Eton Pharmaceuticals, Inc.

Note1 — Company Overview**

The Company is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases. The Company currently haseleven commercial rare disease products: INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, IMPAVIDO®, Carglumic Acid, Betaine Anhydrous and Nitisinone, with IMPAVIDO® scheduled for commercialization in* September 2026.The Company hasfour* additional product candidates in late-stage development: Amglidia®, ET-700, ET-800 and ZENEO® hydrocortisone autoinjector.

Note2 — Summary of Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying condensed financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain prior period amounts have been reclassified to conform to current year presentation in the condensed financial statements and notes to financial statements.

Unaudited Interim Financial Information

The accompanying interim condensed financial statements are unaudited and have been prepared on the same basis as the audited annual financial statements of the Company and, in the opinion of management, reflect all adjustments necessary for the fair presentation of the Company’s financial position as of* June 30, 2026,and the results of its operations and its cash flows for the periods ended June 30, 2026and2025.* The financial data and other information disclosed in these notes related to thethree andsix months ended* June 30,2026 and2025 are also unaudited. The interim financial statements are condensed and generally donot repeat the disclosures in the annual financial statements. As such, the interim financial statements herein should be read in conjunction with the Company’s latest annual financial statements filed with the U.S. Securities and Exchange Commission (“SEC”) on Form10-K on March 19, 2026.The results for thethree* andsix months ended* June 30, 2026,arenot* necessarily indicative of results to be expected for the year ending* December 31, 2026,*any other interim periods, or any future year or period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but arenot limited to, Medicaid program rebates, valuation of inventories, useful lives of assets and the recoverability of long-lived assets, valuation of deferred tax assets, and the valuation of common stock, stock options, warrants, and restricted stock units (“RSUs”). Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions.

Acquisitions

The Company accounts for business acquisitions using the acquisition method of accounting. Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company's estimates of fair value are based upon assumptions believed to be reasonable but that are inherently uncertain and unpredictable and, as a result, actual results* may*differ from estimates. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill.

The Company accounts for acquisitions that donot meet the definition of a business as an asset acquisition. The determination of whether a transaction represents a business combination or an asset acquisition requires significant judgment, including an evaluation of whether the acquired asset includes a substantive process and whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. For transactions accounted for as asset acquisition, the Company allocates the purchase price, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. This allocation requires management to make significant estimates and assumptions, including the selection of valuation methodologies, discount rates, projected cash flows, and useful lives of acquired assets. Changes in these assumptions could result in materially different allocations of the purchase price, which* mayimpact future amortization expense. In addition, because goodwill isnot* recognized in asset acquisitions, the assignment of value to identifiable intangible assets* may*be greater than in a business combination.

The Company amortizes finite-lived intangible assets over their estimated useful lives and evaluates indefinite-lived assets for impairment. The determination of useful lives and the timing of impairment assessments requires significant judgment and* may*materially affect the Company’s results of operations. Critical estimates in valuing certain of the intangible assets acquired include:

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Segment Information

The Company operates the business on the basis of a single reportable segment, which includeseleven commercial rare disease products: INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, IMPAVIDO®, Carglumic Acid, Betaine Anhydrous and Nitisinone. The Company primarily derives revenues from product sales to a specialty pharmacy customer, AnovoRx, who then provides order fulfillment, inventory storage and distribution services. The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer, who evaluates the Company’s financial performance and results of operations as a single operating segment. The CODM reviews net income or loss as a measure of segment profit or loss in assessing performance and allocating resources. Segment revenues, expenses and profit or loss is reported on the Condensed Statements of Operations. Additionally, the measure of segment assets is reported on the Company’s Condensed Balance Sheets as total assets.

The Company's revenues and its accounts receivable balances are highly concentrated and consist of sales to and amounts due from AnovoRx for the Company's INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, Carglumic Acid, Betaine Anhydrous and Nitisinone products, as well as from Pentec Health for sales of the Company’s PKU GOLIKE® product. For thesix months ended* June**30,* 2026 and2025, AnovoRx product sales represented 90.4% and 92.0% of net product revenues, respectively. As of* June 30, 2026and December 31, 2025,AnovoRx product sales represented 88.1% and 88.4% of net accounts receivable. During thethree* andsix months ended* June 30, 2026and2025,* the Company's revenues from external customers were entirely derived from U.S. operations. As of* June 30, 2026and December 31, 2025,*all long-lived assets were domiciled within the U.S.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity ofthree months or less to be cash equivalents. All cash and cash equivalents are held in U.S. financial institutions or invested in short-term U.S. treasury bills or high-grade, government money market funds. From time to time, amounts deposited with its bank exceed federally insured limits. The Company believes the associated credit risk to be minimal.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and are non-interest bearing. Accounts receivable are recorded net of allowances for credit losses and cash discounts for prompt payment. The Company considers historical collection rates and the current financial status of its customers, as well as macroeconomic and industry-specific factors when evaluating potential credit losses. The Company's accounts receivable balances are highly concentrated with a select number of customers, consisting primarily of specialty pharmacies. Given the size and creditworthiness of these customers, we havenot experienced and donot expect to experience material credit losses.

