Yarrow Bioscience, Inc.

VYNE Therapeutics Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1 -NATURE OF OPERATIONS

Yarrow Bioscience, Inc. (formerly VYNE Therapeutics Inc.) is a clinical-stage biotechnology company focused on developing transformative therapies to treat autoimmune thyroid diseases. The Company’s lead product candidate, YB-101 (also known as GenSci098), is a humanized, monoclonal antibody targeting the thyroid-stimulating hormone receptor (“TSHR”), which the Company plans to develop for the treatment of Graves’ disease (“GD”) and thyroid eye disease (“TED”). Both GD and TED are serious and poorly treated autoimmune diseases in which autoantibodies against TSHR attack and overstimulate the receptor, leading to a wide spectrum of thyroidal and extra-thyroidal clinical sequelae. As used herein, unless the context otherwise requires, references to the “Company” refer: (1) following the completion of the Merger (as defined below), to Yarrow Bioscience, Inc. (the “Combined Company” or “Yarrow”) and its subsidiaries and (2) prior to the completion of the Merger, to VYNE Therapeutics Inc. (“VYNE”) and its subsidiaries.

YB-101 was designed to selectively bind to TSHR and block autoantibody-induced receptor activation, thereby directly inhibiting the pathogenic activity of thyroid-stimulating autoantibodies that drive disease progression in GD and TED as well as the biological pathway responsible for hyperthyroidism and orbitopathy. The Company believes that this novel and targeted approach represents a potential breakthrough for patients with GD and TED and has the potential to address an important unmet need for therapies with differentiated risk-benefit profiles.

In August 2025, VYNE’s board of directors (the “Board of Directors”) initiated a strategic review to evaluate a range of options to maximize stockholder value, including the assessment of its internal pipeline, financing opportunities and strategic alternatives. Following the strategic review, VYNE entered into an Agreement and Plan of Merger and Reorganization, dated as of December 17, 2025, which was amended on January 30, 2026 (as amended, the "Merger Agreement") with Yarrow Bioscience, Inc. ("Yarrow"), pursuant to which among other matters, Yellow Merger Sub Corp., a direct, wholly owned subsidiary of VYNE ("Merger Sub"), merged with and into Yarrow, with Yarrow surviving as a wholly owned subsidiary of VYNE and the surviving corporation of the merger (the "Merger"). Following the completion of the Merger on July 27, 2026, the current business of Yarrow became the Company’s primary business.

In October 2025, VYNE initiated the repeat non-clinical toxicology study of VYN202 in male dogs to potentially maximize strategic optionality for the asset. The study is expected to be completed in the second half of 2026, with a final report expected in the fourth quarter of 2026. As such, the Company continues to evaluate opportunities for repibresib and VYN202, which may include a sale, license, transfer, disposition, divestiture or other monetization transaction to a third party or to a related party.

For additional information regarding the sale of the Company's legacy commercial business (the “MST Franchise”) to Journey Medical Corporation ("Journey") in January 2022 and the Company's licensing arrangements with Tay Therapeutics ("Tay"), see "Note 3 - Strategic Agreements."

The Company is a Delaware corporation and operates asone business segment. Its principal executive offices are in New Haven, Connecticut.

The Merger Agreement

Following the strategic review described above, on December 17, 2025, VYNE entered into the Merger Agreement with Yarrow, then a privately held biotechnology company advancing YB-101 (also known as GenSci098), a clinical-stage, humanized monoclonal antibody targeting the thyroid-stimulating hormone receptor for the treatment of GD and TED, pursuant to which Yarrow became a wholly owned subsidiary of VYNE. In connection with the completion of the Merger, VYNE changed its name to “Yarrow Bioscience, Inc.” In connection with the Merger, the Company filed a registration statement on Form S-4, which the Securities and Exchange Commission ("SEC") declared effective on June 15, 2026, and the related definitive proxy statement/prospectus was filed and first mailed to the Company’s stockholders on or about June 15, 2026. On July 16, 2026, VYNE held a special meeting of stockholders (the “Special Meeting”), and all of the proposals included in the proxy statement/prospectus were approved by VYNE stockholders, other than the proposal to adjourn the Special Meeting, which was not presented to the VYNE stockholders. On July 27, 2026 (the “Closing Date”), the Company consummated the acquisition of Yarrow in accordance with the terms of the Merger Agreement. Following the Merger, the current business of

Yarrow became the primary business of the Combined Company and the Combined Company's common stock trades on Nasdaq under the trade symbol “YARW.”

