Outlook Therapeutics Inc

1. Organization and Description of Business

Outlook Therapeutics, Inc. (“Outlook” or the “Company”) was incorporated in New Jersey on January 5, 2010, started operations in July 2011, reincorporated in Delaware by merging with and into a Delaware corporation in October 2015 and changed its name to “Outlook Therapeutics, Inc.” in November 2018. The Company is a biopharmaceutical company focused on developing and commercializing ONS-5010/LYTENAVATM, an ophthalmic formulation of bevacizumab for use in retinal indications. The Company is based in Iselin, New Jersey.

In May 2024 the Company received Marketing Authorization from the European Commission for LYTENAVA™ (bevacizumab gamma), an ophthalmic formulation of bevacizumab for the treatment of wet age-related macular degeneration (“AMD”) in the European Union (“EU”). Additionally, in July 2024 the Company also received marketing authorization for LYTENAVA™ (bevacizumab gamma) in the United Kingdom (“UK”) from the UK Medicines and Healthcare products Regulatory Agency (“MHRA”). LYTENAVA™ (bevacizumab gamma) is the first and only authorized ophthalmic formulation of bevacizumab for use in treating wet AMD in the EU and UK.

In the fourth quarter of calendar 2023, the Company agreed to conduct an additional adequate and well-controlled clinical trial following discussions with the U.S. Food and Drug Administration (“FDA”) in support of the Company’s Biologics License Application (“BLA”) for ONS-5010/LYTENAVA. In December 2023, the Company submitted a Special Protocol Assessment (“SPA”) to the FDA for this study (NORSE EIGHT) seeking confirmation that, if successful, it will address the FDA’s requirement for a second adequate and well-controlled clinical trial to support its planned resubmission of the ONS-5010/LYTENAVA BLA. In January 2024, the Company received confirmation that the FDA had reviewed and agreed upon the NORSE EIGHT trial protocol pursuant to the SPA and that, if the NORSE EIGHT trial is successful, it would satisfy the FDA’s requirement for a second adequate and well-controlled clinical trial to address fully the clinical deficiency identified in the Complete Response Letter (“CRL”). In addition, through a Type A meeting and additional interactions, the Company has identified the approaches needed to resolve the chemistry, manufacturing and controls (“CMC”) comments in the CRL. In November 2024, the Company reported that ONS-5010/LYTENAVA did not meet the pre-specified non-inferiority endpoint at week 8 set forth in the SPA. In January 2025, the Company reported the complete data and safety results from NORSE EIGHT which demonstrated an improvement in vision and the presence of biologic activity, as well as a continued favorable safety profile for ONS-5010/LYTENAVA.

2. Liquidity

The Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of $525,907,286 as of December 31, 2024. As of December 31, 2024, the Company had a working capital deficit including $32,229,130 of principal, accrued interest and exit fees due under an unsecured convertible promissory note issued in December 2022 (as amended, the “December 2022 Note”), maturing on July 1, 2025. Refer to Note 7 for further details on the December 2022 Note. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The unaudited interim consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

On January 16, 2025, the Company entered into warrant exercise inducement offer letter agreements with GMS Ventures and Investments (“GMS”), the Company’s largest stockholder, and certain other holders of existing warrants to purchase the Company’s common stock, pursuant to which the holders agreed to exercise their existing warrants (“Existing Warrants”) for an aggregate of 7,074,637 shares of common stock at a reduced exercise price of $2.51 per share. In exchange, the Company issued two new inducement warrants for each Existing Warrant exercised (“Inducement Warrants”), which are exercisable for an aggregate of up to 14,149,274 additional shares of common stock (the “Inducement Warrant Shares”) at an exercise price of $2.26 per share (collectively, the “Warrant Inducement

Transaction”). The Company received net proceeds of $15,746,960 after capital markets advisory fees and estimated offering costs, from the Warrant Inducement Transaction.

