Turn Therapeutics Inc.
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 9, 2026
TTRX$9.79+3.3%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001213900-26-088427
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0001213900-26-117186
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 97 current paragraphs.
44 unchanged; 33 reworded; 20 added; 6 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Enrollment in Phase 2b of the trial continued during the Phase 2a analysis and remains on track with topline results expected in the first quarter of 2027.
Current report
No serious adverse events or treatment-related discontinuations occurred in Phase 2a of the trial.
Current report
Other Income (Expense)
Current report
General and administrative expenses were $3.6 million for the nine months ended September 30, 2026, compared to $3.4 million for the same period in 2025, an increase of $0.2 million. Stock-based compensation expense increased by $1.2 million because of new grants to new and existing employees and directors, salaries and wages increased by $0.4 million and other corporate expenses rose by $0.2 million during the nine months ended September 30, 2026 when compared to nine months ended September 30, 2025. A $1.6 million decrease in legal and professional fees mostly offset these increases as those fees were higher in nine months ended September 30, 2025 because of costs related to our direct listing on Nasdaq.
Current report
Interest income increased by $78.9 thousand from $5.1 thousand for three months ended September 30, 2025 to $84.0 thousand during the three months ended September 30, 2026. The increase is primarily due to higher balances of cash equivalents in money market accounts.
Current report
Interest income increased by $0.2 million from $15.4 thousand for nine months ended September 30, 2025 to $0.2 million during the nine months ended September 30, 2026. The increase is primarily due to higher balances of cash equivalents in money market accounts.
Current report
Other income (expense) for the three months ended September 30, 2025 did not have any material variance when compared with three months ended September 30, 2026.
Current report
Deferred Financing Cost
Current report
Deferred financing cost consists of costs we incur directly in connection with obtaining debt financing that has not yet been drawn, such as costs allocated to undrawn tranches under a loan facility. These costs may be paid in cash or settled by issuing equity instruments. Costs settled in equity instruments are measured at their fair value on the date they are issued.
Current report
Deferred financing cost is recorded as an asset on the condensed consolidated balance sheets and amortized over the draw window to which it relates. When we draw on the related debt, any unamortized balance of deferred financing cost related to that debt is reclassified as a debt discount, presented as a direct deduction from the carrying amount of the debt. If we determine that the related debt will not be drawn, or the availability period expires, the remaining unamortized balance of deferred financing cost is expensed in the condensed consolidated statements of operations in that period.
Current report
Deferred Offering Cost
Current report
Deferred offering cost consists of costs we incur directly in connection with securing access to future equity financing, such as equity line facilities. These costs may be paid in cash or settled by issuing equity instruments, such as common stock or warrants. Costs settled in equity instruments are measured at their fair value on the date they are issued.
Current report
Deferred offering cost is recorded as an asset on the condensed consolidated balance sheets. It is amortized on a straight-line basis over the term of the related agreement. The amortization is recognized as expense in the condensed consolidated statements of operations.
Current report
Debt
Current report
We initially record debt at the principal amount borrowed, net of any debt discount. Debt discount includes the following; (i) fees paid to the lender, (ii) third-party costs directly attributable to obtaining the debt including legal fees, (iii) the fair value of equity instruments issued to the lender, (iv) the fair value of any embedded features that are separated from the debt and accounted for as derivative liabilities, and (v) the present value of any final payment fee due at maturity or prepayment.
Current report
When a loan facility is funded in more than one tranche, costs that relate to the whole facility are allocated between the funded and unfunded tranches. The portion allocated to an unfunded tranche is accounted for under our deferred financing cost policy.
Current report
Debt discount is presented as a direct deduction from the carrying amount of the related debt on the condensed consolidated balance sheets. It is amortized to interest expense using the effective interest rate method over the term of the debt. Any final payment fee is accreted to interest expense over the same period.
Current report
Research and development expenses are composed of both internal and external costs. Internal costs include salaries and employment-related expenses of scientific personnel and direct project costs. External research and development expenses consist primarily of costs associated with clinical and non-clinical development programs and are charged to expenses as incurred.
Current report
We also record accruals for estimated ongoing clinical trial costs. Clinical trial costs primarily represent costs incurred by contract research organizations and clinical trial sites. We analyze the progress of the clinical trial, including levels of subject enrollment, invoices received and contracted costs when evaluating the adequacy of accrued liabilities. In accruing for these services, we estimate the time period over which services will be performed and the level of effort to be expended in each period. These estimates are based on communications with the third-party service providers and our estimates of accrued expenses based on information available at each balance sheet date. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust the accrual accordingly.