Yarrow Series A Preferred Stock Financing

In connection with the execution of the Merger Agreement, certain institutional and accredited investors (the "Series A Investors"), led by an affiliate of RTW Investments and Yarrow entered into a Series A stock purchase agreement, pursuant to which such persons invested in and purchased an aggregate of 20,242,911 shares of Yarrow Series A preferred stock at a purchase price of $4.94 per share for aggregate gross proceeds to Yarrow of $100.0 million.

Yarrow Pre-Closing Financing

Concurrently with the execution and delivery of the Merger Agreement, the Series A Investors also entered into a Securities Purchase Agreement with Yarrow (the "Securities Purchase Agreement"), pursuant to which such investors purchased, immediately prior to the Merger, shares of Yarrow common stock or, in lieu thereof, Yarrow pre-funded warrants, for gross proceeds of approximately $100.0 million (the "Yarrow Pre-Closing Financing").

The shares of Yarrow common stock and Yarrow pre-funded warrants that were issued in the Yarrow Pre-Closing Financing were or have the right to be, respectively, converted into shares of VYNE common stock in the Merger.

Pre-Closing Special Cash Dividend

On July 10, 2026, the Board of Directors declared a special cash dividend of $17.3 million as of a record date of July 22, 2026, with a payment date of July 23, 2026 (the “special cash dividend”). Holders of VYNE's common stock and warrants of record as of July 22, 2026 were entitled to receive the special cash dividend.

Reverse Stock Split and Recasting of Per-Share Amounts

On September 12, 2025, the Company received a notification from The Nasdaq Stock Market, LLC (“Nasdaq”) that the Company was not in compliance with the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2), because the closing bid price of the Company’s common stock was below $1.00 per share for 30 consecutive business days. The Company initially had 180 calendar days, or until March 10, 2026, to regain compliance with the minimum bid price requirement. On March 11, 2026, the Company received a letter (the “Extension Notice”) from Nasdaq notifying the Company that its request for an extension to regain compliance with the minimum bid price requirement has been granted, and the Company had an additional 180 calendar days, or until September 7, 2026, to regain compliance with the minimum bid price requirement. On July 16, 2026, the Board of Directors approved, and on July 24, 2026 the Company effected, a 1-for-50 reverse stock split of its outstanding shares of common stock. The reverse stock split was intended to support the Merger and to facilitate compliance with Nasdaq's initial listing requirements, including the minimum bid price requirement. No fractional shares were issued in connection with the reverse stock split. In lieu of fractional shares, stockholders who would otherwise have been entitled to receive a fractional share received cash payments. The par value of VYNE common stock remained unchanged as a result of the reverse stock split. Proportionate adjustments were made to the exercise prices and number of shares underlying the Company's outstanding stock options, restricted stock units, warrants and other equity awards, as well as the number of shares available for issuance under the Company's equity incentive plans. On August 10, 2026, the Combined Company received a letter from the Nasdaq providing that the Combined Company had regained compliance with the minimum bid price requirement and that Nasdaq considers this matter closed.

Unless otherwise indicated, all share and per share amounts presented in these condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented.

Liquidity and Capital Resources

As of June 30, 2026, the Company had cash and cash equivalents of $22.9 million and an accumulated deficit of $764.2 million. The Company hadno outstanding debt as of June 30, 2026. For the six months ended June 30, 2026, the Company incurred a net loss of $6.6 million and used $6.1 million of cash in operations.

The Company's primary uses of capital were historically compensation and related expenses, research and development costs, legal and other regulatory expenses and general overhead costs. In anticipation of the Merger, the Company suspended and substantially wound down its research and development activities and operations were limited. The Company's future operations are highly dependent on the success of the Merger with Yarrow, which closed on the Closing Date.

In accordance with Accounting Standards Codification (“ASC”) Subtopic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company, giving effect to the consummation of the Merger that occurred subsequent to June 30, 2026 has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that its unaudited condensed consolidated financial statements are issued. The Company believes, after giving effect to the consummation of the Merger that occurred subsequent to June 30, 2026, its existing cash and cash equivalents are sufficient to fund its operating and capital expenditure requirements for a period of at least 12 months from the date of issuance of these unaudited condensed consolidated financial statements.

NOTE 2 -SIGNIFICANT ACCOUNTING POLICIES

a. Basis of presentation

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair statement of the Company’s unaudited condensed consolidated financial position, results of operations, cash flow and statement of stockholders' equity for the interim periods presented. Certain information and disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 27, 2026.

The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results expected for the year ending December 31, 2026.

b. Principles of consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

c. Use of estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. 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 unaudited condensed consolidated financial statements and reported amounts of income and expenses during the reporting period. Actual results could differ from the Company’s estimates.

d. Cash and cash equivalents

The Company considers cash equivalents to be all short-term, highly liquid investments, which include short-term bank deposits, treasury bills and money market funds with original maturities of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash.

e. Marketable securities

Marketable securities with original maturities of greater than three months and remaining maturities of less than one year from the balance sheet date are classified as short-term. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long-term.