Concurrently with the Warrant Inducement Transaction, the Company entered into a warrant exercise inducement offer letter agreement with Syntone Ventures, LLC (“Syntone”), pursuant to which Syntone agreed to exercise existing warrants (“Existing Syntone Warrants”) for an aggregate of 1,071,429 shares of common stock at a reduced exercise price of $2.51 per share. In exchange, the Company agreed to issue two new inducement warrants for each Existing Syntone Warrant exercised (the "Syntone Inducement Warrants”), which will be exercisable for up to 2,142,858 shares of common stock (the “Syntone Inducement Warrant Shares”) at an exercise price of $2.26 per share (the “Syntone Warrant Inducement Transaction”). The closing of the Syntone Warrant Inducement Transaction is subject to receipt of certain regulatory approvals. The Company expects to generate net proceeds of approximately $2,400,000 after capital markets advisory fees and estimated offering costs. Refer to Note 11 for further details on the Warrant Inducement Transaction and the Syntone Warrant Inducement Transaction.

On January 31, 2025, the Company entered into a Securities Purchase Agreement (“SPA”) with Avondale Capital, LLC (“Avondale”), pursuant to which the Company agreed to issue to Avondale an unsecured convertible promissory note for $33,100,000 (the “January 2025 Note”). The Company expects to use the proceeds from the January 2025 Note to repay in full the remaining obligations, including accrued and unpaid interest and the applicable exit fee owed under the December 2022 Note. The December 2022 Note will be cancelled in connection with the issuance of the January 2025 Note. The closing of the transaction (the “Note Closing”) is expected to occur shortly after the Company’s 2025 annual meeting of stockholders, subject to certain closing conditions, including stockholder approval of the issuance of shares of the Company’s common stock in excess of 19.99% of the outstanding common stock upon conversion of the January 2025 Note. Prior to the Note Closing, the Company has agreed not to sell common stock, other than issuances pursuant to the Company’s at-the-market offering, below a per share price of $2.26 and must maintain its Nasdaq listing. The Company has agreed to file a registration statement registering the resale of common stock issuable upon conversion of the January 2025 Note within seven days of the Note Closing. The Company must use commercially reasonable efforts to have the registration statement declared effective within 45 days; otherwise, the outstanding balance on the January 2025 Note will automatically increase by 0.5% monthly until the registration statement is declared effective.

The January 2025 Note will bear interest at theprime rate plus 3% (subject to a floor of 9.5%), will be scheduled to mature on July 1, 2026, and will be convertible into common stock. The Company must repay at least $3,000,000 (by cash or conversions into common stock) of the outstanding balance on the January 2025 Note each quarter starting in the second calendar quarter of 2025 (subject to adjustments for conversions and to payment of a 7.5% exit fee) (the “Quarterly Debt Reduction Obligations”). Any amount converted by Avondale during a given calendar quarter in excess of the Quarterly Debt Reduction Obligations will be credited toward meeting the Quarterly Debt Reduction Obligations for the next quarter or quarters. Refer to Note 11 for further details on the January 2025 Note.

Management does not believe that the existing cash and cash equivalents as of December 31, 2024, together with net proceeds from the sale of shares of common stock in the Warrant Inducement Transaction, are sufficient to fund the Company’s operations through one year from the date of this Quarterly Report on Form 10-Q. As a result, additional financing will be needed by the Company to fund its operations in the future and to commercially develop ONS-5010/LYTENAVA and to develop any other product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations, including but not limited to, proceeds from potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, sale of the development and commercial rights to the Company’s drug product candidates in regions outside of the U.S., the issuance of additional debt, the issuance of equity securities, including accessing capital through at-the-market offering agreements (refer to Note 9 for further details), and revenues from potential future product sales, if any. There can be no assurance that these future funding efforts will be successful.

The Company’s future operations are highly dependent on a combination of factors, including: (i) the timely and successful completion of additional financing discussed above; (ii) the Company’s ability to successfully begin marketing of its product candidates or complete revenue-generating partnerships with other companies; (iii) the success of its research and

development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately, (v) regulatory approval and market acceptance of the Company’s proposed future products.

3. Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the accompanying unaudited interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of December 31, 2024 and its results of operations for the three months ended December 31, 2024 and 2023, cash flows for the three months ended December 31, 2024 and 2023, and stockholders’ deficit for the three months ended December 31, 2024 and 2023. Operating results for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the full year ending September 30, 2025. The unaudited interim consolidated financial statements presented herein do not contain all of the required disclosures under GAAP for annual consolidated financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended September 30, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 27, 2024.