Current report
Recently Issued Accounting Pronouncements
Removed paragraphs (6)
Previous report
Enrollment in the trial continued during the interim analysis and as of June 30, 2026, we had an additional 21 patients enrolled that met the inclusion criteria of Stage 2. The efficacy population from Stage 2 will be evaluated using a single prespecified Hochberg multiple-testing method across four selected endpoints namely:
Previous report
No major safety concerns or treatment-related adverse events were noted in Stage 1 of the trial.
Previous report
Research and Development Expenses
Previous report
Other Income
Previous report
General and administrative expenses increased by $0.6 million from $1.7 million for the six months ended June 30, 2025 to $2.3 million for the six months ended June 30, 2026. The increase in operating expenses primarily resulted from increase in stock-based compensation expense due to vesting timing difference of $0.6 million when compared to six months ended June 30, 2025.
Previous report
Recently Adopted Accounting Pronouncements
Reworded paragraphs (33)
Previous wording
Youshould read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report and with our audited financial statements and related notes and other financial information appearing in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report and our Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report and with our audited consolidated financial statements and related notes and other financial information appearing in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report and our Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Previous wording
Turn Therapeutics is a clinical-stage biotechnology company developing targeted anti-inflammatory therapies for dermatologic conditions with high unmet needs. Turn’s lead investigational therapy, GX-03, is a potentially first-in-class, non-systemic topical therapy for the potential treatment of atopic dermatitis (AD) that acts via modulating release of key inflammatory signals involved in eczema and other inflammatory dermatological conditions.
Current wording
Turn Therapeutics is a clinical-stage biotechnology company developing targeted anti-inflammatory therapies for dermatologic conditions with high unmet needs. Turn’s lead investigational therapy, GX-03, is a potentially first-in-class, non-systemic topical therapy for the potential treatment of inflammatory skin conditions such as atopic dermatitis (“AD”) that acts via modulating release of key inflammatory signals involved in eczema and other inflammatory dermatological conditions.
Previous wording
GX-03 is currently being evaluated in an ongoing, randomized, double-blind, vehicle-controlled clinical study designed to assess its potential as a topical treatment for AD. An interim analysis was completed in June 2026 with 50 patients completed and based on the findings of the interim analysis, we expanded the trial to now enroll patients across the full Eczema Area Severity Index (EASI) from 1.1 and above. We intend to enroll additional 120-135 patients in the trial. Enrollment in trial is anticipated to complete in fourth quarter of 2026.
Current wording
GX-03 is currently being evaluated in an ongoing, randomized, double-blind, vehicle-controlled, staged clinical study designed to assess its potential as a topical treatment for AD. Phase 2a/Stage 1 of the trial was completed in June 2026 with 50 patients (“Phase 2a”) completed and based on the findings of the Phase 2a, Phase 2b/Stage 2 was optimized to better identify GX-03’s signal and target population. We intend to enroll 120-136 patients in Phase 2b/Stage 2 of the trial (“Phase 2b”). Topline results from Phase 2b are expected in the first quarter of 2027.
Previous wording
In addition to AD, GX-03 is being advanced for onychomycosis, supported by in-vivo data demonstrating nail penetration and antifungal activity. Our historical medical device portfolio, which includes K183681, K160872, and K171191, also provides background tolerability and feasibility experience with the formula. K183681 has recently been licensed to Medline Industries, LP (“Medline”) under a license and supply agreement. See the section of our Annual Report titled “Business – Marketing – Medline Agreement” for a more detailed description of this agreement.
Current wording
In addition to AD, GX-03 is being advanced for onychomycosis and hidradenitis suppurativa (HS). Our historical medical device portfolio, which includes K183681, K160872, and K171191, also provides background tolerability and feasibility experience with the formula. K183681 has been licensed to Medline Industries, LP (“Medline”) under a license and supply agreement. See the section of our Annual Report titled “Business – Marketing – Medline Agreement” for a more detailed description of this agreement.
Previous wording
We have incurred operating losses since inception, and we expect to continue to incur losses for the foreseeable future. Our net losses were approximately $6.8 million and $1.6 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of approximately $29.2 million. We anticipate that our expenses and operating losses will increase substantially for the foreseeable future due to the increase in research and development costs for later-stage clinical trials.
Current wording
We have incurred operating losses since inception, and we expect to continue to incur losses for the foreseeable future. Our net losses were approximately $13.1 million and $3.5 million for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had an accumulated deficit of approximately $35.4 million. We anticipate that our expenses and operating losses will increase substantially for the foreseeable future due to the increase in research and development costs for later-stage clinical trials.