Inventories

The Company values its inventories at the lower of cost or net realizable value using thefirst-in,first-out method of valuation. The Company reviews its inventories for potential excess or obsolete issues on an ongoing basis and records a write-down if an impairment is identified. As of* June 30, 2026and December 31, 2025*, inventories consisted of purchased finished goods, semi-finished goods and raw materials.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is computed utilizing the straight-line method based on the following estimated useful lives. Computer hardware and software is depreciated over three years. Equipment, furniture and fixtures is depreciated over five years. Leasehold improvements are amortized over their estimated useful lives or the remaining lease term, whichever is shorter. Construction in progress is capitalized butnot depreciated until it is placed into service.

Intangible Assets

The Company has historically capitalized payments it makes for licensed products when the payment is based on Food and Drug Administration (“FDA”) approval or near-term approval for the product and the cost is recoverable based on expected future cash flows from the product. In* January 2026,the Company purchased the licensing rights to a product that hasnot* received FDA approval and accordingly, is classified as In-Process Research and Development (“IPR&D”) within Intangible assets, net on the Company's Condensed Balance Sheet as of* June 30, 2026.In February 2026,the Company entered into a licensing agreement to acquire the U.S. rights to HEMANGEOL® (propranolol) oral solution from Pierre Fabre Medicament Sas (“Pierre Fabre”), in which the Company paid Pierre Fabre $14,000 upfront. The Company accounted for this transaction as an asset acquisition, and after purchase accounting adjustments for inventory step-up costs of $1,131, and including acquisition related expenses of $100, the Company recorded $12,969 for the HEMANGEOL® intangible asset which is being amortized over its useful life often years. In May 2026,*the Company entered into a licensing agreement to acquire the U.S right to IMPAVIDO® (miltefosine) oral capsules from Knight Therapeutics, Inc., in which the Company will pay $4,250 in fixed fees. The Company capitalized $3,304 in intangible assets associated with IMPAVIDO®, which is being amortized over its useful life often years. The Company accounted for this transaction as an asset acquisition

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Intangible assets are amortized on a straight-line basis over the estimated useful life of the product commencing on the approval date or the product acquisition date in accordance with ASC350 — Intangibles - Goodwill and Other. The following table presents the Company's intangible assets as of* June 30, 2026and December 31, 2025:*

The Company recorded $2,473 and $2,002 of amortization expense for thesix months ended* June 30, 2026and2025,* respectively. The table below shows the estimated remaining amortization for these products for each of the* *five years from2026 to2030 and thereafter.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the Company’s Condensed Statements of Operations for the amount by which the carrying amount of the asset exceeds the fair value of the asset. No impairment was recognized during thesix-month periods ended* June 30, 2026or2025*.

Deferred Financing Costs, Debt Discount and Detachable Debt-Related Warrants

Costs incurred to issue debt are deferred and recorded as a reduction to the debt balance in the accompanying Condensed Balance Sheets. The Company amortizes these costs over the expected term of the related debt under the effective interest method. Debt discounts related to the relative fair value of warrants issued in conjunction with debt are also recorded as a reduction to the debt balance and accreted over the expected term into interest expense using the effective interest method.

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Leases

The Company accounts for leases in accordance with ASC Topic842 — Leases. The Company reviews all relevant facts and circumstances of a contract to determine if it is a lease whereby the terms of the agreement convey the right to control the direct use and receive substantially all the economic benefits of an identified asset for a period of time in exchange for consideration. The associated right-of-use assets and lease liabilities are recognized at lease commencement. The Company measures lease liabilities based on the present value of the lease payments over the lease term discounted using the rate it would pay on a loan with the equivalent payments and term for the lease. The Company doesnot include the impact for lease term options that would extend or terminate the lease unless it is reasonably certain that it will exercise any such options. The Company accounts for the lease components separately from non-lease components for its operating leases.

The Company measures right-of-use assets based on the corresponding lease liabilities adjusted for (i) any prepayments made to the lessor at or before the commencement date, (ii) initial direct costs it incurs, and (iii) any incentives under the lease. In addition, the Company evaluates the recoverability of its right-of-use assets for possible impairment in accordance with its long-lived assets policy.

Operating leases are reflected on the Condensed Balance Sheets as operating lease right-of-use assets, current accrued liabilities and long-term operating lease liabilities. The Company doesnot have any finance leases as of* June 30, 2026* and* December 31, 2025*.

The Company commences recognizing operating lease expense when the lessor makes the underlying asset available for use by the Company and the operating lease expense is recognized on a straight-line basis over the term of the lease. Variable lease payments are expensed as incurred.

The Company doesnot recognize right-of-use assets or lease liabilities for leases with a term oftwelve months or less; such lease costs are recorded in the Condensed Statements of Operations on a straight-line basis over the lease term.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the successful award of a patent and the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

Concentrations of Credit Risk, Sources of Supply and Significant Customers

The Company is subject to credit risk for its cash and cash equivalents, which are invested in money market funds and U.S. treasury bills from time to time. The Company maintains its cash and cash equivalent balances withone major commercial bank and the deposits held with the financial institution exceed the amount of insurance provided on such deposits and are exposed to credit risk in the event of a default by the financial institution holding its cash and cash equivalents to the extent recorded on the Condensed Balance Sheets. The Company believes the associated credit risk to be minimal.

The Company is dependent onthird-party suppliers for its products and product candidates. In particular, the Company relies, and expects to continue to rely, on a small number of suppliers to manufacture key chemicals, approved products and process its product candidates as part of its development programs. These programs could be adversely affected by a significant interruption in the manufacturing process.