The Company classifies all marketable securities as available-for-sale debt securities. The Company’s marketable securities are measured and reported at fair value using either quoted prices in active markets for identical securities or quoted prices in markets that are not active for identical or similar securities. Unrealized gains and losses are reported as a separate component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses, if any, are included in other income, net within the unaudited condensed consolidated statement of operations and comprehensive loss.

f. Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The Company’s property and equipment are depreciated by the straight-line method on the basis of their estimated useful life.

Estimated useful lives are as follows:

g. Revenue recognition

The Company accounts for its revenue transactions under the Financial Accounting Standards Board ("FASB") ASC Topic 606, Revenue from Contracts with Customers("ASC Topic 606"). In accordance with ASC Topic 606, the Company recognizes revenues when its customers obtain control of its product for an amount that reflects the consideration it expects to receive from its customers in exchange for that product. To determine revenue recognition for contracts that are determined to be in scope of ASC Topic 606, the Company 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 Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once the contract is determined to be within the scope of ASC Topic 606, 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 such performance obligation is satisfied.

Following the disposition of the MST Franchise in January 2022, the Company does not have any revenue generating products; however, the Company may receive royalty revenues from the sale of specified products (see "Note 4 - Discontinued Operations").

Royalty Revenues and Collaboration Agreements

The Company previously licensed the rights to Finacea foam to LEO Pharma A/S ("LEO Pharma") in exchange for certain royalty payments. Finacea foam was not part of the MST Franchise that was sold in January 2022. Royalties are recognized as revenue when the product is sold by LEO Pharma. For both the three months ended June 30, 2026 and 2025, royalty revenues were $0.1 million. For the six months ended June 30, 2026 and 2025, royalty revenues were $0.2 million and $0.3 million, respectively. On June 11, 2026, LEO Pharma informed VYNE of its decision to terminate its license agreement for Finacea foam effective as of December 31, 2026.

For collaboration agreements under ASC 606, the Company identifies the contract, identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) the performance obligation is satisfied.

The Company identifies the performance obligations included within the agreement and evaluates which performance obligations are distinct. Upfront payments for licenses are evaluated to determine if the license is capable of being distinct from the obligations to participate on certain development and/or commercialization committees with the collaboration partners and supply manufactured drug product for clinical trials. For performance obligations that are satisfied over time, the Company utilizes the input method and revenue is recognized by consistently applying a method of measuring progress toward complete satisfaction of that performance obligation. The Company periodically reviews estimated periods of performance based on the progress under each arrangement and accounts for the impact of any changes in estimated periods of performance on a prospective basis.

Milestone payments are a form of variable consideration as the payments are contingent upon achievement of a substantive event. Milestone payments are estimated and are included in the transaction price when the Company determines that it is probable that there will not be a significant reversal of cumulative revenue recognized in future periods.

h. Collaboration arrangements

The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC Topic 808, Collaborative Arrangements ("ASC 808"), to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, the Company will assess whether aspects of the arrangement between it and its collaboration partner are within the scope of other accounting literature.

i. Research and development expenses

All expenses associated with research and development are expensed as incurred. Research and development expenses include expenses directly attributable to conducting the Company's research and development programs, including expenses incurred under arrangements with third parties, such as contract research organizations, contract development and manufacturing organizations and consultants as well as the cost of clinical trials, clinical trial supplies, salaries, stock-based compensation expenses, payroll taxes and other employee benefits.

Expenses are considered incurred based on the evaluation of the progress to completion of specific tasks under each contract using information and data provided by the service providers and vendors or the Company's estimate of the level of service that has been performed at each reporting date, whereas payments are dictated by the terms of each agreement, such as the successful enrollment of a certain number of patients, site initiation, and the completion of clinical trial milestones. As such, depending on the timing of payment relative to the receipt of goods or services, management may record prepaid expenses, accrued expenses, or other assets.

j. Credit losses

An allowance is maintained for potential credit lossesin accordance with accounting standards update ("ASU") No. 2016-13, Financial Instruments - Credit Losses. The Company evaluates its allowance based on expected losses rather than incurred losses, which is known as the current expected credit loss (“CECL”) model. The allowance is determined using the loss rate approach and is measured on a collective (pool) basis when similar risk characteristics exist. Where financial instruments do not share risk characteristics, they are evaluated on an individual basis. The allowance is based on relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Trade receivable balances are written off against the allowance when it is deemed probable that the receivable will not be collected. Trade receivables, net are stated net of reserves for certain sales allowances and credit losses. Credit losses werenot material for the three and six months ended June 30, 2026 and 2025.

k. Fair value measurement

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data or active market data of similar or identical assets or liabilities.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

l. Income taxes

Deferred taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will not be realized in the foreseeable future. Given the Company’s losses, the Company has provided a full valuation allowance with respect to its deferred tax assets.