Reverse stock split

Effective on March 14, 2024, the Company amended its amended and restated certificate of incorporation to implement aone-for-twenty reverse stock split of its common stock. As a result of the reverse stock split, the Company made corresponding adjustments to the share amounts under its employee incentive plans, outstanding options, and common stock warrant agreements with third parties. The disclosure of common shares and per common share data in the accompanying consolidated financial statements and related notes reflect the reverse stock split for all periods presented.

Inventory

The Company values inventory at the lower of cost or net realizable value. The Company regularly reviews its inventory quantities and, when appropriate, records a provision for obsolete and excess inventory to derive the new cost basis, which takes into account the Company’s sales forecast and corresponding expiry dates. The Company has not recognized a provision for obsolete and excess inventory as of December 31, 2024.

Upon the initiation of production for the first commercial batches of drug product in October 2024, the Company began capitalizing the purchases of saleable inventory of the product from suppliers. As of December 31, 2024, all inventory is classified as work-in-process.

Use of estimates

The preparation of the unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the unaudited interim consolidated financial statements, such as the current macroeconomic environment, including as a result of fluctuations in inflation, and interest rates or ongoing

overseas conflict, actual results may materially vary from these estimates. Estimates and assumptions are periodically reviewed, and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary.

Net income (loss) per share

Basic net income (loss) per share of common stock is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted net income (loss) per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, warrants, performance-based stock options and units, and stock options using the treasury stock method, which would result in the issuance of incremental shares of common stock. For purposes of calculating diluted loss per common share, the denominator includes both the weighted average common shares outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. All common stock equivalents were considered anti-dilutive for the three months ended December 31, 2024 as they are all out of the money.

The following table sets forth the computation of basic loss per share and diluted loss per share:

The following potentially dilutive securities (in common stock equivalents) have been excluded from the computation of diluted weighted-average shares outstanding as of December 31, 2024 and 2023, as they would be antidilutive:

Recently issued accounting pronouncements

In November 2023, the FASB issued ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07, which is applicable to entities with a single reportable segment and will primarily require enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-07 will have on its consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03,Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional disclosure of specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statements and disclosures.

4. Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table presents the Company’s liabilities that are measured at fair value on a recurring basis:

The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrant liability and unsecured convertible promissory note for the three months ended December 31, 2024:

As further described in Note 7, the Company elected the fair value option to account for the December 2022 Note. The fair value of the December 2022 Note is estimated using a binomial lattice model, which evaluates the payouts under hold, convert or call decisions. Significant estimates in the binomial lattice model include the Company’s stock price, volatility, risk-free rate of return, and credit-adjusted discount rate.

The fair value of the December 2022 Note was estimated using a binomial lattice model with the following assumptions:

The warrants issued in connection with the convertible senior secured notes originally issued pursuant to that certain Note and Warrant Purchase Agreement dated December 22, 2017 and warrants issued in connection with private placements that closed on March 18, 2024 and April 15, 2024, are classified as liabilities on the accompanying unaudited interim consolidated balance sheets. The warrants related to the Note and Warrant Purchase Agreement dated December 22, 2017 are classified as liabilities as the warrants include cash settlement features at the option of the holders under certain circumstances. The warrants issued in connection with private placements that closed on March 18, 2024 and April 15, 2024 are classified as liabilities as the Company assessed that they are not indexed to the Company’s own stock and must be classified as liabilities.

The above warrant liabilities are revalued each reporting period with the change in fair values recorded in the accompanying consolidated statements of operations until the warrants are exercised or expire. The fair values of the

warrant liabilities are estimated using the Black-Scholes option pricing model using the following weighted average assumptions:

5. Equity Method Investment

In connection with the execution of a stock purchase agreement with Syntone, the United States-based affiliate of Syntone Technologies Group Co. Ltd. (“Syntone PRC”) on May 22, 2020, the Company and Syntone PRC entered into a joint venture agreement pursuant to which they agreed to form a People’s Republic of China (“PRC”) joint venture, Beijing Syntone Biopharma Ltd (“Syntone JV”), that is 80% owned by Syntone PRC and 20% owned by the Company. As the Company can exert significant influence over, but does not control, Syntone JV’s operations through voting rights or representation on Syntone JV’s board of directors, the Company accounts for this investment using the equity method of accounting. Upon formation of Syntone JV in April 2021, the Company entered into a royalty-free license with Syntone JV for the development, commercialization and manufacture of ONS-5010/LYTENAVA in the greater China market, which includes Hong Kong, Taiwan and Macau.