The Company is also subject to credit risk from its accounts receivable related to product sales as it extends credit based on an evaluation of the customer’s financial condition, and collateral isnot required. The Company's accounts receivables are evaluated to determine if any allowance should be recorded based on consideration of the current economic environment, expectations of future economic conditions, specific circumstances and the Company's historical collection experience. Additionally, management monitors its exposure to accounts receivable by periodically evaluating the collectability of the account receivable based on a variety of factors including the length of time the receivables are past due, the financial health of the customer and any prior customer credit loss experience. Based upon the review of these factors, the Company recordedno allowance for credit losses at* June 30, 2026* or* December 31, 2025*.

Revenue Recognition for Contracts with Customers

The Company accounts for contracts with its customers in accordance with ASC606 — Revenue from Contracts with Customers. ASC606 applies to all contracts with customers, except for contracts that are within the scope of other standards. Under ASC606**, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC606**, the entity performs the following* five *steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of ASC606**, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses whether these options provide a material right to the customer and, if so, they are considered performance obligations. The exercise of a material right is accounted for as a contract modification for accounting purposes.

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The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time. For thethree andsix months ended* June 30, 2026and2025,* all revenues recognized in the Condensed Statements of Operations were point in time sales to the Company's customers.

Milestone Payments – If a commercial contract arrangement includes development and regulatory milestone payments, the Company will evaluate whether the milestone conditions have been achieved and if it is probable that a significant revenue reversal wouldnot occur before recognizing the associated revenue. Milestone payments that arenot within the Company’s control or the licensee’s control, such as regulatory approvals, are generallynot considered probable of being achieved until those approvals are received.

Royalties – For arrangements that include sales-based royalties, including milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied.

The Company sells its products to pharmacy distributor customers which provide order fulfillment and inventory storage/distribution services. The Company uses athird-party logistics (“3PL”) vendor to process and fulfill orders and has concluded it is the principal in the sales to wholesalers because it controls access to the3PL vendor services rendered and directs the3PL vendor activities.

The Company bills for its products at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid and other government program rebates which are recorded as a reduction of net revenues at the date of sale/shipment. Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt pay discounts and state Medicaid and other government program rebates are in sales reserves, accrued liabilities and net accounts receivable.

The Company estimates the transaction price when it receives each purchase order taking into account the expected reductions of the selling price initially billed to the wholesaler/distributor arising from all of the above factors. The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, The Company's product sales arenot subject to returns.

The Company stores its products inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders.

The state Medicaid and other government program rebates and related liabilities are estimated based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical rebate rates and estimated lag time of the rebate invoices.

Cost of Sales

Cost of product sales consists of the profit-sharing and royalty fees with the Company’s product licensing and development partners, the purchase costs for finished products fromthird-party manufacturers, freight and handling/storage from the Company’s3PL logistics service providers and inventory step-up expense, and amortization expense of certain intangible assets. The costs of sales for profit-sharing, royalty fees, purchased finished products, and the associated inbound freight expense are recorded when the associated product sale revenue is recognized in accordance with the terms of shipment to customers while outbound freight and handling/storage fees charged by the3PL service provider are expensed as they are incurred. Intangible assets are amortized on a straight-line basis over the estimated useful life of the product. Cost of product sales also reflects any write-downs or reserve adjustments for the Company’s inventories.

Licensing cost of sales* may*consist of supply agreements and profit-sharing agreements associated with the Company’s sale of its product licenses to customers. The costs of sales for profit-sharing agreements are recognized upon the achievement of certain development and commercial milestones.

Research and Development Expenses

Research and development (“R&D”) expenses include both internal R&D activities and external contracted services. Internal R&D activity expenses include salaries, benefits and stock-based compensation and other costs to support the Company’s R&D operations. External contracted services include product development efforts such as certain product licensor milestone payments, clinical trial activities, manufacturing and control-related activities and regulatory costs. R&D expenses are charged to operations as incurred. The Company reviews and accrues R&D expenses based on services performed and* may,*from time to time, make estimates of those costs applicable as to the stage of completion of each project. Actual results could differ from the Company’s estimates. Nonrefundable advance payments for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses and are expensed as the related goods are delivered or the services are performed.

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Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as unvested restricted stock, stock options and warrants that are outstanding during the period. Common stock equivalents are excluded from the computation when their inclusion would be anti-dilutive.No such adjustments were made for thethree andsix months ended* June 30, 2025as including the effects of common stock equivalents in the diluted earnings per share calculation would have been anti-dilutive. See Note8* for further information.

Income Taxes

The Company accounts for income taxes under the provisions of ASC740 - Income Taxes. As part of the process of preparing the Company’s financial statements, the Company must estimate the actual current tax liabilities and assess temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the Condensed Balance Sheets. The Company must assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent the Company believes that recovery isnot likely, a valuation allowance must be established. To the extent the Company establishes a valuation allowance or increase or decrease to this allowance in a period, the impact will be included in income tax expense in the Condensed Statements of Operations. As of* June 30, 2026* and* December 31, 2025*, the Company has established a 100% valuation reserve against its deferred tax assets. See Note9 for further information.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of ASC718 Compensation – Stock Compensation. The guidance under ASC718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant and record expense over the related service periods, which are generally the vesting period of the equity awards. Compensation expense is recognized over the period during which services are rendered by consultants and non-employees until completed.