Uncertainty in income tax

The Company follows a two-step approach in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates that it is more likely than not that the position will be sustained based on technical merits. If this threshold is met, the second step is to measure the tax position as the largest amount that has more than a 50% likelihood of being realized upon ultimate settlement.

The Company’s net operating loss ("NOL") carryforwards are subject to annual limitations imposed by Section 382 of the Internal Revenue Code. The Company completed a Section 382 study through March 31, 2025, identifying ownership changes in connection with the 2020 merger between Menlo Therapeutics (the Company's predecessor company) and Foamix Pharmaceuticals Ltd. and with the private placement transaction in November 2023. These ownership changes resulted in federal NOLs expected to expire unutilized. The Company has not completed a Section 382 study through June 30, 2026, however, the Company may have experienced ownership changes in connection with the Merger between VYNE and Yarrow.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"), which made comprehensive revisions to federal corporate income tax provisions, including those related to research and development expense treatment, full expensing of business assets, interest deduction limitations, and international tax regimes such as global intangible low-taxed income, foreign-derived intangible income, and controlled foreign corporation look-through rules. The enactment of this legislation did not have a material impact on the Company’s income tax provision for the three and six months ended June 30, 2026.

m. Net loss per share

Net loss per share, basic and diluted, is computed on the basis of the net loss from continuing operations for the period divided by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is based upon the weighted average number of shares of common stock and of common stock equivalents outstanding when dilutive. The Company has issued Pre-Funded Warrants to purchase the Company’s common stock (the "Pre-Funded Warrants"), which do not expire until they are exercised in full (see “Note 8 - Stockholders' Equity”). Pursuant to the guidance of ASC 260-10, the Company concluded that because the equity-classified Pre-Funded Warrants were immediately exercisable for little or no cash consideration, due to the non-substantive exercise price, all of the necessary conditions for issuance of the underlying shares of common stock had been met when the Pre-Funded Warrants were issued. Therefore, the underlying shares of common stock should be included in the denominator for both the calculation of basic and diluted net loss per share of common stock for the three and six months ended June 30, 2026 and 2025.

The following stock options, restricted stock units (“RSUs”) and warrants were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (data presented as number of shares):

n. Concentration of credit risks

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, marketable securities and accounts receivable. The Company deposits cash and cash equivalents with highly rated financial institutions and, as a matter of policy, limits the amounts of credit exposure to any single financial institution. In addition, all marketable securities carry a high credit rating or are government insured. The Company has not experienced any material credit losses in these accounts and does not believe it is exposed to significant credit risk on these instruments.

Existing royalty receivables relate to one customer, but do not present a credit risk due to their immaterial nature.

o. Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding. For issued warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations and comprehensive loss. Liability-classified warrants are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded as a component of other income, net in the statements of operations and comprehensive loss. As of June 30, 2026 and December 31, 2025, all of the Company's outstanding warrants were equity-classified warrants.

p. Newly issued and recently adopted accounting pronouncements

Recently Issued Accounting Pronouncements:

In November 2024, the FASB issued ASU No. 2024-03,"Comprehensive Income (Topic 220)—Disaggregation of Income Statement Expenses"("ASU 2024-03"), to improve financial reporting by requiring disclosures in the notes to financial statements about specific types of expenses included in the expense captions presented on the face of the statement of operations and comprehensive loss. The requirements of the ASU, as clarified by ASU 2025-01 issued in January 2025, are effective for annual reporting periods beginning after December 15, 2026 and for interim reporting 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 evaluating the impact the adoption of this guidance will have on its unaudited condensed consolidated financial statements and related disclosures.

NOTE 3 -STRATEGIC AGREEMENTS

Agreements with Tay Therapeutics

Evaluation and Option Agreement

In April 2021, the Company entered into an Evaluation and Option Agreement (the “Option Agreement”) with Tay. For a description of the Option Agreement, see Note 3,“Agreements with Tay Therapeutics—Evaluation and Option Agreement” to the condensed consolidated financial statements included in Part I, Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 (the “Q1 Form 10-Q”), filed with the SEC on May 15, 2026, which description is incorporated herein by reference.