Previous wording
Other than any potential revenue from medical device or intellectual property out-licensing arrangements, we will not generate revenue in the future from product sales unless and until we successfully initiate and complete additional clinical development programs and obtain regulatory approval for one or more additional drug candidates. As a result, we will need substantial additional funding to support our continuing drug development and operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financing and from other sources of capital, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of our products. As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents of approximately $10.3 million and $5.1 million, respectively. We believe that our existing cash, cash equivalents and other short-term investments will be sufficient to fund our operating expenses and research and development expenses for development of GX-03 in AD into the third quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the section of our Annual Report titled “Risk Factors — Risks Related to Our Business and Industry — We design, develop, and conduct pre-clinical and clinical testing on drug candidates and medical devices. Given the inherent expense associated with these activities, it is common for companies at our stage to incur significant losses associated with such product development. We expect to incur additional losses for the foreseeable future, and it is possible we may never achieve or maintain profitability. Our consolidated financial statements therefore express substantial doubt about our ability to continue as a going concern.” for more details.
Current wording
Other than any potential revenue from medical device or intellectual property out-licensing arrangements, we will not generate revenue in the future from product sales unless and until we successfully initiate and complete additional clinical development programs and obtain regulatory approval for one or more additional drug candidates. As a result, we will need substantial additional funding to support our continuing drug development and operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financing and from other sources of capital, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of our products. As of September 30, 2026 and December 31, 2025, we had cash and cash equivalents of approximately $10.4 million and $5.1 million, respectively. We believe that our existing cash, cash equivalents will be sufficient to fund our operating expenses and research and development expenses for development of GX-03 in AD and HS into the third quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the section of our Annual Report titled “Risk Factors — Risks Related to Our Business and Industry — We design, develop, and conduct pre-clinical and clinical testing on drug candidates and medical devices. Given the inherent expense associated with these activities, it is common for companies at our stage to incur significant losses associated with such product development. We expect to incur additional losses for the foreseeable future, and it is possible we may never achieve or maintain profitability. Our consolidated financial statements therefore express substantial doubt about our ability to continue as a going concern.” for more details.
Previous wording
An interim analysis was completed at 50 patients completed (“Stage 1”) under the oversight of an independent interim data monitoring committee (“IDMC”) in order to review emerging signals of tolerability and efficacy in an effort to optimize the adaptive study design. We analyzed emerging signals and potential biomarkers from the interim dataset and expanded our trial to enroll additional 120-135 patients (“Stage 2”) across the entire EASI spectrum (EASI 1.1 and above) with moderate-severe lesions using the validated investigator global assessment (“vIGA-AD”) of 3 or 4. We also prospectively stratified the patients into different stratums based on EASI as follows:
Current wording
An analysis of Phase 2a was completed in order to review emerging signals of tolerability and efficacy in an effort to optimize the adaptive study design. We analyzed emerging signals and potential biomarkers from the Phase 2a dataset and expanded Phase 2b of our trial to enroll 120-136 patients across the entire EASI spectrum (EASI 1.1 and above) with moderate-severe lesions using the validated investigator global assessment (“vIGA-AD”) of 3 or 4 and a baseline Peak Pruritus Numerical Rating Scale (PP-NRS) score of 7 or more. We also prospectively stratified the patients into different strata based on EASI as follows:
Previous wording
We also plan to evaluate GX-03 as a topical treatment for hidradenitis suppurativa (“HS”). In vivo studies in a validated animal model demonstrated GX-03’s potential to inhibit certain interleukins (ILs), including IL-36, a cytokine that has been implicated as an important driver of inflammation in HS pathogenesis. Additionally, GX-03 has been shown in-vitro to eliminate anaerobic bacteria known to contribute to HS symptoms. The formula has achieved antimicrobial claims in previous medical device iterations. The antimicrobial properties of GX-03, together with the observed inhibition of IL-36, provide a strong scientific rationale for exploring GX-03 as a potential treatment for HS. We plan to initiate a Phase 2a study to evaluate the safety and efficacy of GX-03 in HS in mid-2027 subject to capital availability.
Current wording
We plan to evaluate GX-03 as a topical treatment for hidradenitis suppurativa (“HS”). In vivo studies in a validated animal model demonstrated GX-03’s potential to inhibit certain interleukins (ILs), including IL-36, a cytokine that has been implicated as an important driver of inflammation in HS pathogenesis. Additionally, GX-03 has been shown in-vitro to eliminate certain bacteria known to contribute to HS symptoms. The formula has achieved antimicrobial claims in previous medical device iterations. The antimicrobial properties of GX-03, together with the observed inhibition of IL-36, provide a strong scientific rationale for exploring GX-03 as a potential treatment for HS. We plan to initiate a Phase 2a study to evaluate the safety and efficacy of GX-03 in HS in the first quarter of 2027.
Previous wording
GX-03 is also being advanced as a topical treatment for onychomycosis. In-vivo studies in a validated animal model demonstrated nail-plate penetration and significant reduction of fungal burden. Additional clinical program steps are expected to follow completion of the AD clinical program and related Investigational New Drug (“IND”) activities.
