TALPHERA, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

Condensed Consolidated Statements of Stockholders’** Equity**

(in thousands, except share data)

Condensed Consolidated Statements of Cash Flows

(In thousands)

Notes to Condensed Consolidated Financial Statements

(In thousands, except where otherwise noted)

1. Organization and Summary of Significant Accounting Policies

The Company

Talphera, Inc., or the Company, or Talphera, was incorporated in Delaware on July 13, 2005 as SuRx, Inc. The Company subsequently changed its name to AcelRx Pharmaceuticals, Inc. and, on January 9, 2024 to Talphera, Inc. The Company’s operations are based in San Mateo, California.

Talphera is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings. The Company’s product development portfolio features Niyad™ (a regional anticoagulant for the dialysis circuit), LTX-608 (a nafamostat formulation for direct IV infusion) that the Company intends to develop for one or more of the following indications: disseminated intravascular coagulation, or DIC, acute respiratory distress syndrome, or ARDS, acute pancreatitis, or as an anti-viral treatment.

On January 7, 2022, the Company acquired Lowell Therapeutics, Inc., or Lowell, a privately held company (see Note 4, “Asset Acquisition” to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K for additional information) and, as a result acquired the Niyad™ developmental product, a regional anticoagulant for the dialysis circuit during continuous renal replacement therapy for acute kidney injury patients in the hospital, that the Company is studying under an investigational device exemption, or IDE, and which has received Breakthrough Device Designation status from the FDA. While not approved for commercial use in the United States, the active drug component of Niyad, nafamostat, has been approved in Japan and South Korea as a regional anticoagulant for the dialysis circuit, disseminated intravascular coagulation, and acute pancreatitis. Niyad is a lyophilized formulation of nafamostat, a broad-spectrum, synthetic serine protease inhibitor, with anticoagulant, anti-inflammatory, and potential anti-viral activities. The second intended indication for Niyad is as a regional anticoagulant for the dialysis circuit for chronic kidney disease patients undergoing intermittent hemodialysis in dialysis centers. In addition, the Company acquired LTX-608, a nafamostat formulation for direct IV infusion, that it intends to develop for the treatment of one or more of the following indications: ARDS, DIC, acute pancreatitis or as an anti-viral agent.

Liquidity and Going Concern

The condensed consolidated financial statements for the three and nine months ended September 30, 2025 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. The Company has incurred recurring operating losses and negative cash flows from operating activities since inception and expects to continue to incur operating losses and negative cash flows in the future. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Considering the Company’s current cash resources and its current and expected levels of operating expenses for the next twelve months, management expects to need additional capital to fund its planned operations prior to the 12-month anniversary of the date this Quarterly Report on Form 10-Q is filed with the United States Securities and Exchange Commission, or the SEC.

Management may seek to raise such additional capital through public or private equity offerings, debt securities, a new debt facility, monetizing or securitizing certain assets, entering into product development, license or distribution agreements with third parties, or divesting any of the Company’s remaining product candidates. While management believes its plans to raise additional funds will alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not entirely within the Company’s control and cannot be assessed as being probable of occurring.

Additional funds may not be available when the Company needs them on terms that are acceptable to the Company, or at all. If adequate funds are not available, the Company may be required to further reduce its workforce, delay the ongoing clinical trial for Niyad, or delay the development of its regulatory filing plans for its product candidates in advance of the date on which the Company’s cash resources are exhausted to ensure that the Company has sufficient capital to meet its obligations and continue on a path designed to preserve stockholder value. In addition, if additional funds are raised through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish rights to its technologies, future revenue streams or product candidates, or to grant licenses on terms that may not be favorable to the Company.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, or GAAP, and with the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, related to quarterly reports on Form 10-Q, and accordingly, they do not include all the information and disclosures required by GAAP for annual financial statements. These condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on March 31, 2025. The unaudited financial information for the interim periods presented herein reflects all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of its financial position and the condensed consolidated results of operations for the periods presented. Results of operations for interim periods covered by this Quarterly Report on Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management believes its most significant accounting estimates relate to fair value of warrants, impairment of long-lived assets, management’s assessment of going concern, revenue recognition, liability related to the sale of future payments and accrued clinical trial liabilities. Management evaluates its estimates on an ongoing basis including critical accounting policies. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in its Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2025, from those previously disclosed in its 2024 Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting and Standards Board, or FASB, issued Accounting Standard Update, or ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid. The Company has adopted ASU 2023-09 for its period beginning January 1, 2025, and it will be applied on a prospective basis. The adoption of ASU 2023-09 did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03,Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, or ASU 2024-03, which is intended to enhance transparency into the nature and function of expenses, primarily through additional disclosures on certain cost and expenses. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This authoritative guidance is effective for the Company beginning with its annual disclosures for 2027 and interim periods beginning in 2028. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is in the process of evaluating the impact of this new guidance on its disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the condensed consolidated financial statements.

