Medicus Pharma Ltd.: Form 10-Q for the period ended Mar 31, 2026

This Item and other sections of this Quarterly Report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we encourage you to review the risks and uncertainties described in "Risk Factors" in Part I, Item 1A in the 2025 Annual Report and Part II, Item 1A of this Quarterly Report. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this Quarterly Report. These forward-looking statements are made as of the date of this Quarterly Report, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. All amounts are expressed in United States dollars unless otherwise stated. This discussion should be read in conjunction with the Company's interim unaudited condensed consolidated financial statements for the three months ended March 31, 2026 and 2025.

Company Overview

Medicus Pharma Ltd. (the "Company") is a clinical stage, multi-strategy biotech/life sciences company focused on investing in and accelerating clinical development programs of novel and potentially disruptive therapeutic assets. The Company looks into opportunities across all therapeutic areas where an unmet need exists for improved patient safety and efficacy. The Company is opportunistically exploring to expand its drug development pipeline through qualified and accretive acquisitions and partnerships.

The Company has two wholly owned subsidiaries, Medicus Pharma Inc., a company incorporated in the state of Delaware on October 12, 2023, and SkinJect, Inc. ("Skinject"), a company incorporated in the state of Pennsylvania on March 3, 2015.

The Company also has one non-wholly owned subsidiary, Antev Limited ("Antev"), a company formed in England and Wales, of which it owns 98.6% of the issued and outstanding shares.

SkinJect is focused on the development of a novel "innovation combination product", as an investigational new drug, using uniquely designed, patent protected dissolvable microneedle arrays ("C-MNAs or P-MNAs") and doxorubicin containing dissolvable microneedle arrays ("D-MNAs") for the treatment of certain skin cancers. To that end, the Company licensed certain technology co-developed by the University of Pittsburgh and Carnegie Mellon University. The Company established and validated fabrication processes relative to the C-MNAs or P-MNAs and D-MNAs, completed pre-clinical testing and secured approval to proceed with clinical trials activity from the Food and Drug Administration ("FDA").

The Company then completed a dose escalation study ("SKNJCT-001") that assessed the safety of D-MNA patch in patients with basal cell carcinoma ("BCC"). There were no serious systemic or local adverse events nor any demonstrated alterations in any clinical measurements during the trial. The conclusion of the study was that D-MNA patch was well tolerated with no evidence of dose limiting toxicity.

The Company had initiated a clinical study ("SKNJCT-002") aimed at evaluating clinical efficacy. The first part involved the enrollment of 15 healthy volunteers and was designed to study the penetration of device only containing Dynamic Mechanical Allodynia patches at five different anatomic locations. After the first seven health volunteers were enrolled, due to the variability of array application observed by the investigator, SkinJect made the decision to pause the trial. The study was never resumed, and it was ultimately closed without further enrollment. There were no adverse events reported in the enrolled subjects.

In January 2024, the Company submitted the clinical design for a randomized, double-blinded, three arm study evaluating two dose levels of microneedle-mediated delivery of doxorubicin (D-MNA) compared with a device-only control (C-MNA or P-MNA) in patients with nodular type of basal cell carcinoma (nBCC). It was a multi-center study ("SKNJCT-003") enrolling up to 60 subjects presenting with nodular type of BCC of the skin. The FDA responded in March 2024 and requested additional clinical information. A final protocol was submitted to the FDA in July 2024, which included the information requested by the FDA, along with updated chemistry, manufacturing and controls, stability and sterility data. On July 31, 2024, the FDA responded to the latest submission and requested certain additional information and clarification. The Company responded to the FDA on August 2, 2024 and commenced patient recruitment on August 27, 2024.

The SKNJCT-003 Phase 2 clinical study is currently underway in nine clinical sites across United States. In March 2025, the Company announced a positively trending interim analysis for SKNJCT-003 demonstrating more than 60% clinical clearance. The interim analysis was conducted after more than 50% of the then-targeted 60 patients in the study were randomized. The findings of the interim analysis were preliminary and may or may not correlate with the findings of the study once completed. In April 2025, the investigational review board increased the number of participants in SKNJCT-003 to 90 subjects. The Company also announced expanding clinical trial sites in Europe. In December 2025, the Company announced it successfully completed enrolment of 90 patients in the United States.