License for Locally Administered Pan-BD BET Inhibitor Program (Repibresib)

On August 6, 2021, the Company exercised its option with respect to the repibresib program and, on August 9, 2021, the parties entered into a License Agreement (the “Repibresib License Agreement”) granting the Company a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of Tay’s pan-BD BET inhibitor compounds in all fields. For a description of the Repibresib License Agreement, see Note 3,“Agreements with Tay Therapeutics—License for Locally Administered Pan-BD BET Inhibitor Program (Repibresib)” to the condensed consolidated financial statements included in Part I, Item 1 of the Company’s Q1 Form 10-Q, which description is incorporated herein by reference.

License for Selective BET Inhibitor Program (VYN202)

On April 28, 2023, the Company exercised the Oral Option and entered into a license agreement (the "VYN202 License Agreement") with Tay granting the Company a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of Tay’s Oral BETi Compounds in all fields. For a description of the VYN202 License Agreement, see Note 3,“Agreements with Tay Therapeutics—License for Selective BET Inhibitor Program (VYN202)” to the condensed consolidated financial statements included in Part I, Item 1 of the Company’s Q1 Form 10-Q, which description is incorporated herein by reference.

Sale of the MST Franchise

On January 12, 2022, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Journey pursuant to which the Company sold its MST Franchise to Journey. For a description of the Purchase Agreement, see Note 3, “Sale of the MST Franchise” to the condensed consolidated financial statements included in Part I, Item 1 of the Company’s Q1 Form 10-Q, which description is incorporated herein by reference.

NOTE 4 –DISCONTINUED OPERATIONS

The Company determined that the sale of the MST Franchise represented a strategic shift that had a major effect on the business and therefore the MST Franchise met the criteria for classification as discontinued operations. Accordingly, the MST Franchise is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations("ASC 205-20"). In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. Historically, research and development, marketing, and general and administrative expenses in discontinued operations included corporate costs incurred directly to solely support the MST Franchise.

On June 11, 2026, LEO Pharma notified the Company of its decision to terminate the Finacea license agreement effective December 31, 2026. As a result, the Company does not expect to recognize Finacea royalty revenue for periods after December 31, 2026. During both the three and six months ended June 30, 2026, the Company recognized a $0.1 million loss from discontinued operations, net of income taxes, related to an uncollected receivable from transition service agreements. For the three and six months ended June 30, 2025, the loss from discontinued operations, net of income taxes was $8 thousand and $16 thousand, respectively, and consisted solely of general and administrative expenses.

For the six months ended June 30, 2026, there were $0.1 million of non-cash transactions related to uncollectible receivable. There wereno non-cash items related to discontinued operations for the six months ended June 30, 2025.

The milestone payments for sales of ZILXI, AMZEEQ and FCD105 represent contingent consideration. Contingent consideration has been accounted for as a gain contingency in accordance with ASC 450, Contingencies, and will be recognized in earnings in the period when realizable.

NOTE 5 –FAIR VALUE MEASUREMENTS

The Company’s financial assets that are measured at fair value as of June 30, 2026 and December 31, 2025 are classified in the tables below in one of the three categories described in “Fair value measurement (k)” in "Note 2 - Significant Accounting Policies” above:

Other financial instruments consist of other receivables, trade payables and accrued expenses. The fair value of these financial instruments approximates their carrying values due to their short-term nature. In determining the fair value of its Level 2 investments, the Company relied on quoted prices for identical securities in markets that are not active. These quoted prices were obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities.

NOTE 6 –MARKETABLE SECURITIES

As of June 30, 2026, the Company hadno marketable securities. As of December 31, 2025, marketable securities consisted of U.S. Government and agency debt securities as well as U.S. Treasury bills.

The following table sets forth the Company’s marketable securities:

As of December 31, 2025, the amortized cost, gross unrealized gains, gross unrealized losses and fair value were as follows:

As of December 31, 2025, there were $5.0 million of marketable securities, which were in an unrealized gain position. The Company determined that unrealized gains and losses on marketable securities were primarily due to interest rate changes. No allowance for credit losses related to any of these marketable securities was recorded for the period ended December 31, 2025. All maturities are less than 12 months.

NOTE 7 -PROPERTY AND EQUIPMENT

The following table sets forth the Company's property and equipment, net as of June 30, 2026 and December 31, 2025:

Depreciation expense totaled $6 thousand and $12 thousand for both the three and six months ended June 30, 2026 and 2025, respectively, which is included within general and administrative expenses on the unaudited condensed consolidated statements of operations and comprehensive loss.

