ZEVRA THERAPEUTICS INC

Organization

Zevra Therapeutics, Inc. (the "Company") is a rare disease company combining science, data and patient needs to create transformational therapies for diseases with limited orno treatment options. The Company has a diverse portfolio of products and product candidates, which includes preclinical development programs, clinical stage pipeline and commercial stage assets. The Company’s pipeline includes arimoclomol, an orally-delivered,first-in-class investigational product candidate being developed for Niemann-Pick disease type C (“NPC”), which has been granted orphan drug designation, Fast-track designation, Breakthrough Therapy designation and rare pediatric disease designation for the treatment of NPC by the U.S. Food and Drug Administration ("FDA") and orphan medical product designation for the treatment of NPC by the European Medicines Agency ("EMA"). The arimoclomol NDA for NPC was resubmitted to the FDA on* December 21, 2023,and has been assigned a PDUFA date of September 21, 2024.*KP1077 is the Company's lead clinical development product candidate which is being developed as a treatment for idiopathic hypersomnia ("IH"), a rare neurological sleep disorder, and narcolepsy.KP1077 is comprised solely of serdexmethylphenidate (“SDX”), the Company's proprietary prodrug of d-methylphenidate ("d-MPH"). The FDA has grantedKP1077 orphan drug designation for the treatment of IH. OLPRUVA®(sodium phenylbutyrate) for oral suspension is approved by the FDA for the treatment of urea cycle disorders ("UCDs"). The Company also has a pipeline of investigational product candidates, including celiprolol for the treatment of vascular Ehlers-Danlos syndrome in patients with a confirmed type III collagen mutation.

The Company changed its name from KemPharm, Inc. to Zevra Therapeutics, Inc. effective as of* February 21, 2023.On March 1, 2023,*following its name change, the Company's common stock began trading on the Nasdaq Global Select Market under the ticker symbol "ZVRA".

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During thethree months ended* March31,* 2024, and2023, the Company incurred a net loss of $16.6 million and $13.2 million, respectively, and as of* March31,* 2024, has an accumulated deficit of $416.4 million. The Company has sustained operating losses for the majority of its corporate history and expects to continue to incur operating losses and negative operating cash flows until revenues reach a level sufficient to support ongoing operations.

The Company’s ability to continue operating as a going concern is contingent upon its ability to generate revenue from approved products or obtain product candidate regulatory approvals, which would generate revenue, milestones, and cash flow sufficient to support ongoing operations and the satisfaction of financial covenants. These factors raise substantial doubt as to the Company’s ability to continue as a going concern for at leastone year from the date the unaudited condensed consolidated financial statements are being issued. The unaudited condensed consolidated financial statements donot include any adjustments that might result from the outcome of these uncertainties.

The Company's liquidity needs will be largely determined by the success of operations through the progression of its products and product candidates in the future. The Company also* mayconsider other sources to fund operations including: (1) out-licensing rights to certain of its technologies and product candidates, pursuant to which the Company would receive cash royalties and milestones; (2) raising additional capital through equity or debt financings or from other sources; (3) obtaining product candidate regulatory approvals, which would generate revenue, milestones and cash flow; (4) reducing spending onone* or more research and development programs, including by discontinuing development; and/or (5) restructuring operations to change its overhead structure. The Company is in the early stages of its commercialization effort for OLPRUVA and doesnot yet have a substantial basis to project future earnings, and its other sources of revenue arenot sufficient to sustain its present activities on their own. Accordingly, the Company's ability to continue as a going concern* may*require it to obtain additional financing to fund its operations.

Basis of Presentation

The Company prepared the unaudited condensed consolidated financial statements in accordance with U.S. GAAP and the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the Company's opinion, reflect all adjustments, including normal recurring items that are necessary.

Merger

On* August 30, 2023,the Company and Aspen Z Merger Sub, Inc., a wholly-owned subsidiary of Zevra (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Acer Therapeutics Inc. (“Acer”), a pharmaceutical company focused on development and commercialization of therapies for rare and life-threatening diseases. On November 17, 2023 (*the "Closing Date"), the Company completed the acquisition of Acer. Pursuant to the Merger Agreement, on the Closing Date, Merger Sub was merged with and into Acer (the "Merger"), with Acer continuing as the surviving entity and as a wholly-owned subsidiary of Zevra. In connection therewith, Zevra also purchased Acer’s secured debt from Nantahala Capital Management, LLC ("NCM”), certain of its affiliates and certain other parties (collectively with NCM, “Nantahala”) through a series of transactions and Zevra agreed to provide Acer with a bridge loan facility for up to $18.0 million ("Bridge Loan"), subject to certain terms and conditions. The Merger expanded Zevra's rare disease portfolio, as well as increased and diversified its revenues with the addition of a U.S. commercial asset, OLPRUVA, indicated for the treatment of UCDs. See Note L for further discussion related to the Merger.

10

Amendment to Registration Statement on Form S-3

In connection with the Merger, Zevra and Nantahala concurrently entered into a registration rights agreement, pursuant to which Zevra agreed to file a resale registration statement with respect to the resale of the Zevra common stock issuable to Nantahala. On* February 5, 2024,Zevra filed a registration statement on Form S-3 (FileNo.* 333-276856) registering an aggregate of 2,269,721 shares of Zevra’s common stock.

On* April 5, 2024,we filed an amendment to the registration statement on Form S-3 (FileNo.* 333-250945) covering the issuance of the shares of our common stock issuable upon the exercise of warrants issued in connection with the Merger (Note L) and remaining unexercised as of the date of the amendment, which was declared effective on* April 8, 2024.*

Entry into 2021 ATM Agreement

On* July**2,* 2021, the Company entered into an equity distribution agreement (the*"2021* ATM Agreement") with JMP Securities LLC ("JMP") and RBC Capital Markets, LLC ("RBCCM") under which the Company* mayoffer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $75.0 million through JMP and RBCCM as its sales agents. The issuance and sale, if any, of common stock by the Company under the2021* ATM Agreement will be made pursuant to a registration statement on Form S-3. JMP and RBCCM* maysell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule415* of the Securities Act of1933, as amended. JMP and RBCCM will use commercially reasonable efforts to sell the common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company* mayimpose). The Company will pay JMP and RBCCM a commission equal to 3.0% in the aggregate of the gross sales proceeds of any common stock sold through JMP and RBCCM under the2021* ATM Agreement. The Company filed a registration statement on Form S-3 covering the sale of the shares of its common stock up to $350.0 million, $75.0 million of which was allocated to the sales of the shares of common stock issuable under the2021 ATM Agreement, which was declared effective on* July 12, 2021.As of March 31, 2024,no shares have been issued or sold under the2021* ATM Agreement.