Current wording
GX-03 is also being advanced as a topical treatment for onychomycosis. In-vivo studies in a validated animal model demonstrated nail-plate penetration and significant reduction of fungal burden. Additional clinical program steps are expected to follow the completion of Phase 2b of our ongoing trial in AD and subject to capital availability.
Previous wording
Other income includes interest income earned from cash equivalents of our highly liquid investments in money markets, interest expense under the Avenue Capital Loan Agreement, fair-value gain or loss from derivative liabilities, amortization of deferred offering cost and vendor credits.
Current wording
Other income (expense) includes interest income earned from cash equivalents of our highly liquid investments in money markets, interest expense under the Avenue Capital Loan Agreement, fair-value gain or loss from derivative liabilities, amortization of deferred offering cost, amortization of deferred financing cost and vendor credits.
Previous wording
The following table summarizes our results of operations for the three and six months ended June 30, 2026 and 2025:
Current wording
The following table summarizes our results of operations for the three and nine months ended September 30, 2026 and 2025:
Previous wording
We did not generate any revenue or incur any cost of goods sold during the six months ended June 30, 2026 and 2025, as we continued to focus on the research and development of our drug candidates and medical devices.
Current wording
We did not generate any revenue or incur any cost of goods sold during the nine months ended September 30, 2026 and 2025, as we continued to focus on the research and development of our drug candidates and medical devices.
Previous wording
General and administrative expenses decreased by $0.2 million from $1.3 million for the three months ended June 30, 2025 to $1.2 million for the three months ended June 30, 2026. The decrease in operating expenses primarily resulted from decrease in professional fees of $0.7 million incurred in three months ended June 30, 2025 in relation to our Direct Listing which were offset by an increase in stock-based compensation expense due to vesting timing difference of $0.5 million during three months ended June 30, 2026.
Current wording
General and administrative expenses decreased by $0.4 million from $1.8 million for the three months ended September 30, 2025 to $1.4 million for the three months ended September 30, 2026. The decrease in general and administrative expenses primarily resulted from decrease in legal, professional and consulting fees of $1.1 million incurred in three months ended September 30, 2025 in relation to our Direct Listing which were offset by an increase in stock-based compensation expense due to vesting timing difference of $0.6 million during the three months ended September 30, 2026.
Previous wording
Research and development expenses increased by $0.4 million from $62.7 thousand for the three months ended June 30, 2025 to $0.5 million for the three months ended June 30, 2026. The increase in research and development expenses primarily resulted from expenses incurred on our ongoing Phase-2 equivalent study of GX-03 in AD.
Current wording
Research and development expenses increased by $0.4 million from $158.7 thousand for the three months ended September 30, 2025 to $0.6 million for the three months ended September 30, 2026. The increase in research and development expenses primarily resulted from expenses incurred on our ongoing Phase-2 study of GX-03 in AD.
Previous wording
Research and development expenses increased by $0.5 million from $71.9 thousand for the six months ended June 30, 2025 to $0.6 million for the six months ended June 30, 2026. The increase in research and development expenses primarily resulted from expenses incurred on our ongoing Phase-2 equivalent study of GX-03 in AD.
Current wording
Research and development expenses increased by $1.0 million from $230.6 thousand for the nine months ended September 30, 2025 to $1.2 million for the nine months ended September 30, 2026. The increase in research and development expenses primarily resulted from expenses incurred on our ongoing Phase-2 study of GX-03 in AD.
Previous wording
Change in fair value of derivative liability instrument was a net loss of $3.3 million and $2.6 million during the three and six months ended June 30, 2026. The derivative liability instrument comprised of contingent warrant liability and the put option liability under the GEM Purchase Agreement (defined below) as well as contingent conversion option under the Avenue Capital Loan Agreement. Cumulative fair value of derivative liabilities from different instruments as of December 31, 2025 was $3.0 million and a remeasurement net loss due to change in fair value as of June 30, 2026 is $2.6 million. These derivative liability instruments either did not exist or did not have any material value as of June 30, 2025.
Current wording
Change in fair value of derivative liability instrument was a net loss of $3.3 million and $6.0 million during the three and nine months ended September 30, 2026, respectively. The derivative liability instrument comprised of contingent warrant liability and the put option liability under the Share Purchase Agreement as well as contingent conversion option under the Avenue Capital Loan Agreement. Cumulative fair value of derivative liabilities from different instruments as of December 31, 2025 was $3.0 million and a remeasurement net loss due to change in fair value as of September 30, 2026 is $6.0 million. These derivative liability instruments either did not exist or did not have any material value as of September 30, 2025. On August 13, 2026, the warrant under the Share Purchase Agreement was exercised on a cashless basis and the related warrant derivative liability of $8.9 million was derecognized.