2. Investments and Fair Value Measurement

Investments

The Company classifies its marketable securities as available for sale and records its investments at fair value. Available-for-sale securities are carried at estimated fair value based on quoted market prices or observable market inputs of almost identical assets, with the unrealized holding gains and losses included in accumulated other comprehensive income (loss).

As of September 30, 2025, and December 31, 2024, the contractual maturity of all investments held was less than one year.

The tables below summarize the Company’s cash, cash equivalents and short-term investments (in thousands):

At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic conditions. There wereno material realized or unrealized gains or losses on marketable securities for the three and nine months ended September 30, 2025 or the twelve months ended December 31, 2024. As such, the Company didnot record a credit allowance for the three and nine months ended September 30, 2025 or the year ended December 31, 2024.

Fair Value Measurement

The Company’s financial instruments consist of Level I and II assets. Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. For Level II instruments, the Company estimates fair value by utilizing third-party pricing services in developing fair value measurements where fair value is based on valuation methodologies such as models using observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data. Such Level II instruments typically include U.S. Treasury, U.S. government agency securities and commercial paper. As of September 30, 2025 and December 31, 2024, the Company held, in addition to Level I and II assets, a warrant liability related to the December 2022 Common Stock Warrants. The fair value of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years; equity volatility; and risk-free interest rate. The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The estimated fair value of the warrant liability represents a Level III measurement. Changes to the estimated fair value of these liabilities are recorded in change in fair value of warrant liability in the condensed consolidated statements of operations.

The following tables set forth the fair value of the Company’s financial assets by level within the fair value hierarchy (in thousands):

The following tables set forth a summary of the changes in the fair value of the Company’s Level III warrant liability for the three and nine month periods ended September 30, 2025 and 2024 (in thousands):

The common warrants issued in December 2022 to purchase an aggregate of 4,227,052 shares of common stock, or the December 2022 Common Stock Warrants, were accounted for by the Company as a liability. At September 30, 2025, the December 2022 Common Stock Warrants were valued at approximately $1.9 million, using the Black-Scholes option pricing model as follows: exercise price of $2.07 per share, stock price of $0.8932 per share, expected life of 3.25 years, volatility of 99.73%, a risk-free rate of 3.61% and 0% expected dividend yield.

There were no transfers between Level I, Level II or Level III of the fair value hierarchy during the three and nine months ended September 30, 2025, and the year ended December 31, 2024.

3. Discontinued Operations

On March 12, 2023, the Company entered into the Asset Purchase Agreement with Alora Pharmaceuticals, LLC, or Alora, for Alora’s acquisition of all assets related to DSUVIA, including inventories, equipment and intellectual property in exchange for consideration at closing of $1.1 million, a 15% payment on commercial sales of DSUVIA,75% payment on sales of DSUVIA to the Department of Defense and up to $116.5 million in sales-based milestones, or the DSUVIA Agreement. The transaction closed on April 3, 2023 (see Note 3, “Discontinued Operations” to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K for additional information).