The Company made the initial investment of $900,000 in June 2020 and is committed to making capital contributions to Syntone JV of approximately $2,100,000, based upon the development plan contemplated in the license agreement. The maximum exposure to a loss as a result of the Company’s involvement in Syntone JV is limited to the initial investment and the future capital contributions totaling approximately $2,100,000.

6. Accrued Expenses

Accrued expenses consist of:

In connection with the departure of the Chief Executive Officer and the reduction in the workforce, during the three months ended December 31, 2024, the Company recognized $1,428,455 in severance related charges in connection with the workforce reduction, consisting of cash-based expenses related to employee

severance and notice period payments, benefits and related costs. In addition, during the three months ended December 31, 2024, the Company recorded a non-cash expense totaling $2,079,083 related to stock-based compensation for accelerated equity awards for the former Chief Executive Officer. During the three months ended December 31, 2024, the Company made cash payments totaling $40,058.

7. Debt

Debt consists of:

December 2022 Note

On December 22, 2022, the Company entered into a Securities Purchase Agreement and issued the December 2022 Note with a face amount of $31,820,000 to Streeterville Capital, LLC (the “Lender”), the holder of the Company’s unsecured promissory note issued in November 2021 (the “November 2021 Note”). The December 2022 Note has an original issue discount of $1,820,000. The Company received net proceeds of $18,052,461 upon the closing on December 28, 2022 after deducting the Lender’s transaction costs in connection with the issuance and a full payment of the remaining outstanding principal and accrued interest on the November 2021 Note.

In December 2023, the Company extended the maturity of the December 2022 Note from January 1, 2024 to April 1, 2024. The Company incurred a $475,000 extension fee, which was expensed and included in interest expense in the unaudited interim consolidated statement of operations.

The December 2022 Note bore interest at 9.5% per annum through April 1, 2024. The December 2022 Note contains customary covenants, including a restriction on the Company’s ability to pledge certain of the Company’s assets, subject to certain exceptions, without the Lender’s consent. Beginning on April 1, 2023, the Lender had the right to convert the December 2022 Note at the Conversion Price (as defined below). The principal amount and conversion price of the December 2022 Note are subject to adjustment upon certain triggering events. In addition, the Company has the right to convert all or any portion of the outstanding balance under the December 2022 Note into shares of common stock at the Conversion Price if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the common stock on Nasdaq equals or exceeds $50.00 per share (subject to adjustments for stock splits and stock combinations) for a period of 30 consecutive trading days. Payments may be made by the Company (i) in cash, (ii) in shares of common stock, with the number of shares being equal to the portion of the applicable payment amount divided by the Conversion Price (as defined below), or (iii) a combination of cash and shares of common stock. Any payments made by the Company in cash, including prepayments or repayment at maturity, will be subject to an additional fee of 7.5%. Upon the occurrence of certain events described in the December 2022 Note, including, among others, the Company’s failure to pay amounts due and payable under the December 2022 Note, events of insolvency or bankruptcy, failure to observe covenants contained in the Securities Purchase Agreement and the December 2022 Note, breaches of representations and warranties in the Securities Purchase Agreement, and the occurrence of certain transactions without the Lender’s consent (each such event, a “Trigger Event”), the Lender shall have the right, subject to certain exceptions, to increase the balance of the December 2022 Note by 10% for a Major Trigger Event (as defined in the December 2022 Note) and 5% for a Minor Trigger Event (as defined in the December 2022 Note). If a Trigger Event is not cured withinten (10) trading days of written notice thereof from the Lender, it will result in an event of default (such event, an “Event of Default”). Following an Event of Default, the Lender may accelerate the December 2022 Note such that all amounts thereunder become immediately due and payable, and interest shall accrue at a rate of 22% annually until paid. Prior to April 1, 2024, under the December 2022 Note,

“Conversion Price” meant, prior to a Major Trigger Event, $40.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i) $40.00 per share (subject to adjustment for stock splits and stock combinations), and (ii)90% multiplied by the lowest closing bid price of the Company’s common stock in thethree trading days prior to the date on which the conversion notice is delivered. If the Conversion Price is below $3.51 per share, the Company will be required to satisfy a conversion notice from the Lender in cash. Subject to certain exceptions, while the December 2022 Note is outstanding, the Lender will have a consent right on any future variable rate transactions or any debt and a 10% participation right in any future debt or equity financings.