Previous wording
Amortization of deferred offering cost was approximately $1.1 million and $0 for the six months ended June 30, 2026 and 2025, respectively. Amortization of deferred offering cost was approximately $0.6 million and $0 for the three months ended June 30, 2026 and 2025, respectively. Deferred offering cost of $0.85 million was recorded as an asset for commitment fee under the GEM Purchase Agreement which became payable to GEM upon completion of the Direct Listing in October 2025. A $5.60 million deferred offering cost was recorded as an asset for the initial recognition of warrant issued on the Direct Listing to GEM under the GEM Purchase Agreement. A $0.72 million deferred offering cost was recorded as an asset for the debt discounts related to Tranche 2 of the Avenue Loan Agreement. The deferred offering cost related to commitment fee under the GEM Purchase Agreement is being amortized on straight line basis over the term of GEM Purchase Agreement, the deferred offering cost related to warrant is being amortized on straight-line basis over the term of the GEM Purchase Agreement and the deferred offering cost related to Tranche 2 of Avenue Loan Agreement will be transferred to debt discount upon draw-down of Tranche 2 or expensed if Tranche 2 is not withdrawn.
Current wording
Amortization of deferred offering and financing costs was approximately $1.8 million and $0 for the nine months ended September 30, 2026 and 2025, respectively. Amortization of deferred offering and financing costs was approximately $0.6 million and $0 for the three months ended September 30, 2026 and 2025, respectively. Deferred offering cost of $0.85 million was recorded as an asset for commitment fee under the Share Purchase Agreement which became payable to investor upon completion of the Direct Listing in October 2025. A $5.60 million deferred offering cost was recorded as an asset for the initial recognition of warrant issued on the Direct Listing to investor under the Share Purchase Agreement. A $0.72 million deferred financing cost was recorded as an asset for the debt issuance costs allocated to Tranche 2 of the Avenue Capital Loan Agreement. The deferred offering cost related to commitment fee under the Share Purchase Agreement is being amortized on straight line basis over the term of Share Purchase Agreement, the deferred offering cost related to warrant is being amortized on straight-line basis over the term of the Share Purchase Agreement and the deferred financing cost related to Tranche 2 of Avenue Capital Loan Agreement is being amortized over the Tranche 2 draw down window and any remaining unamortized balance will either be transferred to debt discount upon draw-down of Tranche 2 or expensed if draw of Tranche 2 is not probable.
Previous wording
Interest expense net of interest income increased by $0.2 million from interest income of $5.1 thousand for three months ended June 30, 2025 to interest expense of $0.2 million during the three months ended June 30, 2026. The increase is primarily due to interest expense incurred under the Avenue Capital Loan Agreement that was executed in March 2026.
Current wording
Interest expense increased by $0.3 million from $0 for three months ended September 30, 2025 to interest expense of $0.3 million during the three months ended September 30, 2026. The increase is due to interest expense incurred under the Avenue Capital Loan Agreement that was executed in March 2026.
Previous wording
Interest expense net of interest income increased by $0.2 million from interest income of 10.3 thousand for six months ended June 30, 2025 to interest expense of $0.2 million during the six months ended June 30, 2026. The increase is primarily due to interest expense incurred under the Avenue Capital Loan Agreement.
Current wording
Interest expense increased by $0.7 million from $0 for nine months ended September 30, 2025 to interest expense of $0.7 million during the nine months ended September 30, 2026. The increase is due to interest expense incurred under the Avenue Capital Loan Agreement.
Previous wording
Other income decreased by $0.2 million from $0.2 million for the six months ended June 30, 2025 to $5.6 thousand for the six months ended June 30, 2026. The decrease was primarily due to a $120.96 thousand write-off of a historical outstanding balance to a vendor and $51.29 thousand discount received from another vendor against a historic outstanding invoice during six months ended June 30, 2025.
Current wording
Other income (expense) decreased by $0.2 million from $0.2 million for the nine months ended September 30, 2025 to $0 for the nine months ended September 30, 2026. The decrease was primarily due to a $121.0 thousand write-off of a historical outstanding balance to a vendor and $51.3 thousand discount received from another vendor against a historic outstanding invoice during nine months ended September 30, 2025.
Previous wording
As of June 30, 2026, we had $17.0 million in total assets, which included $10.3 million in cash and cash equivalents, $0.14 million in prepaid expenses and other current assets, $56.3 thousand in right of use assets, $0.9 million in intangible assets, $5.6 million as deferred offering cost and $8.6 thousand in security deposit. Our intangible assets primarily include capitalized legal costs related to the registration of patents and trademarks.