NOTE 8 –STOCKHOLDERS' EQUITY

Preferred stock

As of June 30, 2026, the Company's Amended and Restated Certificate of Incorporation (as amended, the "Certificate of Incorporation") authorized the Company to issue 20,000,000 shares of preferred stock, par value $0.0001 per share. There wereno shares of preferred stock issued and outstanding as of June 30, 2026 and December 31, 2025.

Shares of preferred stock may be issued from time to time in one or more series. The voting powers (if any), preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of any series of preferred stock will be set forth in a Certificate of Designation filed pursuant to the Delaware General Corporation Law, as determined by the Board of Directors.

Common stock

Pursuant to the Certificate of Incorporation, as of June 30, 2026, the Company was authorized to issue 150,000,000 shares of common stock, par value $0.0001 per share. On July 27, 2026, the Company amended its Certificate of Incorporation to increase the number of authorized shares of common stock to 300,000,000. Each share of common stock is entitled toone vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the Board of Directors, subject to the prior rights of holders of all classes of preferred stock outstanding. As of June 30, 2026, the Company had never declared any dividends on common stock. On July 23, 2026, the Company paid the special cash dividend. See Note 12,“Subsequent Events - Special Cash Dividend.”

On July 16, 2026, the Board of Directors approved, and on July 24, 2026 the Company effected, a 1-for-50 reverse stock split of its outstanding shares of common stock. The reverse stock split was intended to support the Merger and to facilitate compliance with Nasdaq's initial listing requirements, including the minimum bid price requirement. No fractional shares were issued in connection with the reverse stock split. In lieu of fractional shares, stockholders who would otherwise have been entitled to receive a fractional share received cash payments. The par value of the Company's common stock remained unchanged as a result of the reverse stock split. Proportionate adjustments were made to the exercise prices and number of shares underlying the Company's outstanding stock options, restricted stock units, warrants and other equity awards, as well as the number of shares available for issuance under the Company's equity incentive plans.

Unless otherwise indicated, all share and per share amounts presented in these condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented.

Issuances of common stock and warrants

At-the-Market Equity Offering Program

On March 1, 2024, the Company entered into a sales agreement (the “Cowen Sales Agreement”) with Cowen and Company, LLC as sales agent (“Cowen”) under which the Company may offer and sell, from time to time at its sole discretion, shares of the Company's common stock through Cowen in an at-the-market offering having an aggregate offering price up to $50.0 million. Cowen is entitled to compensation for its services equal to 3.0% of the gross proceeds of any shares of common stock sold under the Cowen Sales Agreement. The Company did not sell any shares of common stock under the Cowen Sales Agreement during the six months ended June 30, 2026 and 2025.

Pre-Funded Warrants

In October 2023, the Company entered into a security purchase agreement, pursuant to which the Company agreed to sell and issue to the purchasers in a private placement shares of the Company’s common stock and Pre-Funded Warrants (the "Private Placement"). The Pre-Funded Warr ants issued in the Private Placement will not expire until exercised in full. The Pre-Funded Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation; provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving 60 days’ notice to the Company, but not to exceed anypercentage in excess of 19.99%.

For the year ended December 31, 2025,365,942 Pre-Funded Warrants were exercised pursuant to a net exercise mechanism. During the six months ended June 30, 2026, no Pre-Funded Warrants were exercised pursuant to a net exercise mechanism. As of June 30, 2026,190,911 Pre-Funded Warrants remained outstanding.

Other Warrants

As of June 30, 2026 and December 31, 2025, the Company had warrants to purchase an aggregate of 550 shares of the Company’s common stock outstanding, with an exercise price of $420.00, and an expiration date of July 29, 2026. For details of the expiration, see Note 12,“Subsequent Events -Termination of Warrants.” These warrants were issued by Foamix Pharmaceuticals Ltd. in connection with a financing in July 2019 and were subsequently assumed by the Company in connection with the merger with Foamix Pharmaceuticals Ltd. Pursuant to the warrant certificate, the exercise price of the warrant will be proportionally adjusted in the event that the Company issues common stock at a price per share less than the exercise price (the "Down Round Feature"). In the event that the Down Round Feature is triggered, the Company must calculate the difference between the warrants’ fair value, using the Black-Scholes-Merton option-pricing model, before and after the Down Round Feature was triggered using the original exercise price and the new exercise price. The exercise price will continue to be adjusted in the event the Company issues additional shares of common stock below the then-current exercise price, in accordance with the terms of the warrants.

The Pre-Funded Warrants and warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the Pre-Funded Warrants and warrants do not provide any guarantee of value or return.