Share Repurchase Program

On* December 20, 2021,the Company initiated a share repurchase program (the "Share Repurchase Program") pursuant to which the Company was able to repurchase up to $50 million of shares of its common stock through December 31, 2023.On December 31, 2023,*the Share Repurchase Program ended, and the Company had repurc hased 1,575,692 shares of its common stock for approximately $11.0 million.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, the useful lives of property and equipment, the recoverability of long-lived assets, the incremental borrowing rate for leases, and assumptions used for purposes of determining stock-based compensation, income taxes, the fair value of investments and the fair value of the derivative and warrant liability and discount and rebate liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities.

11

Investments

The Company maintains investment securities that are classified as available-for-sale securities for which the Company has elected the fair value option under ASC825, Financial Instruments("ASC825"). As such, these securities are carried at fair value with unrealized gains and losses included in fair value adjustment related to investments on the unaudited condensed consolidated statements of operations. The securities primarily consist of U.S. Treasury securities and are included in securities at fair value in the unaudited condensed consolidated balance sheets. As of* March 31, 2024,and December 31, 2023,*the Company held securities with an aggregate fair value of $9.9 million and $24.7 million, respectively, that contained aggregate unrealized (losses) gainsof approximately ($0.1) million and $0.2 million, respectively. Applying fair value accounting to these debt securities more accurately represents the Company's investment strategy due to the fact that excess cash is currently being invested for the purpose of funding future operations. Interest income is recognized as earned using an effective yield method giving effect to the amortization of premium and accretion of discount and is based on the economic life of the securities. Interest income is included in interest and other income, net in the unaudited condensed consolidated statements of operations.

Variable Interest Entities

The primary beneficiary of a variable interest entity ("VIE") is required to consolidate the assets and liabilities of the VIE. When the Company obtains a variable interest in another entity, it assesses at the inception of the relationship and upon occurrence of certain significant events whether the entity is a VIE, and if so, whether the Company is the primary beneficiary of the VIE based on its power to direct the activities of the VIE that most significantly impact the VIE's economic performance and the Company's obligation to absorb losses or the rights to receive benefits from the VIE that could potentially be significant to the VIE.

To assess whether the Company has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, the Company considers all the facts and circumstances, including the Company's role in establishing the VIE and the Company's ongoing rights and responsibilities. The assessment includes identifying the activities that most significantly impact the VIE's economic performance and identifying which party, if any, has the power to direct those activities. In general, the parties that make the most significant decisions affecting the VIE (management and representation on the Board of Directors) are deemed to have the power to direct the activities of a VIE.

To assess whether the Company has the obligation to absorb losses of the VIE or the rights to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests that are deemed to be variable interests in the VIE.

This assessment requires judgement in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. As of* March 31, 2024,and December 31, 2023,*the Company identified Acer to be the Company's sole interest in a VIE (Note L). As Zevra is the final decision maker for all of Acer's research, development, and commercialization of drug candidates that it is producing, the Company directs the activities of Acer that most significantly impact its performance. Therefore, the Company is the primary beneficiary of this VIE for accounting purposes.

12

Revenue Recognition

The Company recognizes revenue in accordance with the provisions of ASC606, Revenue from Contracts with Customers (“ASC606”) and, as a result, follows thefive-step model when recognizing revenue:1) identifying a contract;2) identifying the performance obligations;3) determining the transaction price;4) allocating the price to performance obligations; and5) recognizing revenue when the performance obligations have been fulfilled.

Licensing Agreements

The terms of the Company’s licensing agreements typically includeone or more of the following: (i) upfront fees; (ii) milestone payments related to the achievement of development, regulatory, or commercial goals; and (iii) royalties on net sales of licensed products. Each of these payments* may*result in licensing revenues.

As part of the accounting for these agreements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. Generally, the estimation of the stand-alone selling price* may*include such estimates as independent evidence of market price, forecasted revenues or costs, development timelines, discount rates, and probability of regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and it measures the services delivered to the licensee which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

Up-front Fees: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from the transaction price allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time.

Milestone Payments: At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal wouldnot occur, the associated milestone value is included in the transaction price. Milestone payments that arenot within the Company’s or the licensee’s control, such as non-operational developmental and regulatory approvals, are generallynot considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones that are within its or the licensee’s control, such as operational developmental milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. Revisions to the Company’s estimate of the transaction price* may*also result in negative licensing revenues and earnings in the period of adjustment.

Product Revenues, Net

Net revenues from product sales is recognized at the transaction price when the customer obtains control of the Company's products, which occurs at a point in time, typically upon receipt of the product by the customer.

The Company's net revenues represent total revenues adjusted for discounts and allowances, including estimated cash discounts, chargebacks, rebates, returns, copay assistance, data fees and wholesaler fees for services. These adjustments represent variable consideration under ASC606 and are recorded as a reduction of revenue. These adjustments are established by management as its best estimate based on available information and will be adjusted to reflect known changes in the factors that impact such allowances. Adjustments for variable consideration are determined based on the contractual terms with customers, historical trends, communications with customers and the levels of inventory remining in the distribution channel, as well as expectations about the market for the product and anticipated introduction of competitive products.

13

Inventories

The value of inventory is recorded at its net realizable value. The Company determines the cost of its other inventories, which includes amounts related to materials and manufacturing overhead, on afirst-in,first-out basis.