Current wording
As of September 30, 2026, we had $16.3 million in total assets, which included $10.4 million in cash and cash equivalents, $0.10 million in prepaid expenses and other current assets, $0.6 million in deferred financing cost, $44.7 thousand in right of use assets, $0.9 million in intangible assets, $4.3 million as deferred offering cost and $8.6 thousand in security deposit. Our intangible assets primarily include capitalized legal costs related to the registration of patents and trademarks.
Previous wording
As of June 30, 2026, we had total liabilities of $16.3 million, including $2.6 million in current accounts payable and accrued expenses, $6.1 million in derivative liability instruments pursuant to outstanding warrants, put option liability and conversion option, $49.3 thousand in current portion of operating lease liability, $8.7 thousand in long term portion of lease liability, $6.1 million in long-term debt, net of debt discounts and $1.4 million in deferred revenue. The deferred revenue as of June 30, 2026 is attributable to a license agreement for our FleX Product which has been deferred due to unpredictable outcomes and timelines of the FDA approval process which cannot be reasonably estimated. We will continue to defer the recognition of revenue until FDA approval is achieved or sufficient information is available to make a reasonable estimate on the outcome and timelines.
Current wording
As of September 30, 2026, we had total liabilities of $10.7 million, including $2.4 million in current accounts payable and accrued expenses, $0.6 million in derivative liability instruments pursuant to put option liability and conversion option, $46.3 thousand in current portion of operating lease liability, $0.4 million in current portion of debt, net of debt discount, $5.7 million in long-term debt, net of current portion and debt discount, and $1.4 million in deferred revenue. The deferred revenue as of September 30, 2026 is attributable to a license agreement for our FleX Product which has been deferred due to unpredictable outcomes and timelines of the FDA approval process which cannot be reasonably estimated. We will continue to defer the recognition of revenue until FDA approval is achieved or sufficient information is available to make a reasonable estimate on the outcome and timelines.
Previous wording
Based on our current operating plan, we estimate that our cash and cash equivalents as of June 30, 2026 will be sufficient to fund our operating expenses and research and development expenses for development of GX-03 in AD into the third quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and could deplete our capital resources sooner than we currently expect. Our capital resources may not be sufficient to fund operations through at least the next 12 months from the date that the accompanying unaudited condensed consolidated interim financial statements as of June 30, 2026 are issued based on our expected cash needs, which raises substantial doubt about our ability to continue as a going concern. We currently anticipate that we will require up to approximately $60 to $65 million to complete our planned Phase 3 trials for AD and onychomycosis, and approximately $2.5 million for our Phase 2a study in HS, which we expect to fund through accessing the capital markets, including with additional issuances of equity and/or equity-linked securities. See the section titled “Risk Factors — Risks Related to Our Business and Industry — We design, develop, and conduct pre-clinical and clinical testing on drug candidates and medical devices. Given the inherent expense associated with these activities, it is common for companies at our stage to incur significant losses associated with such product development. We expect to incur additional losses for the foreseeable future, and it is possible we may never achieve or maintain profitability. Our condensed consolidated financial statements therefore express substantial doubt about our ability to continue as a going concern.” in our Annual Report for more information.
Current wording
Based on our current operating plan, we estimate that our cash and cash equivalents as of September 30, 2026 will be sufficient to fund our operating expenses and research and development expenses for development of GX-03 in AD and HS into the third quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and could deplete our capital resources sooner than we currently expect. Our capital resources may not be sufficient to fund operations through at least the next 12 months from the date that the accompanying unaudited condensed consolidated interim financial statements as of September 30, 2026 are issued based on our expected cash needs, which raises substantial doubt about our ability to continue as a going concern. We currently anticipate that we will require up to approximately $60 to $65 million to complete our planned Phase 3 trials for AD and onychomycosis, and approximately $2.5 million for our Phase 2a study in HS, which we expect to fund through accessing the capital markets, including with additional issuances of equity and/or equity-linked securities. See the section titled “Risk Factors — Risks Related to Our Business and Industry — We design, develop, and conduct pre-clinical and clinical testing on drug candidates and medical devices. Given the inherent expense associated with these activities, it is common for companies at our stage to incur significant losses associated with such product development. We expect to incur additional losses for the foreseeable future, and it is possible we may never achieve or maintain profitability. Our consolidated financial statements therefore express substantial doubt about our ability to continue as a going concern.” in our Annual Report for more information.
Previous wording
We intend to fund the operations of the Company for the next 12 months from, as of June 30, 2026, the cash and cash equivalents available of approximately $10.3 million, from new licensing deals for our FDA-cleared medical devices or any payments from our existing license for the FleX Product, and other equity or debt financings, as available.
