposes of Citius Oncology’s in-process research and development asset and the financial statement amortization.

Previous wording

For the six months ended March 31, 2026, we incurred a net loss of $37,503,635, as compared to a net loss of $21,792,751 for the six months ended March 31, 2025. The increase of $15,710,884 in the net loss was due to the increase of $24,407,025 in operating expenses offset by the increase in gross profit of $4,493,323, the increase in other income of $3,707,368 and the decrease in income tax expense of $495,450.

Current wording

For the three months ended June 30, 2026, we incurred a net loss of $11,919,260, as compared to a net loss of $9,203,872 for the three months ended June 30, 2025. The increase of $2,715,388 in the net loss was primarily due to the increase of $3,946,012 in operating expenses offset by the increase in gross profit of $1,001,945.

Previous wording

Six months ended March 31, 2026 compared with the six months ended March 31, 2025

Current wording

Nine months ended June 30, 2026 compared with the nine months ended June 30, 2025

Previous wording

Product revenues for the six months ended March 31, 2026 were $5,611,409, as Citius Oncology began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the six months ended March 31, 2026 was approximately 80%.

Current wording

Product revenues for the nine months ended June 30, 2026 were $7,105,197, as Citius Oncology began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the nine months ended June 30, 2026 was approximately 77%.

Previous wording

For the six months ended March 31, 2026, research and development expenses were $3,233,237, as compared to $5,893,563 during the six months ended March 31, 2025, a decrease of $2,660,326.

Current wording

For the nine months ended June 30, 2026, research and development expenses were $4,287,106, as compared to $7,514,888 during the nine months ended June 30, 2025, a decrease of $3,227,782.

Previous wording

Research and development costs for LYMPHIR decreased by $2,085,664 to $1,555,815 during the three months ended March 31, 2026, as compared to $3,641,479 for the three months ended March 31, 2025 was primarily related to expense recognized in the three months ended March 31, 2025 for a pre-license inspection batch of LYMPHIR previously manufactured.

Current wording

Research and development costs for LYMPHIR decreased by $2,865,388 to $3,959,231 during the nine months ended June 30, 2026, as compared to $6,824,619 for the nine months ended June 30, 2025, which decrease was primarily related to expense recognized in the nine months ended June 30, 2025 for a pre-license inspection batch LYMPHIR previously manufactured as well as a refund of FDA PDUFA fees associated with LYMPHIR.

Previous wording

Research and development costs for Mino-Lok decreased by $360,278 to $147,308 for the six months ended March 31, 2026, as compared to $507,586 for the six months ended March 31, 2025, due primarily to decreased costs for the Mino-Lok combination studies, as well as decreased development related manufacturing costs. In November 2024, the Company held a Type C meeting with the FDA to discuss the results of the Phase 3 study and to obtain the FDA’s view on development plans for Mino-Lok. The FDA provided clear, constructive, and actionable guidance during the discussion, underscoring a pathway to support a future New Drug Application (NDA) submission for Mino-Lok. Update?

Current wording

Research and development costs for Mino-Lok decreased by $369,979 to $299,338 for the nine months ended June 30, 2026, as compared to $669,317 for the nine months ended June 30, 2025, due primarily to decreased costs for Mino-Lok clinical and non-clinical studies, as well as decreased manufacturing development costs. In November 2024, the Company held a Type C meeting with the FDA to discuss the results of the Phase 3 study and to obtain the FDA’s view on development plans for Mino-Lok. The FDA provided clear, constructive, and actionable guidance during the discussion, underscoring a pathway to support a future New Drug Application (NDA) submission for Mino-Lok.

Previous wording

Research and development costs for Halo-Lido decreased by $6,627 to $4,069 for the six months ended March 31, 2026, as compared to $10,696 for the six months ended March 31, 2025. The Phase 2 study was completed in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.

Current wording

Research and development costs for Halo-Lido decreased by $8,594 to $6,096 for the nine months ended June 30, 2026, as compared to $14,690 for the nine months ended June 30, 2025. The Phase 2 study was completed in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.

Previous wording

Amortization of in-process research and development commenced upon revenue generation by LYMPHIR in December 2025. For the six months ended March 31, 2026 amortization was $2,293,750. In-process research and development is being amortized on a straight-line basis over the remaining FDA product exclusivity period which ends in August 2036.