The Company* mayscale-up and make commercial quantities of its product candidates prior to the date it anticipates that such product will receive final regulatory approval. The scale-up and commercial production of pre-launch inventory involves the risk that such products may**not* be approved for marketing on a timely basis, or ever. This risk notwithstanding, the Company* mayscale-up and build pre-launch inventory of product that havenot* received final regulatory approval when the Company believes such action is appropriate in relation to the commercial value of the product launch opportunity. Inventory manufactured prior to regulatory approval is recorded as research and development expense until regulatory approval for the product is obtained. Inventory used in clinical trials is also expensed as research and development expense, when selected for such use. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical manufacturing campaign. The cost of finished goods inventory that is shipped to a customer to support the Company’s patient assistance programs is expensed when those shipments take place. As of* March 31, 2024,and December 31, 2023,*the Company didnot have pre-launch inventory that qualified for capitalization.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventory to its net realizable value in the period in which the impairment isfirst identified. Such impairment charges, should they occur, are recorded as a component of cost of product sales in the statements of operations and comprehensive loss. The determination of whether inventory costs will be realizable requires the use of estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory* maybe required. Additionally, the Company’s product is subject to strict quality control and monitoring that it performs throughout the manufacturing process. In the event that certain batches or units of product donot* meet quality specifications, the Company will record a charge to cost of product sales, to write-down any unmarketable inventory to its estimated net realizable value.

Foreign currency

Assets and liabilities are translated into the reporting currency using the exchange rates in effect on the unaudited consolidated condensed balance sheet dates. Equity accounts are translated at historical rates, except for the change in retained earnings during the year, which is the result of the income statement translation process. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in accumulated other comprehensive income/loss in the accompanying unaudited condensed consolidated statements of stockholders’ equity.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic480, Distinguishing Liabilities from Equity (ASC480) and FASB ASC Topic815, Derivatives and Hedging (ASC815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480, and whether the warrants meet all of the requirements for equity classification under ASC815, including whether the warrants are indexed to our own stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For warrants that meet all criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital, on the unaudited condensed consolidated statement of stockholders’ deficit at the time of issuance. For warrants that donot meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and on each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in other expense, net, on the unaudited condensed consolidated statement of operations. The fair value of the warrants was estimated using the Black-Scholes option pricing model.

New Accounting PronouncementsNot Yet Adopted**

Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures*

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures, which modifies the disclosure and presentation requirements of reportable segments. The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit and loss. The amendments also require disclosure of all other segment items by reportable segment and a description of its composition. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This update is effective for annual periods beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.*Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.

Income Taxes (Topic740*): Improvements to Income Tax Disclosures*

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after* December 15, 2024.*The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.

14

Secured Promissory Note

In connection with the Merger (Note L), on* August 30, 2023,the Company and Nantahala, entered into a secured promissory note payable by Zevra to Nantahala in the original principal amount of $5.0 million (the "Nantahala Note"). The Nantahala Note initially bore interest at 9.0% per annum, payable quarterly in arrears in cash. The interest rate increased to 12.0% per annum effective March 1, 2024,as the Nantahala Note remained unpaidsix* months from its issue date. The additional 3.0% interest would have been paid in shares of Zevra's common stock based on the volume weighted average trading price ("VWAP") of Zevra's common stock during thetwenty consecutive trading days ending on the date before such interest payment date. Beginning on thefirst interest payment date following thesecond anniversary of the Nantahala Note, and on each interest payment date thereafter, Zevra was required to make $0.6 million amortization payments on the Nantahala Note until it was paid in full. All principal and unpaid interest on the Nantahala Note would have been due on* August 30, 2026,thethird* anniversary of the Nantahala Note. Zevra was entitled to prepay the Nantahala Note at any time without penalty. The Nantahala Note was secured by Zevra’s interest in (i) the loan assets under the Loan Purchase Agreement described in Note L; (ii) the note assets under the Note Purchase Agreement described in Note L; (iii) the Bridge Loan described in Note L; and (iv) the proceeds therefrom. The Company used the proceeds from the Nantahala Note, along with $12.0 million in cash and 98,683 shares of Zevra's common stock, to acquire Acer's term loans, as more fully described in Note L. In* April 2024,the Nantahala Note was repaid in full and terminated. At the time of repayment, Nantahala elected to receive a cash payment in lieu of shares of Zevra's common stock in exchange for the additional 3.0% interest accrued for the period from March 1, 2024,through April 5, 2024.The outstanding balance under the Nantahala Note is included in long-term liabilities as of March 31, 2024,*as it was refinanced with long-term debt after the balance sheet date, but prior to issuance of the unaudited condensed consolidated financial statements.

As of* March 31, 2024,and December 31, 2023,*the Company had a secured promissory note outstanding, in the aggregate principal amount, as follows (in thousands):

Future minimum principal payments under the secured promissory note as of* March 31, 2024,*were as follows (in thousands):

Line of Credit

On* January 26, 2023,the Company and Wells Fargo, as lender, entered into a revolving margin account agreement. The Company's investments are used as collateral for the loan and the amount the Company is able to borrow is limited to 80-90% of its outstanding investment balance held with Wells Fargo. The margin account bore interest at the Prime rate minus 225 basis-points. As of March 31, 2024,and December 31, 2023,$37.9 million and $37.7 million was outstanding under the margin account, respectively. In April**2024,* the Company repaid the outstanding balance under the margin account with Wells Fargo, and upon such repayment, the margin capabilities were removed from the account. The outstanding balance under the margin account is included in long-term liabilities as of* March 31, 2024,as it was refinanced with long-term debt after the balance sheet date, but prior to issuance of the unaudited condensed consolidated financial statements. As of March 31, 2024,*the remaining borrowing capacity under the margin account was approximately $3.8 million.

15

Term Loans

As a subsequent event, on* April 5, 2024 (*the "Term Loans Closing Date"), the Company entered into a credit agreement (the “Credit Agreement”) with HCR Stafford Fund II, L.P., HCR Potomac Fund II, L.P., and Perceptive Credit Holdings IV, LP (collectively, the “Lenders”), and Alter Domus (US) LLC, as administrative agent (the “Administrative Agent”).