Current wording
We expect to fund our operations over the next 12 months with our existing cash and cash equivalents of approximately $10.4 million as of September 30, 2026, together with proceeds from new licensing agreements for our FDA-cleared medical devices, payments under our existing license agreement for the FleX Product, and additional equity or debt financing, to the extent available.
Previous wording
On August 29, 2025, we entered into an amended and restated Share Purchase Agreement, which was further amended by a side letter dated as of September 24, 2025, and an amended and restated Registration Rights Agreement with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited (collectively, “GEM”) (as amended, the “GEM Purchase Agreement” and the “GEM Rights Agreement,” respectively, and together, the “GEM Agreements”), pursuant to which we are eligible to put certain shares of common stock to the selling stockholders, subject to certain volume and price restrictions. Under the GEM Agreements, GEM agreed to purchase up to $85.0 million in shares of our common stock subject to certain conditions and limitations, including the registration of our common stock on a national securities exchange. Accordingly, we expect to put shares of our common stock to GEM under the GEM Agreements as needed. On October 31, 2025, we issued the initial draw-down notice to GEM for 1,235,200 shares and GEM purchased 1,235,200 shares of common stock at approximately $3.29 per share resulting in gross proceeds of $4.1 million to us.
Current wording
On August 29, 2025, we entered into an amended and restated Share Purchase Agreement, which was further amended by a side letter dated as of September 24, 2025, and an amended and restated Registration Rights Agreement with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited (collectively, “GEM”) (as amended, the “Share Purchase Agreement” and the “GEM Rights Agreement,” respectively, and together, the “GEM Agreements”), pursuant to which we are eligible to put certain shares of common stock to the selling stockholders, subject to certain volume and price restrictions. Under the GEM Agreements, GEM agreed to purchase up to $85.0 million in shares of our common stock subject to certain conditions and limitations, including the registration of our common stock on a national securities exchange. Accordingly, we expect to put shares of our common stock to GEM under the GEM Agreements as needed. On October 31, 2025, we issued the initial draw-down notice to GEM for 1,235,200 shares and GEM purchased 1,235,200 shares of common stock at approximately $3.29 per share resulting in gross proceeds of $4.1 million to us. On October 29, 2026, we issued another draw-down notice to GEM for 272,642 shares with a draw-down of 15 trading days. The draw-down period is expected to close on November 20, 2026.
Previous wording
On March 23, 2026 (the “Closing Date”), we entered into a Loan and Security Agreement (the “Loan Agreement”), with Avenue Venture Opportunities Fund II, L.P., as administrative agent and collateral agent (the “Agent”) and Avenue Venture Opportunities Fund II, L.P., as lender (the “Lender”, together with Agent, “Avenue Capital”). The Loan Agreement makes available to us term loans in an aggregate principal amount of up to $25.0 million with (i) $7.0 million funded on March 24, 2026 (“Tranche 1”), (ii) up to $8.0 million to be made available to us between September 1, 2026 and March 31, 2027, subject to (a) dosing of first patients in a Phase 3 trial of onychomycosis, (b) raising $10.0 million via equity financing and (c) positive data in our ongoing Phase 2 clinical study of GX-03 for moderate-severe atopic dermatitis (“Tranche 2”). The Lender may make additional term loans of up to an additional $10.0 million (the “Discretionary Tranche 3” and collectively with Tranche 1, and Tranche 2, the “Loans”), to be funded between January 1, 2027 and June 30, 2028, subject to, among other things, (i) that we have drawn the full amount of Tranche 2, (ii) our achievement of a certain clinical milestone and (iii) the mutual written agreement between us and the Lender (upon the Lender’s investment committee approval).
Current wording
On March 23, 2026 (the “Closing Date”), we entered into a Loan and Security Agreement (the “Loan and Security Agreement”) and a Supplement to the Loan and Security Agreement (together with the Loan and Security Agreement, the “Loan Agreement”), with Avenue Venture Opportunities Fund II, L.P., as administrative agent and collateral agent (the “Agent”) and Avenue Venture Opportunities Fund II, L.P., as lender (the “Lender”, together with Agent, “Avenue Capital”). The Loan Agreement makes available to us term loans in an aggregate principal amount of up to $25.0 million with (i) $7.0 million funded on March 24, 2026 (“Tranche 1”), (ii) up to $8.0 million to be made available to us between September 1, 2026 and March 31, 2027, subject to (a) dosing of first patients in a Phase 3 trial of onychomycosis, (b) raising $10.0 million via equity financing and (c) positive data in our ongoing Phase 2 clinical study of GX-03 for moderate-severe atopic dermatitis (“Tranche 2”). The Lender may make additional term loans of up to an additional $10.0 million (the “Discretionary Tranche 3” and collectively with Tranche 1, and Tranche 2, the “Loans”), to be funded between January 1, 2027 and June 30, 2028, subject to, among other things, (i) that we have drawn the full amount of Tranche 2, (ii) our achievement of a certain clinical milestone and (iii) the mutual written agreement between us and the Lender (upon the Lender’s investment committee approval).