Current wording

Amortization of in-process research and development commenced upon revenue generation by LYMPHIR in December 2025. For the nine months ended June 30, 2026 amortization was $4,014,062. In-process research and development is being amortized on a straight-line basis over the remaining FDA product exclusivity period which ends in August 2036.

Previous wording

For the six months ended March 31, 2026, general and administrative expenses were $32,111,828, as compared to $10,179,874 during the six months ended March 31, 2025. General and administrative expenses increased by $21,931.954 in comparison with the prior period. The increase of $21,931,954 was primarily related to a notice of termination from a contract manufacturing organization received in February 2026. In March 2026, we recorded a contract cancellation fee of $19,733,307. Other general and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.

Current wording

For the nine months ended June 30, 2026, general and administrative expenses were $38,261,001, as compared to $14,626,882 during the nine months ended June 30, 2025. General and administrative expenses increased by $23,634,119 in comparison with the prior period. The increase of $23,634,119 was primarily related to a notice of termination from a contract manufacturing organization received in February 2026. In March 2026, we recorded a contract cancellation fee of $19,733,307 as well as increased expense in the commercial organization related to the launch of LYMPHIR. Other general and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.

Previous wording

Stock-based compensation expense under all plans for the six months ended March 31, 2026 and 2025 was $8,068,502 (including $585,742 for Citius Pharma options, $4,110,478 for Citius Oncology options and $3,372,282 for Citius Oncology restricted stock unit awards) and $5,226,825 (including $1,329,775 for Citius Pharma options and $3,897,050 for Citius Oncology options), respectively.

Current wording

Stock-based compensation expense under all plans for the nine months ended June 30, 2026 and 2025 was $11,879,167 (including $835,616 for Citius Pharma options, $5,968,921 for Citius Oncology options and $5,074,630 for Citius Oncology restricted stock units) and $7,946,529 (including $1,924,242 for Citius Pharma options and $6,022,287 for Citius Oncology options), respectively.

Previous wording

Stock-based compensation expense for the six months ended March 31, 2026 increased by $2,841,647 in comparison to the prior period primarily due to the Citius Oncology restricted stock unit awards granted in September 2025.

Current wording

Stock-based compensation expense for the nine months ended June 30, 2026 increased by $3,932,638 in comparison to the prior period primarily due to the Citius Oncology restricted stock units granted in September 2025.

Previous wording

For the six months ended March 31, 2026, interest income was $98,681, as compared to interest income of $36,021 for the six months ended March 31, 2025. We have invested the remaining proceeds of our equity offerings in money market accounts.

Current wording

For the nine months ended June 30, 2026, interest income was $215,372, as compared to interest income of $56,658 for the nine months ended June 30, 2025. We have invested the remaining proceeds of our equity offerings in money market accounts.

Previous wording

We recognized a gain of $3,833,277 for the three months ended March 31, 2026, in connection with the sale of certain New Jersey income tax net operating losses to a third party under the New Jersey Technology Business Tax Certificate Transfer Program.

Current wording

We recognized a gain of $3,833,277 for the nine months ended June 30, 2026, in connection with the sale of certain New Jersey income tax net operating losses to a third party under the New Jersey Technology Business Tax Certificate Transfer Program.

Previous wording

For the six months ended March 31, 2026, interest expense was $188,569, as compared to $0 for the six months ended March 31, 2025. For the six months ended March 31, 2026, interest expense of $78,872 was related to the March 28, 2025 letter agreement with Eisai and interest expense on the note payable, including the fair value of the warrant issued to the lender was $109,697.

Current wording

For the nine months ended June 30, 2026, interest expense was $420,301, as compared to $172,262 for the nine months ended June 30, 2025. For the nine months ended June 30, 2026, interest expense was $198,333 for the new loan agreement, $112,270 for the March 28, 2025 letter agreement with Eisai and 109,697 for the note payable, including the fair value of the warrant issued to the lender. Interest expense for the nine months ended June 30, 2025 was $160,755 for the March 28, 2025 letter agreement with Eisai and $11,507 for the note payable.

Previous wording

The Company recorded a deferred income tax expense of $33,030 for the six months ended March 31, 2026 and a deferred income tax expense of $528,480 for the six months ended March 31, 2025. Deferred income tax expense is related to the amortization for taxable purposes of our in-process research and development asset offset by the financial statement amortization of our in-process research and development asset.