Under the terms of the Credit Agreement, the Lenders provided a senior secured loan facility to the Company in the aggregate principal amount of $100.0 million, which is divided intothree tranches as follows: (i) $60.0 million which was funded in full on the Term Loans Closing Date; (ii) $20.0 million which is available to the Company in up totwo drawings, each in an amountnot to exceed $10.0 million, at the Company’s option until18 months following the Term Loans Closing Date; and (iii) $20.0 million which is available to the Company upon approval by the FDA of the NDA for arimoclomol for the treatment of NPC, at the Company’s option until* December 31, 2024 (*collectively, the “Term Loans”).

The principal amount of the Term Loans outstanding (the “Outstanding Principal Amount”) will bear interest at a rate equal to3-Month Term SOFRplus 7.00% per annum. If the net product sales for the calendar year ending* December 31, 2025,exceed $100.0 million, the Outstanding Principal Amount will bear interest at3*-Month Term SOFRplus 6.00% per annum. If the net product sales for the calendar year ending* December 31, 2025,donot* exceed $100.0 million, then for any subsequent period offour consecutive fiscal quarters ending on or after* March 31, 2026,in which net product sales exceed $125.0 million, the Outstanding Principal Amount will bear interest at3*-Month Term SOFRplus 6.50% per annum. In all cases, the3-Month Term SOFR rate will be subject to a floor of 4.00% per annum. Interest will be payable quarterly in arrears on the last day of each calendar quarter. The Company has the option to pay up to 25% of the interest in-kind beginning on the Term Loans Closing Date, through and including* March 31, 2026.The Term Loans will mature on thefifth* anniversary of the Term Loans Closing Date. In connection with the Credit Agreement, the Company incurred approximately $1.7 million of costs, which primarily consisted of underwriting, legal and other professional fees, and is included in other long-term assets in the unaudited condensed consolidated balance sheet as of* March 31, 2024.*

The Credit Agreement contains customary affirmative and negative covenants by the Company, which among other things, will require the Company to provide certain financial reports to the Lenders, meet certain minimum net product sales amounts, and limit the ability of the Company to incur or guarantee additional indebtedness, engage in certain transactions, and effect a consolidation or merger, without consent. The obligations of the Company under the Credit Agreement* maybe accelerated upon customary events of default, including non-payment of principal, interest, fees and other amounts, covenant defaults, insolvency, material judgments, or inaccuracy of representations and warranties The Term Loans are secured by afirst* priority perfected lien on, and security interest in, substantially all current and future assets of the Company. The proceeds of the Term Loans shall be used to refinance certain existing indebtedness of the Company and its subsidiaries. The Company will use the remaining proceeds to pay fees and expenses related to the Debt Financing and fund the development and commercialization of OLPRUVA and arimoclomol.

Licensing Agreements

AZSTARYS License Agreement

The Company entered into a Collaboration and License Agreement (the “AZSTARYS License Agreement”) with Commave Therapeutics SA ("Commave"), an affiliate of GPC. Under the AZSTARYS License Agreement, as amended, the Company granted to Commave an exclusive, worldwide license to develop, manufacture and commercialize the Company’s product candidates containing SDX and d-MPH, including AZSTARYS, or any other product candidates containing SDX and developed to treat ADHD or any other CNS disorder. Corium was tasked by Commave to lead all commercialization activities for AZSTARYS under the AZSTARYS License Agreement. Pursuant to the AZSTARYS License Agreement, Commave agreed to pay milestone payments up to an aggregate of $590.0 million upon the occurrence of specified regulatory milestones related to AZSTARYS, additional fixed payments upon the achievement of specified U.S. sales milestones, and quarterly, tiered royalty payments based on a range of percentages of net sales (as defined in the AZSTARYS License Agreement). Commave is obligated to make such royalty payments on a product-by-product basis until expiration of the royalty term for the applicable product.

The AZSTARYS License Agreement is within the scope of ASC606, as the transaction represents a contract with a customer where the participants function in a customer / vendor relationship and arenot exposed equally to the risks and rewards of the activities contemplated under the AZSTARYS License Agreement.

The Company concluded that these regulatory milestones, sales milestones and royalty payments each contain a significant uncertainty associated with a future event. As such, these milestone and royalty payments are constrained at contract inception and arenot included in the transaction price as the Company couldnot conclude that it is probable a significant reversal in the amount of cumulative revenue recognized willnot occur surrounding these milestone paym ents. At the end of each reporting period, the Company updates its assessment of whether the milestone and royalty payments are constrained by considering both the likelihood and magnitude of the potential revenue reversal. For thethree months ended* March 31, 2024,and2023,* the Company recognized $1.2 million and $0.6 millionof revenue under the AZSTARYS License Agreement., respectively, primarily related to royalties. There wasno deferred revenue related to this agreement as of* March**31,* 2024, or* December 31,*2023.

In accordance with the terms of the Company’s Termination Agreement with Aquestive Therapeutics dated* March 20, 2012,Aquestive Therapeutics ("Aquestive") has the right to receive an amount equal to 10% of any royalty or milestone payments made to the Company related to AZSTARYS orKP1077* under the AZSTARYS License Agreement.

Relief Exclusive License Agreement

As a condition to entering into the Merger Agreement, Acer and Relief Therapeutics, Inc. ("Relief") entered into an exclusive license agreement on* August 30, 2023 (the “Relief License Agreement”). Pursuant to the Relief License Agreement, Relief will hold exclusive development and commercialization rights for OLPRUVA in the European Union, Liechtenstein, San Marino, Vatican City, Norway, Iceland, Principality of Monaco, Andorra, Gibraltar, Switzerland, United Kingdom, Albania, Bosnia, Kosovo, Montenegro, Serbia and North Macedonia ("Geographical Europe"). The Company will have the right to receive a royalty of up to 10.0% of the net sales of OLPRUVA in Geographical Europe. For thethree* months ended* March**31,* 2024, the Company didnot recognize any revenue under the Relief License Agreement. There wasno deferred revenue related to this agreement as of* March 31, 2024,and December 31, 2023.*For further discussion of the Relief License Agreement, see Note L.