The following table presents the results of the discontinued operations for the three and nine month periods ended September 30, 2025 and 2024 (in thousands):

The following table summarizes the carrying amounts of major classes of liabilities of discontinued operations for each of the periods presented (in thousands):

4. Sale of Future Payments

On January 12, 2024, the Company and XOMA (US) LLC, or XOMA, entered into a Payment Interest Purchase Agreement, or the Purchase Agreement, for the sale by the Company to XOMA, in exchange for $8.0 million, of the Company’s right, title and interest in and to certain amounts payable to the Company, or collectively the Purchased Receivables, pursuant to the DSUVIA Agreement. See Note 7, “Sale of Future Payments” and Note 3, “Discontinued Operations” to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K for additional information on the Purchase Agreement and DSUVIA Agreement, respectively.

The allocation of the consideration for the Purchase Agreement resulted in proceeds of $1.4 million reduced by $0.2 million of transaction costs being allocated to the sale of all future interest in payments related to commercial sales of DSUVIA representing its fair value. As a result of the Company’s loss of control, no further continuing involvement in, or rights to future payments related to commercial sales of DSUVIA, the Company recognized other income of $1.2 million in January 2024.

The Company evaluated the terms of the Purchase Agreement and concluded that the features of the Purchased Receivables are similar to those of a debt instrument. Accordingly, the Company recorded the allocated proceeds of approximately $6.6 million reduced by approximately $0.5 million of transaction costs, as a liability. The Company accounts for the value of the debt at amortized cost. The amounts received by the Company will be accreted to the total estimated amount of the payments necessary to extinguish the Company’s obligation under the Purchase Agreement, which will be recognized as interest expense. The carrying value of the debt will decrease for payments made to XOMA.

In October 2024, Alora Pharmaceuticals, LLC, or Alora, notified the Company that they are discontinuing their DSUVIA sales efforts to non-DoD customers. At this time, the Company is uncertain as to the impact of this decision on sales of DSUVIA to the DoD. As a result, the Company estimates that future payments under the Purchase Agreement will be less than the proceeds from the sale of such future payments. Accordingly, the Company will not recognize any related non-cash interest expense. When the expected payments under the sale of future payments are lower than the gross proceeds of $6.6 million received, the Company defers recognition of any probable contingent gain until the Company has met its obligations under the liability related to the sale of future payments. For the three and nine months ended September 30, 2025, the estimated effective interest rate under the agreement was approximately 0%, and for three and nine months ended September 30, 2024, the estimated effective interest rate under the agreement was approximately 0% and 9%, respectively.

The Company recognized de minimus non-cash payment interest revenue andno non-cash interest expense for the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, the Company didnot recognize any non-cash payment interest revenue. For the three months ended September 30, 2024, the Company didnot recognize any non-cash interest expense, while it recognized $0.4 million in non-cash interest expense for the nine months ended September 30, 2024. The interest and amortization of issuance costs are reflected as non-cash interest expense for the sale of future payments in the condensed consolidated statements of operations.

5. Commitments and Contingencies

Litigation

On June 8, 2021, a securities class action complaint was filed in the U.S. District Court for the Northern District of California against the Company andtwo of its officers. The plaintiff is a purported stockholder of the Company. The complaint alleged that defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by making false and misleading statements and omissions of material fact about the Company’s disclosure controls and procedures with respect to its marketing of DSUVIA. The complaint sought unspecified damages, interest, attorneys’ fees, and other costs. On December 16, 2021, the Court appointed co-lead plaintiffs. Plaintiffs’ amended complaint was filed on March 7, 2022. The amended complaint named the Company andthree of its officers and continued to allege that defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by making false and misleading statements and omissions of material fact about the Company’s disclosure controls and procedures with respect to its marketing of DSUVIA. The amended complaint also asserted a violation of Section 20A of the Exchange Act against the individual defendants for alleged insider trading. The amended complaint sought unspecified damages, interest, attorneys’ fees, and other costs. The Court granted three motions to dismiss plaintiffs’ complaint: the first on September 28, 2022, the second on November 28, 2022, and the third, with prejudice on May 7, 2024. Judgment was entered for defendants on plaintiffs’ claims on May 7, 2024. Plaintiffs appealed the District Court’s decision to the United States Court of Appeals for the Ninth Circuit. On August 20, 2025, the Ninth Circuit affirmed the District Court’s dismissal of the securities class action.