The Company estimates the fair value of stock-based option awards using the Black-Scholes option-pricing model (“BSM”). The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs. The risk-free interest rate was determined from the implied yields forzero-coupon U.S. government issues with a remaining term approximating the expected life of the options or warrants. Dividends on common stock are assumed to bezero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on the Company's historical volatility subsequent to our initial public offering (“IPO”), which we believe represents the most accurate basis for estimating expected future volatility under the current conditions. The Company accounts for forfeitures as they occur.

Fair Value Measurements

We measure certain of our assets and liabilities at fair value. Fair value represents 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. Fair value accounting requires characterization of the inputs used to measure fair value into athree-level fair value hierarchy as follows:

Level1** — Inputs based on quoted prices in active markets for identical assets or liabilities. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

*Level2 ***— Observable inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent from the entity.

*Level3 ***— Unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available.

Fair value measurements are classified based on the lowest level of input that is significant to the measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which* may*affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values stated below take into account the market for the Company’s financials, assets and liabilities, the associated credit risk and other factors as required. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and debt obligation. The carrying amounts of these financial instruments approximate their fair values due to the short-term maturities of these instruments. Based on borrowing rates currently available to the Company, the carrying value of the debt obligation approximates its fair value.

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Recent Accounting Pronouncements

In* November 2024,the Financial Accounting Standards Board(“FASB”) issued Accounting Standards Update(“ASU”)ASU2024*-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40). Additionally, in* January 2025,the FASB issued ASU2025*-01 to clarify the effective date of ASU2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses, which includes purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027,*on a retrospective or prospective basis, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its condensed financial statements.

In* December 2025,the FASB issued ASU2025*-12, *Codification Improvements,which makes narrow-scope amendments to various topics within the Accounting Standards Codification to clarify and improve existing guidance. This guidance is effective for fiscal years beginning after December 15, 2026,and interim periods within annual reporting periods beginning after January 1, 2027,*on a retrospective or prospective basis, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its condensed financial statements.

Note3 — Long-Term Debt

SWK Loan

In* November 2019**,* the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK Funding LLC (“SWK”), which was subsequently acquired in2026 by Runway Growth Finance Corp (“Runway Growth Finance”). The SWK Credit Agreement provided for up to $10,000 in debt financing. As a result of subsequent amendments to the SWK Credit Agreement, the Company expanded its credit facility to $30,000, extended the facility’s maturity tothree years from closing with a loan maturity date of* December 17, 2027**,* and reduced the facility’s annual interest rate to Secured Overnight Financing Rate (“SOFR”) plus 6.75%. In* April 2026,the Company entered into asixth* amendment to its credit agreement with SWK. Under the amended terms of the SWK credit agreement, the credit facility was increased to $40,000, the interest rate was reduced from SOFR plus 6.75% to SOFR plus 6.55% with the SOFR floor reduced to 2.75% from the previous 5.0%. Further, the interest only period was extended to* November 2026.There wereno* fees paid to SWK associated with the credit amendment and the amended credit agreement maturity date remained in* December 2027.*

Interest payments are payable quarterly, with quarterly principal payments of $3,000 due beginning in* November2026* with a final principal payment of $12,000 due at maturity in* December 2027.* The SWK Credit Agreement includes a 5.0% exit fee payable at maturity and this exit fee payable is being accreted to interest expense in the Company's Condensed Statement of Operations using the effective interest expense method. The SWK Credit Agreement contains a mandatory prepayment clause that can compel the Company to partially prepay the loan upon certain triggering events, which the Company has deemed to be remote. Borrowing under the SWK Credit Agreement is secured by the Company's assets, contains customary default provisions, which include limits on additional indebtedness. As of* June 30, 2026and December 31, 2025,*the Company was in compliance with all financial covenants.

In* June 2026,Runway Growth Finance exercised 51,239 common stock warrants at an exercise price of $5.86, exercised 18,141 common stock warrants at an exercise price of $6.62 and exercised 289,736 common stock warrants at an exercise price of $5.32. The weighted average fair market value of $31.19 was based on aten*-day weighted average closing price of the Company's closing common stock price, which resulted in a net cashless settlement of 296,215 shares issued of the Company's common stock. As of* June 30, 2026,*there areno outstanding common stock warrants.

During thesix months ended* June 30, 2026and2025,* the Company recorded interest expense of $2,149 and $2,361, respectively, which included $278 and $342, respectively, of debt discount amortization and non-cash interest expense. The Company had accrued interest of $356 and $425 as of* June 30, 2026and December 31, 2025,*respectively, which is included in accrued liabilities in the accompanying Condensed Balance Sheets.

The table below reflects the future payments for the SWK loan principal as of* June 30, 2026*.

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Note4 — Property and Equipment

Property and equipment consist of the following:

Depreciation expense for thesix months ended* June 30, 2026and2025* was $44 and $16, respectively. During thesecond quarter of2026, the Company removed from property and equipment fully depreciated assets that areno longer in service.

Note5 — Inventory

As of* June 30, 2026and December 31, 2025,*inventory consisted of the following

Inventory reserves were $890 and $1,199 at* June 30, 2026* and* December 31, 2025*, respectively.

Note6 — Common Stock

The Company has 50,000,000 authorized shares of $0.001 par value common stock under its Amended and Restated Certificate of Incorporation.