16

Product Revenues, Net

Arimoclomol Expanded Access Program

Net revenue includes revenue from the sale of arimoclomol for the treatment of NPC under the remunerated expanded access compassionate use program in France (“French nATU”). An expanded access compassionate use program is a program giving specific patients access to a drug, which isnot yet approved for commercial sale. Only drugs targeting serious or rare indications and for which there is currentlyno appropriate treatment are considered for expanded access compassionate use programs. Further, to be considered for the expanded access compassionate use program, the drug must have proven efficacy and safety and must either be undergoing price negotiations or seeking marketing approval.

In accordance with ASC606, the Company recognizes revenue when fulfilling its performance obligation under the Arimoclomol Expanded Access Program ("Arimoclomol EAP") by transferring control of promised goods or services to its customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In determining when the customer obtains control of the product, the Company considers certain indicators, including whether the Company has a present right to payment from the customer, whether title and/or significant risks and rewards of ownership have transferred to the customer and whether the customer acceptance has been received. Revenue is recognized net of sales deductions, including discounts, rebates, applicable distributor fees, and revenue-based taxes.

The French Health Authorities and the manufacturer have agreed to a price for sales during the French nATU, but the final transaction price depends on the terms and conditions in the contracts with the French Health Authorities and is subject to price negotiations with the French Health Authorities, following market approval. Any excess in the price charged the manufacturer compared to the price agreed with the health authorities once the drug product is approved in France must be repaid. The repayment is considered in the clawback liability (rebate). An estimate of net revenue and clawback liability are recognized using the ‘expected value’ method. Accounting for net revenue and clawback liability requires determination of the most appropriate method for the expected final transaction price. This estimate also requires assumptions with respect to inputs into the method, including current pricing of comparable marketed products within the rare disease area in France. Management has considered the expected final sales price as well as the price of similar drug products. The Company is operating within a rare disease therapeutic area where there is unmet treatment need and hence a limited number of comparable commercialized drugs products. The limited available relevant market information for directly comparable commercialized drugs within rare disease increases the uncertainty in management's estimate.

For thethree months ended* March 31, 2024,the Company recognized revenue related to the Arimoclomol EAP in France of $2.2 million, which is net of a clawback liability of $1.3 million, and other gross to net adjustments. For thethree* months ended* March 31, 2023,the Company recognized revenue related to the Arimoclomol EAP in France of$2.0 million, which is net of a clawback liability of $1.3 million, and other gross to net adjustments. The total estimated reserve liability as of March 31,* 2024, and* December 31, 2023,was $13.2 million and$12.2 million, respectively. As of March 31, 2024,and December 31, 2023,*this estimated reserve liability is recorded as discount and rebate liabilities in the unaudited condensed consolidated balance sheets and is separated into current and long-term based upon the timing of the expected payment to the French regulators.

OLPRUVA Product Sales

On* December 27, 2022,the FDA approved OLPRUVA (sodium phenylbutyrate), a prescription medicine used along with certain therapy, including changes in diet, for the long-term management of adults and children with UCDs weighing44* pounds (20 kg) or greater and with a body surface area of1.2m2 or greater. On* November 17, 2023,the Company acquired OLPRUVA in connection with the Merger (Note L). To commercialize OLPRUVA for oral suspension in the U.S. the Company is building marketing, sales, medical affairs, distribution, managerial and other non-technical capabilities or making arrangements withthird* parties to perform these services. The Company's current distributor for sales of OLPRUVA is a single specialty pharmacy provider. However, the Company intends to establish additional distributors such as other retail pharmacies and certain medical centers or hospitals. In addition to distribution agreements, the Company enters into arrangements with health care providers and payors that provide for government mandated and/or privately negotiated rebates with respect to the purchase of its products.

For thethree months ended* March 31, 2024,and2023,* sales of OLPRUVA were de minimis due to limited shipments to our specialty pharmacy inQ1 2024.

Accounts and Other Receivables

Accounts and other receivables consist of receivables from product sales, receivables under the AZSTARYS License Agreement and Arimoclomol EAP, as well as income tax receivables and other receivables due to the Company. Receivables under the AZSTARYS License Agreement are recorded for amounts due to the Company related to reimbursablethird-party costs and royalties on product sales. Receivables under the Arimoclomol EAP are recorded for product sales under the French nATU. These receivables are evaluated to determine if any reserve or allowance should be established at each reporting date. As of* March 31,2024, the Company had receivables related to the Arimoclomol EAP of $4.8 million, AZSTARYS License Agreement of$1.2 million, income tax receivables of $0.1 million and other receivables of $2.2 million. As of December 31, 2023,the Company had receivables related to the Arimoclomol EAP of $4.7 million, AZSTARYS License Agreement of$11.4 million, and other receivables of $1.3 million. As of March**31,* 2024, and* December 31, 2023,*no reserve or allowance for doubtful accounts had been established.

17

From time to time, the Company is involved in various legal proceedings arising in the normal course of business. For some matters, a liability isnot probable, or the amount cannot be reasonably estimated and, therefore, an accrual hasnot been made. However, for such matters when it is probable that the Company has incurred a liability and can reasonably estimate the amount, the Company accrues and discloses such estimates.

Stockholder Litigation Related to the Merger

On* October 12, 2023,Brodsky & Smith, purporting to act as counsel for Jerry Beavee, who was asserted to be a stockholder of Acer, filed a complaint entitled Jerry Beavee v. Acer Therapeutics Inc., et al.,No. 1:23-cv-08995 in the United States District Court for the Southern District of New York (the "Action") alleging that defendants violated Section14*(a) and20(a) of the Securities Exchange Act of1934 by filing the Preliminary Merger Registration Statement which allegedly omitted certain information that such counsel asserts is material to Acer’s required disclosure. On* October 30, 2023,Acer filed with the SEC a ScheduleDEF14A* that contained additional information regarding the Merger, which mooted the disclosure claims alleged in the Action. On* December 8, 2023,*Jerry Beavee filed with the court a notice of dismissal of the Action without prejudice.