On January 22, 2024, the Company entered into an amendment to the December 2022 Note (the “Note Amendment”) with the Lender, which became effective on April 1, 2024 after satisfaction of certain conditions, including various required stockholder approvals and the closing of the private placement on March 18, 2024. The maturity of the December 2022 Note was extended to July 1, 2025. An extension fee of $2,681,847 (calculated as 7.5% of the outstanding balance of the December 2022 Note) was added to the outstanding balance on March 18, 2024. The extension fee was expensed in the quarter ended March 31, 2024 and included in interest expense in the unaudited interim consolidated statement of operations.

Under the Note Amendment, the initial conversion price with respect to $15,000,000 in aggregate principal amount of the December 2022 Note was changed to $7.00, the price per share in the private placement that closed on March 18, 2024. Effective April 1, 2024, the December 2022 Note bears interest at theprime rate (as published in the Wall Street Journal) plus 3% (subject to a floor of 9.5%) and the Company has an obligation to repay at least $3,000,000 (by either cash or conversion into common stock) of the outstanding balance of the December 2022 Note for each calendar quarter beginning with the second calendar quarter of 2024 (subject to adjustment for conversions by the Lender and to payment of an exit fee as set forth in the Note Amendment) and continuing until the December 2022 Note is repaid in full. Any amount converted by the Lender during a given calendar quarter in excess of $3,000,000 will be credited toward meeting the quarterly requirement for the next quarter or quarters. Refer to Note 11 for further details on the December 2022 Note.

The Company elected to account for the December 2022 Note at fair value (Note 4) and was not required to bifurcate the conversion option as a derivative and as a result the original issue discount of $1,820,000 and debt issuance costs were written off upon election to fair value and accounted for as interest. During the three months ended December 31, 2024 and 2023, no interest expense was recognized.

8. Commitments and Contingencies

Litigation

On November 3, 2023, a securities class action lawsuit was filed against the Company and certain of its officers in the United States District Court for the District of New Jersey. The class action complaint alleges violations of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in connection with allegedly false and misleading statements made by the Company related to the Company’s BLA during the period from August 3, 2021 through August 29, 2023. The complaint alleges, among other things, that the Company violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by failing to disclose that there was an alleged lack of evidence supporting ONS-5010/LYTENAVA as a treatment for wet AMD and that the Company and/or their manufacturing partner had deficient CMC controls for ONS-5010/LYTENAVA, which remained unresolved at the time the Company’s BLA was re-submitted to the FDA and, as a result, the FDA was unlikely to approve the Company’s BLA, and that the Company’s stock price dropped when such information was disclosed. The plaintiffs in the class action complaint seek damages and interest, and an award of reasonable costs, including attorneys’ fees. On June 25, 2024, the defendants filed a motion to dismiss the amended class action complaint in its entirety. On February 6, 2025, the court entered an order granting the motion to dismiss and dismissing the complaint without prejudice and with leave to amend, and providing for the filing of a further amended complaint and briefing on the defendants’ anticipated motion to dismiss such further amended complaint in the spring of 2025.

On October 10, 2024, certain of the company’s officers and directors were named as defendants in a shareholder derivative action filed in the District Court of the District of Delaware. The derivative complaint alleges that defendants breached their fiduciary duties by causing and/or allowing the Company to violate federal securities laws based on the same alleged misstatements as the securities class action. The derivative complaint also alleges defendants violated Section 14(a) of the Exchange Act, as well as claims for contribution, unjust enrichment, and waste of corporate assets. The derivative complaint seeks unspecified damages, corporate governance reforms, restitution, contribution, attorneys’ fees, and other costs. The derivative action is currently stayed, pending the final resolution of the November 3, 2023, securities class action pending in the United States District Court for the District of New Jersey.