On July 6, 2021, a purported shareholder derivative complaint was filed in the U.S. District Court for the Northern District of California. The complaint namesten of the Company’s officers and directors and asserts state and federal claims based on the same alleged misstatements as the securities class action complaint. On September 30, 2021, October 26, 2021, and November 17, 2021, three additional purported shareholder derivative complaints were filed in the U.S. District Court for the Northern District of California. The complaints name nine of the Company’s officers and directors and also assert state and federal claims based on the same alleged misstatements as the securities class action complaint. Allfour complaints seek unspecified damages, attorneys’ fees, and other costs. On December 6, 2021, the Court entered an order consolidating all four actions and staying the consolidated action pending the outcome of any motion to dismiss the securities class action. On September 30, 2025, the Court terminated the consolidated action, following the parties’ stipulation to dismiss the case in light of the Ninth Circuit order in securities class action.

On February 16, 2024, another purported shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, asserting the same claims as those in the previously filed derivative actions. The case has been stayed pending the outcome of any motion to dismiss the securities class action. On October 8, 2025, plaintiff filed a notice of dismissal of the case in light of the Ninth Circuit order in the securities class action.

Please see “Part II., Item 1A. Risk Factors—Risks of a General Nature—Litigation may substantially increase our costs and harm our business.”

The Company believes that these lawsuits are without merit and intends to vigorously defend against them. Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions. It is reasonably possible that this estimate may change in the near term. An adverse outcome regarding these matters could materially adversely affect the Company’s financial condition, results of operations, and cash flows.

6. Stockholders’** Equity**

Common Stock

September 2025 Private Placement

The Company entered into securities purchase agreements and a registration rights agreement, each dated September 7, 2025, with CorMedix Inc., or CorMedix, a publicly traded life science company, and several institutional investors, or collectively, the September 2025 Purchasers, relating to the issuance and sale in a private placement of shares of its common stock, par value $0.001 per share, and pre-funded warrants to purchase shares of common stock.

At the first closing of the private placement on September 10, 2025, the Company issued and sold to the September 2025 Purchasers: (i)25,036,360 shares of common stock at a purchase price of $0.55 per share, and (ii) pre-funded warrants to purchase up to an aggregate of 5,845,455 shares of common stock at a purchase price of $0.549 per share (see Note 7, “Warrants” for additional information). The pre-funded warrants were exercisable immediately following the first closing, subject to beneficial ownership limitations, and have an unlimited term and an exercise price of $0.001 per share. The aggregate gross proceeds to the Company from the first closing of the private placement were approximately $17.0 million, before deducting estimated expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the pre-funded warrants.

The September 2025 Purchasers, other than CorMedix, have also agreed to purchase an additional $12.0 million of shares of common stock or pre-funded warrants to purchase shares of common stock in a second closing at the same purchase price as the first closing. The second closing will occur if the Company announces the achievement of the primary endpoint in the NEPHRO CRRT study, and then following such announcement the average VWAP of the Company’s common stock for each of the immediately subsequent five trading days is at least $0.6875 per share (as adjusted for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the date of the September 2025 Purchase Agreements and prior to the second closing date (which is 125% of the per share purchase price)), or the Second Closing Milestone. The September 2025 Purchasers may choose to waive the Second Closing Milestone through the termination of the Niyad NEPHRO CRRT study.

The Company evaluated the shares of common stock and pre-funded warrants to purchase shares of common stock in each of the first and second closings under the September 2025 Private Placement under ASC 815-40 and determined that they did not require liability classification and met the requirements for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity. Accordingly, the proceeds from the first closing were allocated between common stock and the pre-funded warrants, at their respective relative fair value basis to stockholders’ equity and as a component of additional paid-in capital on the condensed consolidated balance sheets. The fair value of the pre-funded warrants was determined using a Black-Scholes option pricing model and the common stock based on the closing date share price and were recorded in additional paid-in capital within stockholders' equity on the condensed consolidated balance sheets. The Company has determined that the shares of common stock and pre-funded warrants in the second closing under the September 2025 Private Placement will also be equity classified as they are indexed to the Company's own shares and meet all other conditions for equity classification and that the fair value of the right to the second closing was immaterial at issuance.