On* October 20, 2023,Long Law, LLC and Acocelli Law, PLLC, purporting to act as counsel for Kevin Turner, who was asserted to be a stockholder of Acer, filed a complaint entitled Kevin Turner v. Acer Therapeutics Inc., et al.,No. 1:23-cv-01185 in the United States District Court for the District of Delaware alleging that defendants violated Section14*(a) and20(a) of the Securities Exchange Act of1934 as well as SEC Rule14a-9 by filing the Definitive Proxy Statement which allegedly omitted certain information that such counsel asserts is material to Acer’s required disclosure. The complaint prays that, if asserted omissions arenot adequately corrected, then Turner will seek to enjoin Acer from holding a stockholder meeting to approve the Merger and, if the Merger closes, will seek to rescind it and seek an award of damages.

On* October 20, 2023,Long Law, LLC, purporting to act as counsel for Matthew Jones, who was asserted to be a stockholder of Acer, filed a complaint entitled Matthew Jones v. Acer Therapeutics Inc., et al.,No. 1:23-cv-01186 in the United States District Court for the District of Delaware alleging that defendants violated Section14*(a) and20(a) of the Securities Exchange Act of1934 as well as SEC Rule14a-9 by filing the Definitive Proxy Statement which allegedly omitted certain information that such counsel asserts is material to the Acer’s required disclosure. The complaint prays that, if asserted omissions arenot adequately corrected, then Jones will seek to enjoin Acer from holding a stockholder meeting to approve the Merger and, if the Merger closes, will seek to rescind it and seek an award of damages.

As of* March 31, 2024,and December 31, 2023*, no accruals have been made related to commitments and contingencies. The Company intends to vigorously defend these lawsuits and believes that it has meritorious defenses to each. However, litigation is inherently uncertain, and any judgment or injunctive relief entered against the Company or any adverse settlement could adversely affect the Company’s business, results of operations and financial condition.

Authorized, Issued, and Outstanding Common Shares

As of* March 31, 2024*, and* December 31, 2023*, the Company had authorized shares of common stock of 250,000,000 shares. Of the authorized shares,43,426,186 and 43,110,360 shares of common stock were issued as of* March 31,2024, and December 31, 2023,respectively, and 41,850,494 and 41,534,668 shares of common stock were outstanding as of March 31, 2024*, and* December 31, 2023*, respectively.

As of* March 31, 2024* and* December 31, 2023*, the Company had reserved authorized shares of common stock for future issuance as follows:

Common Stock Activity

The following table summarizes common stock activity for the three months ended* March 31, 2024**:*

Authorized, Issued, and Outstanding Preferred Stock

As of* March 31, 2024,and December 31, 2023,*the Company had 10,000,000 shares of authorized preferred stock,none of which were designated, issued, or outstanding.

18

Warrants to Purchase Common Stock

The Company has issued warrants to purchase common stock to variousthird parties, of which 5,603,729 remain outstanding as of* March 31, 2024,and are immediately exercisable. These warrants qualify as participating securities under ASC Topic260,* Earnings per Share, and are treated as such in the net loss per share calculation (Note H). The Company* may*be required to redeem these warrants for a cash amount equal to the Black-Scholes value of the portion of the warrants to be redeemed (the “Put Option”).

In connection with the Merger (Note L), in* November 2023,the Company directly issued to certain investors an aggregate of 1,382,489 shares of its common stock, par value $0.0001 per share, and accompanying warrants to purchase up to 1,382,489 shares of its common stock (the"2023* Warrants") at a combined offering price of $4.34 per share of common stock and the Warrants and an aggregate of 917,934 shares of its common stock in exchange for the cancellation of a warrant to purchase 2,920,306 shares of common stock of Acer. The Warrants are immediately exercisable and expire on* November 22, 2028.The Company used the net proceeds of approximately $6.0 million from the offering for general corporate purposes. These warrants are separately exercisable by the warrant holders. While the warrants are outstanding (but unexercised), the warrant holders will participate in any dividend or other distribution of the Company’s assets to its common stockholders by way of return of capital or otherwise. As of March 31, 2024,and December 31, 2023,none of the warrants have been exercised. The warrants have been evaluated to determine the appropriate accounting and classification pursuant to ASC Topic480,* Distinguishing Liabilities from Equity, and ASC Topic815, Derivatives and Hedging. Generally, freestanding warrants should be classified as (i) liabilities if the warrant terms allow settlement of the warrant exercise in cash and (ii) equity if the warrant terms only allow settlement in shares of common stock.

The Company determined that its outstanding warrants and the Put Option should be recorded as a liability and stated at fair value at each reporting period. Changes to the fair value of the warrant liability are recorded through the unaudited condensed consolidated statements of operations as a fair value adjustment related to warrant and CVR liability. As of* March 31, 2024,and December 31, 2023,the fair value of the liability associated with these warrants and the Put Option was approximately$11.5 million and $16.1 million, respectively. The fair value adjustment related to these warrants and the Put Option was approximately$4.6 million of income and $1.5 million of expense for thethree* months ended* March 31,*2024, and2023, respectively.

The Company maintains a stock-based compensation plan (the “Incentive Stock Plan”) that governs stock awards made to employees and directors prior to completion of the IPO.