NOTE 9 –SHARE-BASED COMPENSATION

2023 Equity Incentive Plan

As of June 30, 2026, the Company maintained the 2023 Equity Incentive Plan (the "2023 Plan") and previously maintained the 2019 Equity Incentive Plan (the “2019 Plan”) and 2018 Omnibus Incentive Plan (the "2018 Plan"). Following stockholder approval in December 2023, any shares then available for future grant under the 2019 Plan and 2018 Plan were allocated to the 2023 Plan and no further grants could be made under the 2018 Plan and the 2019 Plan. In December 2024, stockholders approved a proposal to amend the 2023 Plan to increase shares available for grant under the 2023 Plan by 30,400 shares. As of June 30, 2026,6,352 shares remained issuable under the 2023 Plan. Following the Merger and the adoption of the 2026 Plan, as further described in Note 12, “Subsequent Events,” no further awards may be granted under the 2023 Plan.

2024 Induce ment Plan

On February 28, 2024, the Board of Directors approved the Company's 2024 Inducement Plan (the "Inducement Plan"). Pursuant to the Inducement Plan and Nasdaq Listing Rule 5635(c)(4), as of June 30, 2026 the Company is permitted to grant equity awards as an inducement material to an individual's entering into employment with the Company, subject to certain conditions ("Inducement Grants"). In November 2024, the Board of Directors reduced the number of shares available to be issued under the Inducement Plan toone share. In thesecond quarter of 2025 and the first half of 2026,2,225 and 263 shares, respectively, were returned to the Inducement Plan as a result of forfeited equity awards. As of June 30, 2026,2,488 shares were available for future Inducement Grants. Following the Merger and the adoption of the 2026 Plan, as further described in Note 12, “Subsequent Events,” no further awards may be granted under the Inducement Plan.

2019 Employee Share Purchase Plan

The Company has adopted the 2019 Employee Share Purchase Plan (the "ESPP") pursuant to which qualified employees (as defined in the ESPP) may elect to purchase designated shares of the Company’s common stock at a price equal to 85%of the lesser of the fair market value of the common stock at the beginning or end of each semi-annual share purchase period (“Purchase Period”). As of June 30, 2026, employees were permitted to purchase the number of shares purchasable with up to 15%of the earnings paid (as such term is defined in the ESPP) to each of the participating employees during the Purchase Period, subject to certain limitations under Section 423 of the U.S. Internal Revenue Code. In May 2026, ahead of the anticipated Closing Date of the Merger, the Compensation Committee of the Board of Directors terminated all subsequent offerings under the ESPP.

As of June 30, 2026,604 shares remained available for grant under the ESPP. Subsequent to June 30, 2026 the ESPP was terminated in connection with the Merger andno shares remain available for grant.

For the six months ended June 30, 2026 and 2025,644 and 324 shares were purchased by employees pursuant to the ESPP, respectively.

Options and RSUs granted to employees and directors:

For the six months ended June 30, 2026, no options or RSUs were granted to employees and directors.

Stock-based compensation expenses:

The following table illustrates the effect of stock-based compensation on the line items on the unaudited condensed consolidated statements of operations and comprehensive loss:

NOTE 10 –COMMITMENTS AND CONTINGENCIES

Litigation and contingencies

The Company may periodically become subject to legal proceedings and claims arising in connection with its business. As of June 30, 2026, there wereno claims or actions pending against the Company that, in the opinion of management, are likely to have a material adverse effect on the Company.

NOTE 11 -SEGMENT INFORMATION

As of June 30, 2026, VYNE operated inone operating segment, and thereforeone reportable segment, focused on the development of differentiated therapies to treat chronic inflammatory and immune-mediated conditions of high unmet need. This determination, that the Company operated as a single operating segment, is consistent with the financial information regularly reviewed by the Company's Chief Operating Decision Maker (“CODM”) for purposes of evaluating performance, allocating resources, and planning and forecasting for future periods. The Company's Chief Executive Officer (“CEO”) was the CODM.

The accounting policies for the single operating segment are the same as those described in “Note 2—Significant Accounting Policies.” The CODM uses net loss based on net loss that is reported on the unaudited condensed consolidated statement of operations and comprehensive loss to allocate resources (including employees, property, and financial resources), predominantly during the annual budget and forecasting process. The Company’s CODM views specific program spend within research and development expenses as well as overall general and administrative expenses as significant segment expenses. As a pre-commercial product revenue company, the CODM also considers budget versus actual results for expenses that are deemed significant and cash forecast models for assessing performance and to decide the level of investment in the Company’s operating and capital allocation activities. Further, the measure of segment assets is reported on the unaudited condensed consolidated balance sheet as total consolidated assets. All long-lived assets are held in the United States. All revenues are generated in the United States.