The September 2025 Private Placement securities purchase agreements contain customary representations, warranties and agreements by the Company and the September 2025 Purchasers, indemnification rights and other obligations of the parties.

Pursuant to the registration rights agreement, the Company agreed to file registration statements under the Securities Act of 1933, as amended, with the Securities and Exchange Commission following the applicable closings covering the resale of the shares of common stock issued in the September 2025 Private Placement and the shares of common stock underlying the pre-funded warrants.

CorMedix Director Appointment and Right of First Negotiation

Pursuant to the September 2025 Purchase Agreement entered into with CorMedix, for so long as CorMedix and its affiliates beneficially own at least 25% of the shares of common stock it purchased at the first closing, CorMedix shall have the right, subject to compliance with the applicable rules and regulations of The Nasdaq Capital Market, to designate one member of the Company’s board of directors.

Additionally, pursuant to the September 2025 Purchase Agreement entered into with CorMedix, following the public announcement, or the Public Announcement, by the Company of the achievement of the primary endpoint and topline clinical data and results of the NEPHRO CRRT clinical study for its product candidate Niyad, CorMedix shall have the right for 60 days thereafter, or the Exclusivity Period, to negotiate exclusively with the Company, or the Right of First Negotiation, with respect to an acquisition of 100% of the capital stock and equity interests of the Company, or an Acquisition Transaction. During the Exclusivity Period, the Company agreed that it shall not engage in discussions with any other third party about an Acquisition Transaction, a sale or exclusive license of all or substantially all of the assets of the Company or any similar transaction. If after conducting good faith negotiations during the Exclusivity Period, the parties are unable to reach a definitive agreement with respect to an Acquisition Transaction, the Company will not, for a period of nine months from the date of the Public Announcement, enter into a definitive agreement or binding arrangement with a third party with respect to an Acquisition Transaction or similar transaction on financial terms less favorable (in the good faith determination of the board of directors of the Company) than those offered in writing by CorMedix during the Exclusivity Period (if any) without the written consent of CorMedix, which consent shall not be unreasonably withheld, delayed or conditioned. The Right of First Negotiation shall terminate upon the earlier of: (i) Talphera’s public announcement of the termination of the NEPHRO CRRT clinical study for any reason prior to the achievement of the study’s primary endpoint and (ii) December 31, 2027.

April 2025 Private Placement

The Company entered into a securities purchase agreement and registration rights agreement with several institutional investors and a member of management, or collectively, the April 2025 Purchasers, dated March 31, 2025, relating to the issuance and sale in a private placement in three separate tranches of: (i) shares of its common stock, par value $0.001 per share, and (ii) pre-funded warrants to purchase shares of common stock, or the April 2025 Private Placement. The pre-funded warrants will be exercisable immediately following the applicable closing, subject to beneficial ownership limitations, and have an unlimited term and an exercise price of $0.001 per share.

At the first closing of the April 2025 Private Placement, on April 2, 2025, the Company issued and sold to the April 2025 Purchasers: (i)3,405,118 shares of common stock at a price of $0.586 per share, and (ii) pre-funded warrants at a price of $0.585 per warrant to purchase up to an aggregate of 4,999,316 shares of common stock at an exercise price of $0.001 per share (see Note 7, “Warrants” for additional information). The aggregate gross proceeds to the Company from the first closing of the April 2025 Private Placement were approximately $4.9 million, before deducting estimated expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the pre-funded warrants.

The second closing of the April 2025 Private Placement was scheduled to occur if the Company announced the enrollment of at least 17 patients in its Niyad NEPHRO CRRT study, and following such announcement the average volume weighted average price of its common stock for each of the immediately subsequent five trading days was at least $0.7325 per share. The third closing of the April 2025 Private Placement will occur if the Company announces the enrollment of at least 35 patients in the Niyad NEPHRO CRRT study and following such announcement the average volume weighted average price of its common stock for each of the immediately subsequent five trading days is at least $0.7325 per share. The Company announced the enrollment of 17 patients in the Niyad NEPHRO CRRT study on August 25, 2025; however, the average volume weighted average price of its common stock for each of the immediately subsequent five trading days was not at least $0.7325 per share. Therefore, the second closing did not occur. The April 2025 Purchasers may elect to waive the milestones related to each of the second and third closings and exercise their related purchase rights under the April 2025 Private Placement through termination of the NEPHRO CRRT study.