In* November 2014,the Board of Directors of the Company ("the Board"), and in April 2015,the Company’s stockholders, approved the Company’s2014* Equity Incentive Plan (the*“2014* Plan”), which became effective in* April 2015.The2014* Plan provides for the grant of stock options, other forms of equity compensation, and performance cash awards. In* June 2021,the Company's stockholders approved an Amended and Restated2014* Equity Incentive Plan (the "A&R2014 Plan"), following its adoption by the Board in* April 2021,which among other things added 4,900,000 shares to the maximum number of shares of common stock to be issued under the plan and extended the annual automatic increases (discussed further below) until January 1, 2031and eliminated individual grant limits that applied under the2014* Plan to awards that were intended to comply with the exemption for "performance-based compensation" under Code Section162(m). The maximum number of shares of common stock that* maybe issued under the A&R2014* Plan is 9,932,883 as of* March 31, 2024*. The number of shares of common stock reserved for issuance under the A&R2014 Plan will automatically increase on* January 1of each year, until and including January 1, 2031,by 4% of the total number of shares of the Company’s capital stock outstanding on December 31of the preceding calendar year, or a lesser number of shares determined by the Board. Pursuant to the terms of the2014* Plan, on* January 1, 2024,the common stock reserved for issuance under the2014* Plan automatically increased by 1,661,386 shares.

During thethree months ended* March 31,2024, 716,875 stock options were exercised. During thethree months ended March 31, 2023,*no stock options were exercised.

In* June 2021,the Company's stockholders approved an Employee Stock Purchase Plan (the "ESPP"), following its adoption by the Board in April 2021.The maximum number of shares of common stock that maybe issued under the ESPP is 1,500,000. Thefirst* offering period under the ESPP began on* October 1, 2021,and thefirst* purchase date occurred on* May 31, 2022.As of March 31,*2024, 159,828 shares have been issued under the ESPP.

In* January 2023,the Board approved the2023* Employment Inducement Award Plan (the*"2023* Plan"). The maximum number of shares of common stock that were initially available for issuance under the2023 Plan was 1,500,000. In* February 2024,our Board approved an amendment to the2023* Plan to increase the aggregate number of shares of common stock available for issuance under the2023 Plan from 1,500,000 to 4,500,000 shares.

In* May 2023,the Board approved the Ninth Amended and Restated Non-Employee Director Compensation Policy (the “Non-Employee Director Compensation Policy”). The equity compensation made pursuant to the Non-Employee Director Compensation Policy will be granted under the A&R2014* Plan.

Stock-based compensation expense recorded under the Incentive Stock Plan, A&R2014 Plan, ESPP and2023 Plan is included in the following line items in the accompanying unaudited condensed consolidated statements of operations (in thousands):

There wasno stock-based compensation expense related to performance-based awards recognized during thethree months ended* March 31, 2024,and2023.*

19

The accounting standard for fair value measurements provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.

The Company uses athree-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. Thethree tiers are defined as follows:

The carrying amounts of certain financial instruments, including cash and cash equivalents, investments, and accounts payable and accrued expenses, approximate their respective fair values due to the short-term nature of such instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached regarding fair value measurements as of* March 31,2024, and December 31, 2023 (*in thousands):

The common stock warrant liabilities were recorded at fair value using the Black-Scholes option pricing model. The following assumptions were used in determining the fair value of the warrant liabilities valued using the Black-Scholes option pricing model as of* March 31, 2024,and December 31, 2023:*

20

The following table is a reconciliation for the common stock warrant liabilities measured at fair value using Level3 unobservable inputs (in thousands):

For thethree months ended* March 31, 2024,and2023,* the changes in fair value of the warrant liabilities primarily resulted from the volatility of the Company's common stock and the change in the risk-free interest rates.

For all periods presented herein, the Company didnot use thetwo-class method to compute net loss per share of common stock, even though it had issued securities, other than common stock, that contractually entitled the holders to participate in dividends and earnings, because these holders arenot obligated to participate in a loss. Thetwo-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings.

Under thetwo-class method, for periods with net income, basic net income per share of common stock is computed by dividing the undistributed net income by the weighted average number of shares of common stock outstanding during the period. Undistributed net income is computed by subtracting from net income the portion of current period earnings that participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed and subtracting the actual or deemed dividends declared.No such adjustment to earnings is made during periods with a net loss as the holders of the participating securities haveno obligation to fund losses. Diluted net income per share of common stock is computed under thetwo-class method by using the weighted average number of shares of common stock outstanding plus the potential dilutive effects of stock options, warrants and other outstanding convertible securities. In addition to analyzing under thetwo-class method, the Company analyzes the potential dilutive effect of stock options and warrants, under the treasury-stock method and other outstanding convertible securities under the if-converted method when calculating diluted income (loss) per share of common stock, in which it is assumed that the stock options, warrants and other outstanding convertible securities convert into common stock at the beginning of the period or date of issuance, if the stock option, warrant or other outstanding convertible security was issued during the period. The Company reports the more dilutive of the approaches (two-class or treasury-stock/if-converted) as its diluted net income (loss) of common stock during the period.

As noted above, for all periods presented herein, the Company didnot utilize thetwo-class approach as the Company was in a net loss position and the holders of the participating securities haveno obligation to fund losses. The Company did analyze diluted net loss per share of common stock under the treasury-stock/if-converted method and noted that all outstanding stock options and warrants were anti-dilutive for the periods presented. For all periods presented, basic net loss per share of common stock was the same as diluted net loss per share of common stock.

The following securities, presented on a common stock equivalent basis, have been excluded from the calculation of weighted average number of shares of common stock outstanding because their effect is anti-dilutive:

A reconciliation from net loss to basic and diluted net loss per share of common stock for thethree months ended* March**31,* 2024, and2023, is as follows (in thousands):

21

The Company has operating and finance leases for office space, laboratory facilities and various laboratory equipment, furniture and office equipment and leasehold improvements. The Company determines if an arrangement is a lease at contract inception. Lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. The Company doesnot separate lease and non-lease components. Leases with a term of12 months or less at commencement arenot recorded on the unaudited condensed consolidated balance sheets. Lease expense for these arrangements is recognized on a straight-line bases over the lease term. The Company's leases have remaining lease terms of less than 1 year to approximately 3 years, some of which include options to extend the leases for up to 5 years, and some which include options to terminate the leases within 1 year.