During thesix months ended* June 30, 2026*, the Company issued 925,633 shares of its common stock resulting from stock option exercises and vesting of restricted stock units under its2018 Equity Incentive Plan as amended in* December 2020*(the*“2018* Plan”),296,215 shares of its common stock resulting from the exercise of warrants and 21,032 shares of its common stock under the Company’s2018 Employee Stock Purchase Plan (“ESPP”). During thesix months ended* June 30, 2025,the Company issued 108,451 shares of its common stock resulting from stock option exercises under the2018* Plan.

Note7 — Share-Based Payment Awards

In* November 2018**,* the Company’s stockholders and board of directors approved the2018 Plan which succeeded the2017 Plan. The2018 Plan was amended by the board of directors in* December 2020.The Company has granted RSAs, stock options and RSUs for its common stock under the2017* Plan and2018 Plan as detailed in the tables below. There were 1,457,446 shares available for future issuance under the2018 Plan as of* June 30, 2026.*

All stock options issued have been non-qualified stock options and the exercise price was the closing stock price of the Company's common stock on the date of grant. Non-qualified stock options typically have aten-year life and non-qualified stock options that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards under the2018 Plan. In addition, the2018 Plan provides that commencing* January 1, 2019through January 1, 2028,the share reserve will be increased by 4% of the total number of shares outstanding as of the preceding December 31,subject to a reduction at the discretion of the Company’s board of directors. On January 1, 2025,the share reserve was increased by 1,068,323 shares based on the 26,709,084 shares of common stock outstanding at December 31, 2024.On January 1, 2026,the share reserve was increased by 1,081,882 shares based on the 27,047,061 shares of common stock outstanding at December 31,*2025.The exercise price for stock options granted isnot less than the fair value of common stock as of the date of grant. The Company uses the closing stock price on the date of grant as the exercise price.

For thesix months ended* June 30, 2026and2025,* the Company’s total stock-based compensation expense was$2,986 and$3,296, respectively. Of these amounts,$2,887 and$3,214 were recorded in general and administrative (“G&A”) expenses during thesix months ended* June 30, 2026and2025,* respectively, and$99 and$82 were recorded in research and development expenses during thesix months ended* June 30, 2026and2025,* respectively.

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Note7 — Share-Based Payment Awards (continued)

Stock Options

The following table summarizes stock option activity during thesix months ended* June 30, 2026*:

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock at* June 30, 2026* for those stock options that had strike prices lower than the fair value of the Company’s common stock.

The assumptions used to calculate the estimated fair value of options granted during thesix months ended* June 30, 2026and2025* under the BSM were as follows:

Expected Term — The Company has opted to use the “simplified method” for estimating the expected term of options granted to employees and directors, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years). The expected term of options granted to non-employees equals the contractual life of the options.

Expected Volatility — Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which the Company's believes represent the most accurate basis for estimating expected future volatility under the current conditions.

Risk-Free Interest Rate — The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of the Company’s stock options.

Expected Dividend — The Company has not issued any dividends in its history and doesnot expect to issue dividends over the life of the options and therefore has estimated the dividend yield to be zero.

Fair value of Common Stock —The Company uses the closing stock price on the date of grant for the fair value of the common stock.

Stock based compensation related to stock options was$1,864 and$1,756 for thesix-month periods ended* June 30, 2026and2025*, respectively. As of* June 30, 2026*, there was a total of$7,983 of unrecognized compensation costs related to non-vested stock option awards, which will be recognized over a weighted average period of approximately 2.9 years.

During thesix months ended* June 30, 2026,the Company issued 884,190 shares of its common stock resulting from stock option exercises at a weighted average exercise price of $4.68 per share with an intrinsic value of $21,254. During thesix* months ended* June 30, 2025,*the Company issued 108,451 shares of its stock resulting from stock option exercises at a weighted average exercise price of $3.63 per share with an intrinsic value of $1,167.

Restricted Stock Units (RSUs)

The following table summarizes restricted stock unit activity during thesix months ended* June 30, 2026*:

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Note7 — Share-Based Payment Awards (continued)

Stock-based compensation expense related to RSUs was$1,002 and $1,582 for thesix-month periods ended* June 30, 2026and2025*, respectively. As of* June 30, 2026*, there was $5,163 of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted average period of approximately 3.1 years.

Employee Stock Purchase Plan

The ESPP provides for an initial reserve of 150,000 shares, and this reserve is automatically increased on* January 1of each year by the lesser of 1% of the outstanding shares of common stock at December 31of the preceding year or 150,000 shares of common stock, subject to reduction at the discretion of the Company’s board of directors. As of June 30, 2026*, there were 954,655 shares available for issuance under the ESPP.

The annual offerings consist oftwo stock purchase periods, with thefirst purchase period ending in* Decemberand thesecond* ending in* June.The terms of the ESPP permit employees of the Company to use payroll deductions to purchase stock at a price per share that is at least the lesser of (1)85% of the fair market value of a share of common stock on thefirst* date of an offering or (2)85% of the fair market value of a share of common stock on the date of purchase. After the offering period ends, subsequenttwelve-month offering periods automatically commence over the term of the ESPP on the day that immediately follows the conclusion of the preceding offering, each consisting oftwo purchase periods approximatelysix months in duration. The terms of the ESPP provide a restart feature if the Company's stock price is lower at the end of asix-month period within thetwelve-month offering period than it was at the beginning of thetwelve-month offering period.