In October, 2025, certain April 2025 Purchasers elected to waive the milestone requirements for the second and third closings, resulting in the issuance of: (i)1,023,890 shares of common stock, at a price of $0.586 per share, and (ii) pre-funded warrants at a price of $0.585 per warrant to purchase up to an aggregate of 1,706,484 shares of common stock at an exercise price of $0.001 per share, and gross proceeds of $1.6 million, or the Optional Closing. Following the Optional Closing, (i) approximately $4.1 million shares of common stock and/or pre-funded warrants may be sold if the April 2025 Purchasers waive the closing conditions to the second closing and (ii) approximately $4.1 million shares of common stock and/or pre-funded warrants may be sold in a third closing upon the achievement of the milestones related to the third closing or if the April 2025 Purchasers waive the closing condition to the third closing.

The Company evaluated the shares of common stock and pre-funded warrants in each of the first, second and third closings under the April 2025 Private Placement under ASC 815-40 and determined that they did not require liability classification and met the requirements for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity. Accordingly, the proceeds from the first closing were allocated between common stock and the pre-funded warrants, at their respective relative fair value basis to stockholders’ equity and as a component of additional paid-in capital on the condensed consolidated balance sheets. The fair value of the pre-funded warrants was determined using a Black-Scholes option pricing model and the common stock based on the closing date share price and were recorded in additional paid-in capital within stockholders' equity on the condensed consolidated balance sheets. The Company has determined that the shares of common stock and pre-funded warrants in each of the second and third closings under the April 2025 Private Placement will also be equity classified as they are indexed to the Company's own shares and meet all other conditions for equity classification and that the fair value of the right to the second and third closings was immaterial at issuance.

The April 2025 Private Placement securities purchase agreements contain customary representations, warranties and agreements by the Company and the Purchasers, indemnification rights and other obligations of the parties.

Pursuant to the registration rights agreement, the Company agreed to file registration statements under the Securities Act of 1933, as amended, with the Securities and Exchange Commission following the applicable closings covering the resale of the shares of common stock issued in the April 2025 Private Placement and the shares of common stock underlying the pre-funded warrants.

The April 2025 Private Placement released the entities affiliated with Nantahala Management, LLC from their obligations under the Nantahala Agreements related to the second tranche of the January 2024 Private Placement. Accordingly, the second tranche of the January 2024 Private Placement will not be consummated.

7. Warrants

The activity related to warrants during the nine months ended September 30, 2025, is summarized as follows:

Pre-Funded Warrants

In September 2025, the Company issued and sold pre-funded warrants to purchase up to an aggregate of 5,845,455 shares of common stock to the September 2025 Purchasers at a purchase price of $0.549 per share and an exercise price of $0.001 per share (see Note 6, “Stockholders’ Equity” for additional information). The pre-funded warrants were exercisable immediately, subject to beneficial ownership restrictions, and have an unlimited term.

In April 2025, the Company issued and sold pre-funded warrants to purchase up to an aggregate of 4,999,316 shares of common stock to the April 2025 Purchasers at a purchase price of $0.585 per share and an exercise price of $0.001 per share (see Note 6, “Stockholders’ Equity” for additional information). The pre-funded warrants were exercisable immediately, subject to beneficial ownership restrictions, and have an unlimited term.

All the pre-funded warrants issued by the Company in April and September 2025 were classified as a component of permanent equity in the Company's condensed consolidated balance sheet as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares and permit the holders to receive a fixed number of shares of common stock upon exercise. All of the shares underlying the pre-funded warrants are included in the weighted-average number of shares of common stock used to calculate net loss per share attributable to common stockholders because the shares may be issued for little or no consideration and are fully vested and are exercisable after their original issuance date. The pre-funded warrants may participate with common shareholders in dividends or other distributions.