Effective* June 1, 2021,the Company agreed to sublease office space in Florida, comprised ofone* of thetwo contiguous suites, under a non-cancelable operating lease, which expires in* February 2026.*

The components of lease expense were as follows (in thousands):

Supplemental cash flow information related to leases was as follows (in thousands):

22

Supplemental balance sheet information related to leases was as follows (in thousands, except weighted average remaining lease term and weighted average discount rate):

Maturities of lease liabilities were as follows (in thousands):

23

On* August 30, 2023,*in connection with the Merger Agreement with Acer, the following transactions occurred prior to Closing:

In connection with the closing of the Merger on* November 17, 2023,each share of common stock of Acer was converted into the right to receive (i)0.1210 fully paid and non-assessable shares of common stock of Zevra, par value $0.0001 per share , and (ii)one non-transferable contingent value right (“CVR”) to be issued by Zevra, which will represent the right to receiveone* or more contingent payments up to an additional $76 million upon the achievement, if any, of certain commercial and regulatory milestones for Acer’s OLPRUVA and celiprolol products within specified time periods. Certain additional cash payments are also possible pursuant to the CVRs with respect to milestones involving Acer’s early-stage program ACER-2820 (emetine).

24

The assets acquired and liabilities assumed were recorded based on their acquisition date fair values. Consideration for the Merger was $72.6 million and consists of (i) approximately 2.96 million shares of Zevra common stock valued at $12.8 million, (ii) the Bridge Loan advances of $17.8 million, (iii) $12.0 million in cash paid to Nantahala; (iv)2.27 million shares of Zevra Common Stock issued to Nantahala valued at $11.5 million based on the VWAP of shares of Zevra Common Stock during the 20 consecutive trading days ending on the trading date prior to* August 30, 2023; (*v) a secured promissory note payable by Zevra to Nantahala in the original principal amount of $5.0 million, as disclosed in Note C, (vi) $8.5 million in the estimated fair value of contingent consideration related to the CVRs, (vii) approximately 0.9 million shares of Zevra Common Stock issued to a former holder of Acer warrants valued at $4.0 million based on Zevra's common stock price on the Effective Date and (viii) $1.0 million in notes payable paid by the Company on Acer's behalf. In addition, effective as of immediately prior to the Effective Time, all of the outstanding and unexercised Acer stock options were automatically cancelled and ceased to exist without any cash or other consideration being paid or provided in respect thereof. The following purchase price allocation reflects the preliminary estimates of and assumptions related to the fair values of assets acquired and liabilities assumed:

The preliminary fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined using an income approach based on management’s estimates and assumptions, as well as other information compiled by management, includingthird-party valuations that utilize customary valuation procedures and techniques. These preliminary fair values are subject to change within theone-year measurement period. The estimated fair values were developed by discounting future net cash flows to their present value at market-based rates of return. The goodwill acquired represents the excess of the purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of the business acquired. The useful lives of the intangible assets for amortization purposes were determined by considering the period of expected cash flows used to measure the fair values of the intangible assets adjusted as appropriate for entity-specific factors including legal, regulatory, contractual, competitive, economic and other factors that* maylimit the useful life. The marketed product asset is amortized on a straight-line basis over its estimated useful life. As of March**31,* 2024, the IPR&D project hadnot been completed or abandoned and, therefore, the IPR&D intangible asset isnot currently subject to amortization.

The results of operations and changes in stockholders' equity for Acer were included in the Company's consolidated financial statements beginning* November 18, 2023.*

The following pro forma combined results of operations present the acquisition as if it had occurred on* January 1, 2023.The pro forma combined results of operations donot* necessarily represent the Company's consolidated results of operations had the acquisition occurred on the date assumed, nor are these results necessarily indicative of the Company's future consolidated results of operations. The Company expects to realize certain benefits from integrating Acer into the Company and to incur certainone-time costs. The pro forma combined results of operations donot reflect these benefits or costs.

25

Cancellation of Acer Warrant

On* November 22, 2023,*the Company sold an aggregate of 917,934 shares of its common stock to a healthcare focused investment fund (the "Investor") to cancel a warrant held by the Investor to purchase 2,920,306 shares of common stock of Acer. The shares of common stock were offered and sold to the Investor in a registered direct offering without an underwriter or placement agent.

Contingent Consideration

Contingent consideration liabilities relate to our liabilities arising in connection with the CVRs issued as a result of the Merger. The contingent consideration is classified as Level3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earn-out achievement objectives, utilizing projections about future performance. Significant inputs include volatility and projected financial information, including projections representative of a market participant's view of the expected cash payments associated with the agreed upon regulatory milestones based on probabilities of technical success, timing of the potential milestone events for the compounds, and estimated discount rates.

The following table provides a reconciliation of the beginning and ending balances related to the contingent consideration liabilities for the CVRs (dollars in thousands):

For thethree months ended* March**31,* 2024, the Company recordeda $0.9 million loss on the change in fair value of contingent consideration, primarily due to changes in market data and revenue projections.

The Company's goodwill balance was $4.7 million as of* March 31, 2024,and December 31, 2023.*

As of* March 31, 2024,and December 31, 2023,*non-amortizable intangible assets include IPR&D of $2.0 million

As of* March 31, 2024,and December 31, 2023,the Company had a definite-lived intangible asset, net related to the acquisition of OLPRUVA as a result of the Merger of $65.7 million and $67.2 million, respectively. This is amortized on a straight-line basis over its estimated economic life ofeleven years and is reviewed periodically for impairment. Amortization expense is recorded as a component of cost of revenue in the unaudited condensed consolidated statements of operations and was $1.5 million for thethree* months ended* March 31, 2024.* No amortization expense related to definite-lived intangible assets was recognized for thethree months ended* March 31, 2023.*

For intangible assets subject to amortization, estimated amortization expense for thefive fiscal years subsequent to* March 31,*2024, is expected to be $6.2 million per year.

The Company evaluated events and transactions occurring subsequent to* March**31,* 2024, through* May 9, 2024,the date the accompanying unaudited condensed consolidated financial statements were issued. During this period, other than entering into the Credit Agreement and the repayment of the margin account and the Nantahala Note, as disclosed in Note D, there wereno* subsequent events that required recognition in the accompanying unaudited condensed consolidated financial statements, nor were there any additional non-recognized subsequent events that required disclosure.

26