The following table presents VYNE's segment revenue and significant expenses regularly reviewed by the CODM for the three and six months ended June 30, 2026 and 2025:

*Other segment items relate to research and development expenses that cannot be directly allocated to one specific product candidate, such as employee-related expenses, consulting, quality control, regulatory, and general IP legal expenses.

Accordingly, the Company managed its operations as a single operating and reportable segment, and the unaudited condensed consolidated financial statements and notes thereto are presented as a single reportable segment.

NOTE 12 -SUBSEQUENT EVENTS

On the Closing Date, VYNE consummated the acquisition of Yarrow in accordance with the terms of the Merger Agreement. Following the Merger, the current business of Yarrow became the primary business of the Combined Company.

Special Cash Dividend

On July 10, 2026, the Board of Directors declared a special cash dividend of $17.3 million to holders of record of VYNE common stock as of a record date of July 22, 2026, with a payment date of July 23, 2026. The ex-dividend date of the special cash dividend was determined by Nasdaq to be July 24, 2026.

Special Meeting of Stockholders

On July 16, 2026, the Company held the Special Meeting, and all of the proposals included in the proxy statement/prospectus were approved by VYNE stockholders, other than the proposal to adjourn the Special Meeting, which was not presented to the VYNE stockholders.

Reverse Stock Split

On July 16, 2026, VYNE's Board of Directors approved, and on July 24, 2026 the Company effected, a 1-for-50 reverse stock split of its outstanding shares of common stock. The reverse stock split is intended to support the Merger and to facilitate compliance with Nasdaq's initial listing requirements, including the minimum bid price requirement. No fractional shares were issued in connection with the reverse stock split. In lieu of fractional shares, stockholders who would otherwise have been entitled to receive a fractional share received cash payments. The par value of the Company's common stock remained unchanged as a result of the reverse stock split. Proportionate adjustments were made to the exercise prices and number of shares underlying the Company's outstanding stock options, restricted stock units, warrants and other equity awards, as well as the number of shares available for issuance under the Company's equity incentive plans.

Unless otherwise indicated, all share and per share amounts presented in these condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented.

Termination of Warrants

On July 29, 2026, all 550 warrants outstanding with an amended exercise price of $20.22 originating from financing in July 2019 were terminated in accordance with the stated expiration date. Upon expiration of the warrants, the outstanding warrants were subject to an automatic conversion into shares of common stock. However, all holders of the warrants agreed to animmaterial cash payment in the place of shares.

Stock Incentive Plan

On April 23, 2026, the Board of Directors approved the Yarrow Bioscience, Inc. 2026 Stock Incentive Plan (the “2026 Stock Plan”), subject to stockholder approval and the consummation of the Merger. On July 16, 2026, the Company’s stockholders approved the 2026 Stock Plan at the Special Meeting and on July 27, 2026, the Board of Directors ratified the 2026 Stock Plan. The purpose of the 2026 Stock Plan is to promote and closely align the interests of employees, officers, non-employee directors and other individual service providers of the Company and its stockholders by providing stock-based compensation and other performance-based compensation. The initial share pool under the 2026 Stock Plan is 2,688,931. The shares that may be issued under the 2026 Stock Plan will be automatically increased on January 1 of each year beginning in 2027 and ending with a final increase on January 1, 2036, in an amount equal to 5% of the diluted stock (including common stock, preferred stock and unexercised pre-funded warrants) on the preceding December 31, unless a lower (or no) increase is determined by the administrator of the 2026 Stock Plan. Only 100,000,000 shares of common stock may be issued under the 2026 Stock Plan as incentive stock options.

Employee Stock Purchase Plan

On April 23, 2026, the Board of Directors approved the Yarrow Bioscience, Inc. 2026 Employee Stock Purchase Plan (the “2026 ESPP”), subject to stockholder approval and the consummation of the Merger. On July 16, 2026, VYNE’s stockholders approved the 2026 ESPP at the Special Meeting and on July 27, 2026, the Board of Directors ratified the 2026 ESPP. The purpose of the 2026 ESPP is to provide employees of the Company and its designated subsidiaries with an opportunity to purchase shares of common stock through accumulated contributions. The 2026 ESPP, and the rights of participants to make purchases thereunder, is intended to qualify under Section 423 of the Code. The initial share pool under the 2026 ESPP is 336,116. The shares that may be issued under the 2026 ESPP will be automatically increased on January 1 of each year beginning in 2027 and ending with a final increase on January 1, 2036 in an amount equal to the lesser of 1% of the diluted stock (including common stock, preferred stock and unexercised pre-funded warrants) on the preceding December 31 or 2,500,000, unless a lower (or no) increase is determined by the compensation committee of the Board of Directors, as administrator of the 2026 ESPP.