The pending lawsuits and any other related lawsuits are subject to inherent uncertainties, and the actual defense and disposition costs will depend upon many unknown factors. The outcome of the pending lawsuits and any other related lawsuits is necessarily uncertain. The Company could be forced to expend significant resources in the defense of the pending lawsuits and any additional lawsuits, and the Company may not prevail. In addition, the Company may incur substantial legal fees and costs in connection with such lawsuits. The Company currently is not able to estimate the possible cost to it from these matters, as the pending lawsuits are currently at an early stage, and the Company cannot be certain how long it may take to resolve the pending lawsuits or the possible amount of any damages that the Company may be required to pay. Such amounts could be material to the Company’s financial statements if it does not prevail in the defense of the pending lawsuits and any other related lawsuits, or even if it does prevail. The Company has not established any reserve for any potential liability relating to the pending lawsuits and any other related lawsuits. It is possible that the Company could, in the future, incur judgments or enter into settlements of claims for monetary damages.

Leases

Corporate office

In March 2021, the Company entered into athree-year term corporate office lease for its former corporate headquarters in Iselin, New Jersey that ended on April 30, 2024.

In March 2024, the Company entered into afive-year term corporate office lease for its new corporate headquarters in Iselin, New Jersey that commenced on May 1, 2024.

The components of lease cost for the three months ended December 31, 2024 and 2023 are as follows:

Amounts reported in the unaudited interim consolidated balance sheets for leases where the Company is the lessee are as follows:

Other information related to leases for the three months ended December 31, 2024 and 2023 are as follows:

Future minimum lease payments under non-cancelable leases at December 31, 2024 are as follows for the years ending September 30:

9. Common Stock and Stockholders’ Equity

Preferred Stock

On May 13, 2024, the Company filed a Certificate of Elimination to its Certificate of Incorporation, as then amended, with the Secretary of State of the State of Delaware to eliminate from the Certificate of Incorporation all matters set forth in the Certificates of Designation filed with the Secretary of State of the State of Delaware on September 8, 2017 (with respect to its Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock) and July 18, 2018, as amended on March 19, 2020 (with respect to its Series A-1 Convertible Preferred Stock) and returning each of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series A-1 Convertible Preferred Stock to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series. There wereno outstanding shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock or Series A-1 Convertible Preferred Stock as of May 13, 2024. Immediately following the filing of the Certificate of Elimination, the Company filed a Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware, which restates and integrates but does not further amend the Company’s Certificate of Incorporation, as then amended. The number of authorized shares of preferred stock under the Company’s Certificate of Incorporation is 10,000,000 shares.

Common stock

On March 7, 2024, following receipt of stockholder approval at the Company’s 2024 annual meeting of stockholders, the number of authorized shares of common stock under the Company’s Certificate of Incorporation was increased from 21,250,000 shares to 60,000,000 shares.

BTIG, LLC At-the-Market Offering Agreement

On May 16, 2023, the Company entered into an At-the-Market Sales Agreement with BTIG, LLC (“BTIG”) as sales agent (as amended, the “BTIG ATM Agreement” or the “BTIG ATM Offering”), under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $100,000,000 from time to time through BTIG. The Company incurred financing costs of $353,688, which were capitalized and are being reclassified to additional paid in capital on a pro rata basis when the Company sells common stock under the BTIG ATM Offering. As of December 31, 2024, $325,181 of such deferred costs are included in other assets on the unaudited interim consolidated balance sheets.

Under the BTIG ATM Agreement, the Company pays BTIG a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the BTIG ATM Agreement. The offering of common stock pursuant to the BTIG ATM Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the BTIG ATM Agreement or (ii) termination of the BTIG ATM Agreement in accordance with its terms.

During the three months ended December 31, 2024, the Company sold 1,000,000 shares of common stock under the BTIG ATM Offering and generated $1,742,373 in net proceeds. During the three months ended December 31, 2024, the Company paid fees to BTIG and other issuance costs of $53,888. No shares of common stock were sold under the BTIG ATM Offering during the three months ended December 31, 2023.