The Company recorded an expense of$120 and a credit to income of$42 related to the ESPP during thesix-month periods ended* June 30, 2026and2025*, respectively. As of* June 30, 2026* and* December 31, 2025*, the accompanying Condensed Balance Sheets include$53 and$45, respectively, in accrued liabilities for employee ESPP contributions.

Note8 — Basic and Diluted Net Income (Loss) per Common Share

For thethree andsix months ended* June 30, 2026and2025,* basic and diluted net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period and includes common stock equivalents (using the treasury stock and “if converted” method) from stock options, RSUs, ESPP and warrants. For thethree andsix months ended* June 30, 2025,7,425,645 and 7,183,998, respectively, in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect was anti-dilutive. During thethree* andsix months ended* June 30, 2026and2025,* included in the basic and diluted net income (loss) per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director retires from service as a director.

The following table shows the computation of basic and diluted net loss per common share:

Note9 — Income Taxes

The following table summarizes the Company's income tax expense and effective tax rates for thethree andsix months ended* June 30, 2026and2025*:

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The Company’s quarterly income tax provision is calculated under the discrete method, which treats the interim period as if it were the annual period and determines the income tax expense or benefit on that basis. The discrete method is applied when application of the estimated annual effective income tax rate is impractical because it isnot possible to reliably estimate the annual effective tax rate. The Company believes, at this time, the use of this discrete method is more appropriate as the annual effective income tax rate cannot be reliably estimated given the Company's full valuation allowance recorded on its net deferred tax assets and annual utilization limitations that prevent the Company from fully offsetting its expected current income tax liabilities with its available net operating losses and income tax credits.

The Company's quarterly income tax provision calculated under the discrete method for thethree months andsix months ended* June 30, 2026captures the income tax effects of the One Big Beautiful Bill Act (“OBBBA”), which was enacted on July 4, 2025.The Company's current income tax expense for thethree* months andsix months ended* June 30, 2026includes the benefit of the OBBBA restoring the ability to immediately deduct domestic research & experimental expenditures under Internal Revenue Code Section174.* The Company didnot record any deferred income tax expense or benefit related to the OBBBA tax law changes during the period ended* June 30, 2026*as the Company continues to record a full valuation allowance against its net deferred tax assets.

The effective tax rate for thethree months andsix months ended* June 30, 2026varies from thethree* months andsix months ended* June 30, 2025primarily as a result of the Company's valuation allowance recorded against its net deferred tax assets and annual tax attribute utilization limitations that result in current income tax expense. Taxes paid during thesix* months ended* June 30, 2026and2025* were $85 and $89, respectively. Tax refunds received during thesix months ended* June 30, 2026and2025* were $109 and $0, respectively.

Note10 — Related-Party Transactions

Chief Executive Officer

Previously, the Company acquired DS-200* and all related intellectual property pursuant to an asset purchase agreement (the “Selenix Agreement”) dated June 23, 2017between the Company and Selenix LLC (“Selenix”), an entity affiliated with the CEO. On August 30**,2024,* the Company amended the Selenix Agreement in tandem with an agreement to sell DS-200 in* August 2024** (see Note12*). Pursuant to the terms of the amended Selenix Agreement, Selenix waived its rights to future milestone payments and 50% of DS-200 profit in exchange for 45% of proceeds received by the Company from the DS-200 sale agreement. Selenix is 50% owned by Messa Holdings LLC (“Messa”), which is 100% owned by the CEO. In* March 2025**,* the Company recognized licensing revenue of $1,500 and $825 in cost of sales from a development milestone.

Note11 — Leases

The Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheets for substantially all leases, including operating leases, and separates lease components from non-lease components related to its office space lease.

In* May 2025**,* the Company entered into an amendment to its office lease agreement to expand its office space, from5,507 square feet, to8,079 square feet and to renew its lease term. The amendment to the lease agreement was effective* September 1, 2025and the renewal period for the office lease is for asixty-five* month period through* January 2031*and which includes tenant improvement allowances. The Company removed its existing ROU asset and liability and recorded $333 in ROU assets, $189 in tenant improvement allowances and $522 in operating lease liabilities in association with the lease extension.

In* May 2026**,* the Company entered into an additional office lease agreement for4,634 square feet. The lease agreement was effective* May 15, 2026for afifty-one* month period through* July 2030.*The Company capitalized $849 in ROU assets and recorded $849 in operating lease liabilities in association with the lease agreement.

The Company’s operating lease cost was $85 and $42 for thesix months ended* June 30, 2026and2025,* respectively. For thesix months ended* June 30, 2026and2025,* cash paid for operating leases was $97 and $45, respectively. The ROU asset non-cash lease expense was $45 and $30 for thesix months ended* June 30, 2026and2025,* respectively, and is reflected within non-cash lease expense on the Company’s Condensed Statements of Cash Flows. As of* June 30, 2026and December 31, 2025,*the average remaining lease term was 4.4 and 5.2 years, respectively, and the weighted average discount rate was 11.0% and 11.8%, respectively, for each period.

