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 Unaudited 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). All resources are currently focused on developing Niyad. LTX-608 is a nafamostat formulation for direct IV infusion that the Company may 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. There are two ready-to-use pre-filled syringe product candidates that have been explored but are being evaluated for discontinuation.

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 2025 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 for which it 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.

On July 14, 2021, the Company entered into a License and Commercialization Agreement, or the PFS Agreement, with Laboratoire Aguettant, or Aguettant, pursuant to which the Company obtained the exclusive right to develop and, subject to FDA approval, commercialize in the United States (i) an ephedrine pre-filled syringe for injection (Fedsyra), and (ii) a phenylephrine PFS for injection (see Note 5, “In-License Agreement” to the consolidated financial statements in the Company’s 2025 Annual Report on Form 10-K for additional information). Aguettant will supply the Company with the products for use in commercialization, if they are approved in the U.S. This agreement is currently being evaluated for potential termination given the competitive environment for these product candidates.

Liquidity and Going Concern

The unaudited condensed consolidated financial statements for the three months ended March 31, 2026 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 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, 2025, as filed with the SEC on March 23, 2026. 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 unaudited 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 unaudited 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, 2025. There have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2026, from those previously disclosed in its 2025 Annual Report on Form 10-K.

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 unaudited 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 March 31, 2026, and December 31, 2025, the contractual maturity of all investments held was less than one year.

The tables below summarize the Company’s cash and 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 months ended March 31, 2026 or the twelve months ended December 31, 2025. As such, the Company didnot record a credit allowance for the three months ended March 31, 2026 or the year ended December 31, 2025.

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 March 31, 2026 and December 31, 2025, the Company held, in addition to Level 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 unaudited condensed consolidated statements of operations.

The following tables set forth the fair value of the Company’s financial assets and liabilities 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 months ended March 31, 2026 and 2025 (in thousands):

At March 31, 2026, the December 2022 Common Stock Warrants were valued at approximately $1.2 million, using the Black-Scholes option pricing model as follows: exercise price of $2.07 per share, stock price of $0.7469 per share, expected life of 2.75 years, volatility of 94.49%, a risk-free rate of 3.81% 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 months ended March 31, 2026, and the year ended December 31, 2025.

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 2025 Annual Report on Form 10-K for additional information).

The following table presents the results of the discontinued operations for the three-month period ended March 31, 2026 and March 31, 2025 (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.

Alora notified the Company in October 2024 that they are discontinuing their DSUVIA sales efforts to non-DoD customers and, in 2025, that they had submitted a letter to the FDA to request the withdrawal of the DSUVIA NDA. As a result, the Company expects payments to XOMA related to the Purchased Receivables will be lower than the gross proceeds of $6.6 million received; however, the Company will defer recognition of any probable contingent gain until it has met its obligations under the Purchase Agreement. The Company did not recognize any non-cash revenue or non-cash interest expense for the three months ended March 31, 2026, and recognized de minimus non-cash payment interest revenue and no non-cash interest expense for the three months ended March 31, 2025.

5. Commitments and Contingencies

Legal Proceedings

The Company is not currently a party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to its legal proceedings as they are incurred. No such costs have been incurred during the three months ended March 31, 2026.

6. Stockholders’** Equity**

April 2025 Private Placement–* Third** Closing*

On March 13, 2026, the third closing of the April 2025 Private Placement took place following the Company’s announcement of the enrollment of 35 patients in the Niyad NEPHRO CRRT study and the achievement of the target price milestone, which resulted in the issuance of: (i)639,931 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 6,399,316 shares of common stock at an exercise price of $0.001 per share, and gross proceeds of $4.1 million. There are no additional shares of common stock and/or pre-funded warrants remaining to be sold in connection with the third closing of the April 2025 Private Placement.

As of March 31, 2026, the Company had incurred $0.3 million in unpaid closing costs related to the third closing of the April 2025 Private Placement.

CorMedix Right of First Negotiation

Pursuant to the securities purchase agreement entered into with CorMedix, Inc., or 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.

7. Warrants

The activity related to warrants during the three months ended March 31, 2026, is summarized as follows:

April 2025 Pre-Funded Warrants

In March 2026, the Company issued pre-funded warrants at a price of $0.585 per warrant to purchase up to an aggregate of 6,399,316 shares of common stock at an exercise price of $0.001 per share, in connection with the third closing of the April 2025 Private Placement (see Note 6, “Stockholders’ Equity” for additional information).

At March 31, 2026,25,452,768 of the 45,718,344 warrants outstanding and exercisable were pre-funded warrants.

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 19,756 shares of common stock underlying vested RSUs that were withheld during the quarter ended March 31, 2026, 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:

As of March 31, 2026, total stock-based compensation expense related to unvested options to be recognized in future periods was $1.7 million which is expected to be recognized over a weighted-average period of 3 years. As of March 31, 2026, there were 310,787 shares available for grant under the Company’s equity incentive plans and 166,039 shares available for grant under the Amended ESPP.

9. Net Loss per Share of Common Stock

The Company applies the two-class method to compute basic net income (loss) per share by dividing the net income (loss) attributable to common shareholders by the weighted average number of shares of common stock outstanding for the period. The diluted net income (loss) per share of common stock is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the more dilutive of the 1) treasury stock method, if-converted method, or contingently issuable share method, as applicable, or 2) the two-class 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.

The July 2023 Series A and Series B common stock warrants, the placement agent July 2023 Series A and Series B common stock warrants, the December 2022 Common Stock Warrants, and the November 2021 Financing Warrants are all participating securities which, by definition, entitle the holders thereof to participate in dividends and other distributions of assets by the Company to its holders of common shares as though the holder then held common shares; however, there is no contractual obligation on the part of the warrant holders to participate in the Company’s losses.

Given that the Company’s participating securities do not have a contractual obligation to share in the Company’s losses, net loss for the three months ended March 31, 2026, and the year ended December 31, 2025, was attributed entirely to common stockholders. 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 pre-funded warrants issued with de minimis exercise prices of $0.001 per share under the Company’s September 2025, April 2025, January 2024, and July 2023 private placement offerings, are considered outstanding common shares which are included in the calculation of basic and diluted net income (loss) per share in all circumstances.

The following outstanding shares of common stock equivalents were excluded from the computation of diluted net income (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 2025 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.

The segment derives its revenues in the United States pursuant to the Marketing Agreement with Alora. 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 income, net includes fair value adjustments to warrant liability, interest income, and stock-based compensation expense and marketing support.