Previous wording
Net cash used in operating activities during the six months ended June 30, 2026 was $2.6 million and consisted primarily of our net loss of $6.8 million, a $0.3 million outflow from changes in operating assets and liabilities primarily attributable to the timing of expenses incurred and payments issued as well as non-cash adjustments of $0.7 million of stock-based compensation, $2.6 million non-cash fair value loss from derivative liability instruments and $29.0 thousand, $1.1 million and $0.1 million in amortization of intangible assets, deferred offering cost and debt discount, respectively.
Current wording
Net cash used in operating activities during the nine months ended September 30, 2026 was $4.1 million and consisted primarily of our net loss of $13.1 million, a $0.5 million outflow from changes in operating assets and liabilities primarily attributable to the timing of expenses incurred and payments issued as well as non-cash adjustments of $1.4 million of stock-based compensation, $6.0 million non-cash fair value loss from derivative liability instruments and $43.7 thousand, $1.8 million and $0.2 million in amortization of intangible assets, deferred offering and financing costs, and debt discount, respectively.
Previous wording
Net cash used in operating activities during the six months ended June 30, 2025 was $0.8 million and consisted primarily of our net loss of $1.6 million, a $0.4 million inflow from changes in operating assets and liabilities primarily attributable to the timing of expenses incurred and payments issued as well as non-cash adjustments of $0.1 million of stock-based compensation, $0.3 million advisory services expense that was settled through issuance of common stock and $24.9 thousand in amortization of intangible assets.
Current wording
Net cash used in operating activities during the nine months ended September 30, 2025 was $1.4 million and consisted primarily of our net loss of $3.5 million, a $1.6 million inflow from changes in operating assets and liabilities primarily attributable to the timing of expenses incurred and payments issued as well as non-cash adjustments of $0.2 million of stock-based compensation, $0.25 million advisory services expense that was settled through issuance of common stock and $38.6 thousand in amortization of intangible assets.
Previous wording
Net cash used in investing activities during the six months ended June 30, 2026 was $18.0 thousand and consisted primarily of capitalization of patent related legal costs.
Current wording
Net cash used in investing activities during the nine months ended September 30, 2026 was $34.2 thousand and consisted primarily of capitalization of patent related legal costs.
Previous wording
Net cash used in investing activities during the six months ended June 30, 2025 was $31.8 thousand and consisted primarily of capitalization of patent related legal costs.
Current wording
Net cash used in investing activities during the nine months ended September 30, 2025 was $121.5 thousand and consisted primarily of capitalization of patent related legal costs.
Previous wording
Net cash provided by financing activities during the six months ended June 30, 2026 was $7.8 million and consisted of $1.1 million in proceeds from subscription receivable and $6.7 million in net proceeds from Avenue Capital Loan Agreement.
Current wording
Net cash provided by financing activities during the nine months ended September 30, 2026 was $9.4 million and consisted of $1.6 million in proceeds from the issuance of common stock in a private placement under Regulation D, $1.1 million in proceeds from subscription receivable and $6.7 million in net proceeds from Avenue Capital Loan Agreement.
Previous wording
Net cash provided by financing activities during the six months ended June 30, 2025 was $3.1 million and consisted of $3.1 million in proceeds from the issuance of common stock under the Regulation Crowdfunding, Regulation A+ and Regulation D.
Current wording
Net cash provided by financing activities during the nine months ended September 30, 2025 was $3.7 million and consisted of $3.1 million in proceeds from the issuance of common stock under the Regulation Crowdfunding, Regulation A+ and Regulation D and $0.6 million in proceeds from subscription receivable.
Previous wording
Milestone Payments — At the inception of an arrangement that includes development milestone payments, we evaluate whether the milestones are considered likely to be achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue recognized would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control, such as regulatory approvals, are not considered probable to be achieved until those approvals are received. We evaluate factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjust its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.
Current wording
Milestone Payments — At the inception of an arrangement that includes development milestone payments, we evaluate whether the milestones are considered likely to be achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue recognized would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control, such as regulatory approvals, are not considered probable to be achieved until those approvals are received. We evaluate factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other income decreased by $0.1 million from $0.1 million for the three months ended June 30, 2025 to $0 for the three months ended June 30, 2026. The decrease was primarily due to a $120.96 thousand write-off of a historical outstanding balance to a vendor for a historic outstanding invoice during the three months ended June 30, 2025.