The table below presents the lease-related assets and liabilities recorded on the balance sheets as of* June 30, 2026and December 31, 2025**:*

The Company’s future lease commitments as of* June 30, 2026*, are as indicated below:

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Note12 — Commitments and Contingencies

Legal

The Company is subject to legal proceedings and claims that* mayarise in the ordinary course of business. The Company isnot* aware of any pending or threatened litigation matters at this time that would have a material impact on the operations of the Company.

License and product development agreements

The Company has entered into various agreements that include commitments and contingencies which are described below.

In* March 2020**,* the Company entered into an Exclusive License and Supply Agreement (the “Alkindi License Agreement”) with Diurnal for marketing ALKINDI SPRINKLE® in the United States. In* December 2024**,* the Company and Diurnal entered into an amendment to the Alkindi License Agreement to extend the agreement terms to incorporate both ALKINDI SPRINKLE® and KHINDIVITM in the existing agreement terms. The Company could pay up to $44,000 in future sales milestones. The Company pays tiered royalties of 11.0% to 17.0% on net sales.

In* June 2021**,* the Company acquired U.S. and Canadian rights to Crossject’s ZENEO® hydrocortisone needleless autoinjector, which is under development as a rescue treatment for adrenal crisis. The Company could pay up to*$3,500* in future development milestones and up to*$6,000* in commercial milestones, as well as a10% royalty on net sales.

In* September 2022,the Company entered into a licensing agreement with Lukare Medical LLC (“Lukare”) to which the Company acquired the U.S. rights to Betaine Anhydrous (betaine anhydrous oral solution). Under the terms of the agreement, Lukare is entitled to a $250 commercial milestone payment upon Betaine Anhydrous achievement of a certain net sales and a $500 payment ifno* generic competitors have launched within48 months after the effective date of the license agreement.

In* March** 2023,* the Company acquired rare disease endocrinology product candidate, ET-600, from Tulex. In* February 2026,the FDA approved the New Drug Application (“NDA”) for ET-600 (“DESMODA™”) and the Company launched DESMODA™ in March 2026and was obligated to make a milestone payment of $250 (paid in April 2026).*The Company pays tiered royalties to Tulex of 12.5% to 17.0% on net sales of DESMODA™.

In* March 2024**,* the Company entered into a licensing agreement with* APRApplied Pharma Research SA ( "APR")pursuant to which the Company agreed to acquire the U.S. rights to various products under the PKU GOLIKE brand. The Company could pay up to$2,000* inone-time sales milestones, and the Company pays a royalty of30% of net sales less product costs to* APR.*

In* August 2024**,* the Company entered into an agreement to sell its DS-200 product candidate. In* March 2025**,* the Company recognized licensing revenue of $1,500 from a development milestone payment. In addition, the Company could receive additional milestone payments of up to $5,000 based on the achievement of certain future development and commercial milestones related to DS-200*,* of which the Company would recognize 45% of the proceeds from the future milestones, with the balance being distributed to other partners.

In* November 2024**,* the Company entered into a licensing agreement with AMMTeK pursuant to which the Company agreed to acquire the U.S. rights to Amglidia (glyburide oral suspension). Amglidia was approved by the European Medicines Agency in2018 and has been granted Orphan Drug Designation by the U.S. FDA. AMMTeK has conducted a post-approval study trackingfive years of real-world safety and efficacy in European patients, which will be used to support the Company's NDA submission. In* July 2025**,* the Company paid $500 to AMMTek upon the receipt of FDA meeting minutes and under the terms of the licensing agreement, the Company could pay up to*$1,850* as follows: $550 upon NDA acceptance for review by the FDA and $1,300 upon NDA approval by the FDA andfirst commercial sale. The Company would also be required to pay a royalty of 14% of net sales to AMMTek.

In* December 2024**,* the Company acquired GALZIN® (zinc acetate) from Teva Pharmaceuticals USA, Inc and assumed the commercialization of the product in the U.S. during* Marchof2025**.* The Company is required to pay the seller a royalty of 10% of U.S. net sales through thetenth anniversary of the Company'sfirst commercial sales of the product in the U.S.

In* December 2024**,* the Company acquired INCRELEX® (mecasermin injection) from Ipsen S.A. The Company is obligated to pay the seller $2,500 on each of thefirst andsecond anniversaries of closing, of which $2,500 was paid to Ipsen S.A. in* December 2025**.* As of* June 30, 2026and December 31,2025,* the present value of the deferred consideration of $2,379 and $2,259, respectively, was classified as accrued liabilities in the Condensed Balance Sheets, with $121 and $241 as of* June 30, 2026and December 31, 2025,*respectively, to be accreted to interest expense over the remainder of the deferred consideration term using the effective interest rate method.

In connection with the INCRELEX® product acquisition, the Company assumed the commercial manufacturing and supply agreement between Simtra BioPharma Solutions and Ipsen Pharma SAS. The commercial manufacturing and supply agreement was executed in* November 2020and expires in November 2027**.* The commercial manufacturing and supply agreement is associated with the production of INCRELEX® for commercial usage and contains an annual production obligation and a maximum annual obligation.

Additionally, in connection with the INCRELEX® product acquisition, the Company assumed a manufacturing services agreement between Lonza Ltd and Ipsen Pharma SAS, as amended. The manufacturing services agreement was executed in* December 2022and expires in December 2032**.* The manufacturing services agreement is associated with the production of INCRELEX® bulk drug substance and contains a minimum and a maximum obligation everytwenty-four months.