In October 2025, the Company issued and sold additional pre-funded warrants to purchase up to an aggregate of 1,706,484 shares of common stock at a purchase price of $0.585 per share and an exercise price of $0.001 per share, to certain April 2025 Purchasers that elected to waive the April 2025 Private Placement milestone requirements for the second and third closings. The pre-funded warrants were exercisable immediately, subject to beneficial ownership restrictions, and have an unlimited term.

8. Stock-Based Compensation

The Company recorded total stock-based compensation expense for stock options, restricted stock units, or RSUs, and the Amended and Restated 2011 Employee Stock Purchase Plan, or the Amended ESPP, as follows (in thousands):

The following table summarizes restricted stock unit activity under the Company’s equity incentive plans:

Upon vesting, certain of the Company’s RSUs may be settled on a net-exercise basis to cover any required withholding tax with the remaining amount converted into an equivalent number of shares of common stock. There were zero and 31,891 shares of common stock underlying vested RSUs that were withheld during the three and nine months ended September 30, 2025, respectively, based on the value of the RSUs as determined by the Company’s closing stock price on the applicable vesting date.

The following table summarizes stock option activity under the Company’s equity incentive plans:

The per-share weighted average grant date fair value of the options granted during the nine months ended September 30, 2025 was estimated at $0.47 per share on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

As of September 30, 2025, total stock-based compensation expense related to unvested options to be recognized in future periods was $0.9 million which is expected to be recognized over a weighted-average period of 2.5 years. As of September 30, 2025, there were 1,185,690 shares available for grant under the Company’s equity incentive plans and 112,831 shares available for grant under the Amended ESPP.

9. Net Loss per Share of Common Stock

The Company’s basic net loss per share of common stock is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding for the period. The diluted net loss per share of common stock is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, options to purchase common stock, RSUs, and warrants to purchase common stock were considered to be common stock equivalents. In periods with a reported net loss, common stock equivalents are excluded from the calculation of diluted net loss per share of common stock if their effect is antidilutive. Potential common shares that are issuable for little or no cash consideration, such as the Company’s pre-funded warrants issued in September 2025, April 2025, January 2024 and July 2023 with a de minimis exercise price of $0.001 per share, are considered outstanding common shares which are included in the calculation of basic and diluted net loss per share in all circumstances.

The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been antidilutive:

In addition, the shares contingently issuable in connection with the Lowell Merger, as described in Note 4, “Asset Acquisition” to the Company’s 2024 Annual Report on Form 10-K, have also been excluded from the computation of diluted net loss per share of common stock for the periods presented because the contingencies for issuance of these shares have not been met.

10. Segment Information

The Company reports segment information based on how it internally evaluates the operating performance of its business units, or segments. The Company hasone reportable segment, which is the development and commercialization of innovative therapies for use in medically supervised settings.

The Company’s chief operating decision maker, or CODM, which consists of its Chief Executive Officer and the Chief Financial Officer, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations. The CODM assesses performance for the segment and decides how to allocate resources based on condensed consolidated net loss that is also reported on the condensed consolidated statements of operations. The CODM uses condensed consolidated net loss to evaluate the Company's spend and monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing resource allocation across the organization.

The measure of segment assets is reported on the condensed consolidated balance sheets as total condensed consolidated assets.

Factors used in determining the reportable segment include the nature of the Company's operating activities, the organizational and reporting structure and the type of information reviewed by the CODM to allocate resources and evaluate financial performance. The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

All long-lived assets are maintained in the United States.

The table below is a summary of the segment loss, including significant segment expenses (in thousands):

(a) Other general and administrative expense includes consulting and professional services fees, insurance, facilities and other corporate expenses.

(b)Other segment loss (income), net includes gain on sale of future payments, fair value adjustments to warrant liability, interest income and expense, and stock-based compensation expense and marketing support.

11. Subsequent Event

Refer to Note 6, “Stockholders’ Equity” for discussion of the Optional Closing for the April 2025 Private Placement that occurred on October 21, 2025.