Common stock warrants

As of December 31, 2024, shares of common stock issuable upon the exercise of outstanding warrants were as follows:

A holder of warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than a specified percentage of the outstanding common stock (4.99%,9.99% or 19.99%, as applicable), immediately after giving effect to such exercise, which may be increased or decreased at the holders’ option (not to exceed 19.99%), effective 61 days after written notice to the Company. In addition, the Company may require the holders to cash exercise the warrants under certain circumstances as follows: (i) if the VWAP of the common stock equals or exceeds $20.00 per share (subject to adjustment in the event of stock splits, combinations or similar events, such as the reverse stock split implemented prior to Closing as discussed below) for 30 consecutive days (the “Stock Price Condition”) at any time after the Company publicly announces topline data from its NORSE EIGHT clinical trial evidencing satisfaction of the trial’s primary endpoints (the “NORSE EIGHT Announcement”), upon the consent of a majority of the members of the Company’s board of directors, the Company may require the holders to exercise up to 20% of the aggregate number of warrants issued to such holder on the issue date; and (ii) the Company may require up to the remainder of the warrants be exercised (A) if the Stock Price Condition is satisfied at any time after the Company publicly announces approval from the FDA of its BLA for ONS-5010/LYTENAVA, upon the consent of a majority of the members of the board of directors or (B) if the Stock Price Condition is satisfied at any time after the NORSE EIGHT Announcement, upon the unanimous consent of the members of the Company’s Board of Directors present at duly called meeting. Refer to Note 11 for disclosures on the warrant inducement transactions entered into in January 2025.

10. Stock-Based Compensation

2024 Equity Incentive Plan

In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provided for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”) awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. In August 2024, the Company’s stockholders approved the amendment and restatement of the 2015 Plan and, in connection with amending and restating the 2015 Plan, the name of the 2015 Plan was updated to the Outlook Therapeutics, Inc. 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 2024 Plan is 7,303,677. As of December 31, 2024, there were 4,287,050 shares available for grant under the 2024 Plan.

Stock options and RSUs are granted under the Company’s 2024 Plan and generally vest over a period ofone tofour years from the date of grant and, in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and RSU over its vesting period.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the three December 31, 2024 and 2023:

Stock options

As of December 31, 2024, options to purchase common stock of the Company outstanding under the 2024 Plan were as follows:

The aggregate intrinsic value represents the total amount by which the fair value of the common stock subject to options exceeds the exercise price of the related options.

The weighted average grant date fair value of the options awarded to employees for the three months ended December 31, 2024 and 2023 was $4.67 and $5.20 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

As of December 31, 2024, there was $6,496,794 of unrecognized compensation expense that is expected to be recognized over a weighted-average period of 0.8 years.

Performance-based stock options

The Company granted certain officers of the Company option awards whose vesting is contingent upon meeting company-wide performance goals. The performance stock options were granted “at-the-money” and have a term of 10 years.

The fair value of each option grant under the performance share option plan was estimated on the date of grant using the same option valuation model used for non-statutory options above. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

A summary of the activity under the performance share option plan as of December 31, 2024 and changes during the three months then ended are presented below.

The vesting of the performance-based stock options is conditional upon FDA approval of ONS-5010/LYTENAVA. The expense for the performance-based stock options is not recognized until the performance conditions are deemed probable of achievement. The Company did not record any expense related to the performance-based stock options during the three months ended December 31, 2024 as the performance conditions were not deemed probable of being met. As of December 31, 2024, the Company assessed that the performance conditions related to the performance options granted were not probable of achievement. The assessment was based on the relevant facts and circumstances and therefore no compensation costs were recognized.

11. Subsequent Events

Warrant Inducement Transaction

In connection with the Warrant Inducement Transaction (see Note 2), half of the Inducement Warrants (the “Tranche A Inducement Warrants”), representing warrants to purchase up to 7,074,637 shares of common stock are exercisable immediately and expire on January 17, 2030. The remaining Inducement Warrants (the “Tranche B Inducement Warrants”) will be exercisable upon the effective date of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock. The Company plans to present a proposal at its 2025 annual meeting of stockholders to authorize a sufficient increase in the number of authorized shares. The Tranche A Inducement Warrants, Tranche B Inducement Warrants and the underlying Inducement Warrant Shares were offered in a private placement and are exempt from Securities Act registration. The Company has committed to filing resale registration statements with the SEC to register the resale of the Inducement Warrant Shares underlying the Tranche A Inducement Warrants and Tranche B Inducement Warrants within specified time frames. GMS, the Company’s largest stockholder affiliated with Yezan Haddadin and Faisal G. Sukhtian, directors of the Company participated in the Warrant Inducement Transaction. In this transaction, GMS exercised Existing Warrants for an aggregate of 3,458,571 shares of common stock at a reduced exercise price of $2.51 per share, generating gross proceeds of $8,681,013 to the Company, in exchange for Inducement Warrants to purchase 6,917,142 shares of common stock.