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In* March 2025**,* the Company out-licensed the commercial rights to INCRELEX® in territories outside of the U.S. to Esteve Pharmaceuticals, S.A. (“Esteve”). Under the terms of the licensing agreement, Esteve paid the Company in* July 2025*€4,000 to license the rights to INCRELEX® for up toten years, and Esteve also received an option to acquire the international rights in the future for a purchase price of up to€6,000. In accordance with the accounting pronouncement guidance in ASC606 with respect to the license and supply agreements between the Company and Esteve, the Company recognized in* March 2025**,* $4,327 in accounts receivable, licensing revenues of $1,786 and deferred revenues of $2,541. With respect to deferred revenues, $330 and $457, respectively, are reflected in accrued liabilities and $1,617 and $1,762, respectively, in other long-term liabilities in the Company's Condensed Balance Sheets as of* June 30, 2026and December 31,2025.* Deferred revenues will be amortized to revenues over the course of the agreements based on quarterly INCRELEX® product sales, and at the end of the license agreement, a deferred revenue residual will be recognized at the end of the initial term of the license agreement. During thesix months ended* June 30, 2026,*the Company recognized $430 in deferred revenues associated with the supply agreement.

In* June 2025**,* in connection with the asset purchase agreement with Ipsen S.A, the Company purchased $11,540 in inventory. Under the terms of the inventory purchase agreement, the Company is required to make eight equal quarterly installment payments to Ipsen S.A, beginning in thethird quarter of2025**. Accordingly*,* the Company has classified $6,884 and $6,926, respectively, in accounts payable and $0 and $3,463, respectively, in other long-term liabilities in the accompanying Condensed Balance Sheets as of* June 30, 2026and December 31, 2025.*

In* February 2026,the Company entered into a licensing agreement to acquire the U.S. rights to HEMANGEOL® (propranolol) oral solution from Pierre Fabre. Under the terms of the licensing agreement, the Company will pay an 8% royalty on net sales for the duration of the product’s patent protected life ( October 2028).*The Company accounted for this transaction as an asset acquisition.

In* May 2026,the Company entered into a licensing agreement for the U.S. rights to IMPAVIDO® (miltefosine) oral capsules with an affiliate of Knight Therapeutics, Inc. (“Knight Therapeutics”). Under the terms of the licensing agreement, the Company will pay Knight Therapeutics $4,250 in fixed fees during the initial term ending March 31, 2032as follows: $125 on July 1, 2026,$1,250 on April 1, 2027,$1,000 on June 30, 2028,$1,000 on June 30, 2029and $875 on June 30, 2030.The Company's exclusive right to commercialize IMPAVIDO® in the U.S. will begin in September 2026.As of June 30, 2026,the Company has classified $1,020 and $2,304 in accrued liabilities and other long-term liabilities, respectively, in the accompanying Condensed Balance Sheets associated with the associated future fixed fees described above, with $926 to be accreted to interest expense through June 30, 2030*using the effective interest rate method. After the initial term, the Company will have the option to make up toten additional annual renewals subject to certain conditions and an annual fee. The Company would also pay up to an additional $4,000 by making $1,000 payments when cumulative net sales reach $50,000, $100,000, $150,000 and $200,000, respectively. The Company will also pay Knight Therapeutics 55% of net sales up to $7,000 per calendar year and 50% of net sales above $7,000 per calendar year. Knight Therapeutics will be responsible for all product costs and regulatory expenses associated with IMPAVIDO®, and the Company will be responsible for sales and marketing expenses related to commercialization.

Indemnification

As permitted under Delaware law and in accordance with the Company’s Amended and Restated Bylaws, the Company is required to indemnify its officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its directors and officers. The Company believes the fair value of the indemnification rights and agreements is minimal. Accordingly, the Company hasnot recorded any liabilities for these indemnification rights and agreements as of* June 30, 2026* and* December 31, 2025*.

Note13 — Subsequent Events

On* July 31, 2026,the Company entered into a license agreement for a late-stage rare disease product candidate ASN-001 (timolol topical gel) from Auson Pharmaceuticals (“Auson”) for the treatment of proliferating superficial infantile hemangiomas. Under the terms of the agreement, the Company will pay an upfront license fee to Auson of $3,000 within thirty days of the agreement. Additionally, the Company will run a bioavailability bridging study for ASN-001 and the Company intends to submit the NDA upon completion of the study in thesecond* half of2027. Upon the successful approval of ASN-001 by the FDA, the Company would be responsible for the following milestone events: $5,000 uponfirst commercial sale of product after FDA approval; $1,000, uponfirst calendar year in which aggregate annual net sales of product meet or exceed $20,000 in product sales; $2,500 uponfirst calendar year in which aggregate annual net sales of product meet or exceed $40,000 in product sales; and $5,000 uponfirst calendar year in which aggregate annual net sales of product meet or exceed $80,000 in product sales, $10,000 uponfirst calendar year in which aggregate annual net sales of product meet or exceed $150,000 in product sales; and $10,000 uponfirst calendar year in which aggregate annual net sales of product meet or exceed $280,000 in product sales. The Company will pay royalties to Auson as follows:10% royalty rate for net product sales of less than or equal to$200,000; 13% royalty rate for net product sales greater than $200,000 but less than or equal to$400,000; and 15% royalty rate for net product sales greater $400,000. The royalty tiers are based on cumulative lifetime product sales.

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