Current wording

The Company recorded a deferred income tax benefit of $74,317 for the nine months ended June 30, 2026 and a deferred income tax expense of $792,720 for the nine months ended June 30, 2025. Deferred income tax expense is related to the amortization for taxable purposes of our in-process research and development asset offset by the financial statement amortization of our in-process research and development asset.

Previous wording

For the three months ended March 31, 2026, we incurred a net loss of $28,109,746, as compared to a net loss of $11,511,505 for the three months ended March 31, 2025. The increase of $16,598,241 in the net loss was due to the increase of $22,272,528 in operating expenses offset by the increase in gross profit of $1,338,420, the increase in other income of $3,840,417 and the decrease in income tax expense of $495,450.

Current wording

For the nine months ended June 30, 2026, we incurred a net loss of $49,422,895, as compared to a net loss of $30,996,623 for the nine months ended June 30, 2025. The increase of $18,426,272 in the net loss was due to the increase of $28,353,037 in operating expenses offset by the increase in gross profit of $5,495,268, the increase in other income of $3,564,460 and the decrease in income tax expense of $867,037.

Previous wording

We have incurred operating losses since inception and incurred a net loss of approximately $37.5 million for the six months ended March 31, 2026. At March 31, 2026, we had an accumulated deficit of approximately $268.3 million. At March 31, 2026, we had approximately $4.6 million in cash and a negative working capital of approximately $23.3 million. Our net cash used in operations during the six months ended March 31, 2026 was approximately $14.3 million. Our primary source of cash flow since inception has been from financing activities. We have had limited revenue from sales of LYMPHIR, which commenced in December 2025.

Current wording

We have incurred operating losses since inception and incurred a net loss of approximately $49.4 million for the nine months ended June 30, 2026. At June 30, 2026, we had an accumulated deficit of approximately $277.1 million. At June 30, 2026, we had approximately $17.0 million in cash and a negative working capital of approximately $8.3 million. Our net cash used in operations during the nine months ended June 30, 2026 was approximately $23.0 million. Our primary source of cash flow since inception has been from financing activities. We have had limited revenue from sales of LYMPHIR, which commenced in December 2025.

Previous wording

On May 5, 2026 Citius Oncology, entered into a Loan Agreement that makes available term loans in an aggregate principal amount of up to $25.0 million (collectively, the “Loans”), with (i) $10.0 million to be funded on May 6, 2026, (ii) up to $7.0 million beginning on the later of (A) the date on which certain net revenue and liquidity milestones are achieved and (B) October 1, 2026, and continuing through December 31, 2026, and (iii) up to $8.0 million beginning on the later of (A) the date on which certain additional net revenue milestones are achieved and one or more Tranche 2 Loans have been drawn and (B) January 1, 2027, and continuing through March 31, 2027.

Current wording

On May 5, 2026, Citius Oncology entered into a term loan agreement with two lenders (the “Lenders”) for up to $25.0 million (the “Loan Agreement”), with $10.0 million funded on May 6, 2026, up to $7.0 million available between October 1 and December 31, 2026, if certain net revenue and liquidity milestones are achieved (“Tranche 2”), and up to $8.0 million available between January 1 and March 31, 2027, if certain additional net revenue milestones are achieved and a loan was drawn between October 1 and December 31, 2026 (“Tranche 3”). The loans bear interest at the greater of the prime rate plus 6% or 12.75%. The loans are secured by all of Citius Oncology’s assets, subject to agreed exceptions. The maturity date of the loans is November 1, 2029.

Previous wording

During the six months ended March 31, 2026, we paid the final $2,900,000 due to Eisai in connection with the LYMPHIR approval milestone and paid $2,100,000 in connection with the milestone payment due to Dr. Reddy’s. At March 31, 2026, we owe Dr. Reddy’s $17,650,000 representing the balance of the approval milestone.

Current wording

During the nine months ended June 30, 2026, we paid the final $2,900,000 due to Eisai in connection with the LYMPHIR approval milestone and paid $4,100,000 in connection with the milestone payment due to Dr. Reddy’s. At June 30, 2026, we owe Dr. Reddy’s $15,650,000 representing the balance of the approval milestone.