Syntone Warrant Inducement Transaction

In connection with the Syntone Warrant Inducement Transaction (see Note 2), half of the Syntone Inducement Warrants (the “Syntone Tranche A Inducement Warrants”) will be immediately exercisable upon receipt of certain regulatory approvals and will expire on thefive-year anniversary of the date of issuance. The remaining Syntone Inducement Warrants (the “Syntone Tranche B Inducement Warrants”) will be exercisable upon receipt of certain regulatory approvals and the effective date of an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock. The Company plans to present a proposal at its 2025 annual meeting of stockholders to authorize a sufficient increase in the number of authorized shares.

The Syntone Tranche A Inducement Warrants, Syntone Tranche B Inducement Warrants and the underlying Syntone

Inducement Warrant Shares were offered in a private placement exempt from Securities Act registration. The Company has committed to filing resale registration statements with the SEC to register the resale of the Syntone Inducement Warrant Shares underlying the Syntone Tranche A Inducement Warrants and Syntone Tranche B Inducement Warrants within specified time frames.

Unsecured Convertible Promissory Note Securities Purchase Agreement

Commencing on the earlier of (i) six months following the issuance of the January 2025 Note (see Note 2) or (ii) the date on which the registration statement is declared effective (the “Conversion Commencement Date”), Avondale shall have the right to convert all or any portion of the outstanding balance under the January 2025 Note into shares of common stock, calculated by dividing the amount of the January 2025 Note being converted by the Conversion Price (as defined below). Furthermore, the Company retains the right to convert any portion of the outstanding balance under the January 2025 Note into shares of common stock at the Conversion Price, provided certain conditions are met at the time of conversion, including, but not limited to, the condition that the daily volume-weighted average price of the Company’s common stock on Nasdaq equals or exceeds $3.00 per share (subject to adjustments for stock splits and combinations) for a continuous period of 30 trading days, and that the median daily dollar trading volume during the preceding 30 consecutive trading day period meets or exceeds $1,000,000. The Company reserves the right to make payments (i) in cash, (ii) in shares of common stock, calculated as the applicable payment amount divided by the Conversion Price, or (iii) a combination of both cash and shares of common stock. Any cash payments made by the Company, including prepayments or payments made at maturity, will incur an additional fee of 7.5%.

The January 2025 Note stipulates that the Company shall not permit any conversion of the January 2025 Note if, following such conversion, Avondale and its affiliates would beneficially own shares of common stock exceeding 4.99% of the total number of outstanding shares as of that date (the “Beneficial Ownership Limitation”). However, this limitation shall increase to 9.99% when the Company’s market capitalization falls below $25,000,000. Avondale may, by written notice to the Company, adjust the Beneficial Ownership Limitation for itself, though any such adjustment will not take effect until the 61st day after such notice is received.

In the event that specific occurrences outlined in the January 2025 Note transpire—such as the Company’s failure to fulfill payment obligations, non-compliance with the Quarterly Debt Reduction Obligations, insolvency or bankruptcy events, breaches of covenants in the SPA and the January 2025 Note, and unauthorized transactions without Avondale's consent (collectively referred to as “Trigger Events”)—Avondale reserves the right to increase the balance of the January 2025 Note by 10% in the case of a Major Trigger Event (as defined in the January 2025 Note) and by 5% for a Minor Trigger Event (as defined in the January 2025 Note). Should any Trigger Event persist without resolution forten trading days following written notification from Avondale, this will constitute an event of default (such event, an “Event of Default”). Upon an event of default, Avondale may accelerate the January 2025 Note, resulting in all amounts becoming immediately due and payable, with interest accruing at a rate of 22% per annum until full payment is made.

Under the terms of the January 2025 Note, the “Conversion Price” is defined as $2.26 per share prior to a Major Trigger Event (subject to adjustments for stock splits and combinations). Following a Major Trigger Event, the Conversion Price will be the lesser of (i) $2.26 per share (subject to adjustments) or (ii)90% of the lowest closing bid price over thethree trading days preceding the conversion notice. Furthermore, if the Conversion Price falls below $0.404 per share (subject to adjustments), the Company will be required to fulfill a conversion notice from Avondale in cash.