In May 2025, the Company received notice that a study may proceed with approval from United Arab Emirates (UAE) Department of Health (DOH) to commence clinical study (SKNJCT-004) to non-invasively treat BCC of the skin. The study is expected to randomize 36 patients in four clinical sites in the UAE. Cleveland Clinic Abu Dhabi is the principal investigator, along with Sheikh Shakbout Medical City, Burjeel Medical City, and American Hospital of Dubai. Insights Research Organization and Solutions (IROS), a UAE-based contract research organization that is an M42 portfolio company, is coordinating the clinical study for the Company. In October 2025, the Company announced the enrollment of the first patient in its SKNJCT-004 Phase 2 clinical study.

In June 2025, the Company entered into a definitive agreement to acquire Antev, a UK-based clinical biotech company developing Teverelix, a next-generation GnRH antagonist, as first in market product for cardiovascular high-risk prostate cancer patients and patients with first acute urinary retention episodes due to enlarged prostate. Subsequently, in August 2025, the Company completed the acquisition of Antev and acquired 98.6% of the issued and outstanding shares of Antev for aggregate consideration consisting of approximately $2.97 million in cash and 1,603,164 common shares of the Company.

In July 2025, the Company submitted a comprehensive package to the FDA seeking a Type C meeting. In August 2025, the Company announced that the FDA accepted the Company's Type C Meeting request to formally discuss the D-MNA product development and gain further alignment on the clinical pathway. In September 2025, the FDA provided written responses to the Company's queries, and agreed that the Company can rely on the 505(b)(2) regulatory pathway to treat BCC using D-MNA.

In August 2025, the Company announced its entry into a non-binding memorandum of understanding ("MoU") with Helix Nanotechnologies, Inc., a Boston-based biotech company focused on developing a proprietary advanced mRNA platform, in respect of their mutual interest in the development or commercial arrangement contemplated by the MoU.

On October 22, 2025, the Company announced the enrollment of the first patient in the SKNJCT-004 phase 2 clinical study, to non-invasively treat BCC of the skin. On October 29, 2025, the Company announced a strategic collaboration with the Gorlin Syndrome Alliance to advance compassionate access to SkinJect™ for patients suffering from Gorlin Syndrome (nevoid basal cell carcinoma syndrome). Under the collaboration, the parties intend to pursue an Expanded Access IND program with the FDA to allow physician-supervised access for patients with multiple, recurrent, or inoperable BCCs.

In November 2025, the Company announced that it received full regulatory and ethical approvals in the United Kingdom to expand its ongoing Phase 2 clinical study (SKNJCT-003) evaluating D-MNA for the non-invasive treatment of BCC and announced that it submitted an application for an FDA Commissioner's National Priority Voucher in connection with SKNJCT-003.

On December 15, 2025, the Company announced that its Phase 2 clinical study (SKNJCT-003) evaluating safety and efficacy of D-MNA and C-MNA to non-invasively treat nodular BCC of the skin successfully completed enrolment of ninety (90) patients in the United States.

On December 22, 2025, the Company announced that it entered into a non-binding letter of intent with Reliant AI Inc., a decision-intelligence company for the life sciences, specializing in generative AI, to collaborate on the development of an artificial-intelligence-powered data analytics platform designed to support clinical trial execution through data-driven insights.

On January 12, 2026, the Company announced that a detailed clinical data on Teverelix, it long acting next generation GnRH antagonist, have been accepted for e-poster presentation at the American Association of Clinical Endocrinology (AACE) Annual meeting 2026, held April 22-24 in Las Vegas, Nevada.

On January 22, 2026, the Company announced that its subsidiary, Antev, has entered into Amendment No. 3 to its license agreement with LifeArc relating to Teverelix, an investigational next generation long-acting GnRH antagonist. Under the amended agreement, the royalty rate payable on worldwide net sales of Teverelix has been reduced from ~4% to 2%, with the royalty term clarified on a country-by-country basis in line with standard industry practice. The amendment does not alter the scope of the license, the underlying intellectual property, or the respective development responsibilities of the parties, and all other terms of the original agreement remain in full force and effect.

On February 10, 2026, the Company announced that it has received "study may proceed" clearance from the U.S. Food and Drug Administration (FDA) to initiate its Phase 2b dose-optimization study of Teverelix®, an investigational next generation long-acting GnRH antagonist, in men with advanced prostate cancer (APC).

On March 5, 2026, the Company announced topline results from its Phase 2 clinical study (SKNJCT-003) evaluating safety and efficacy of Doxorubicin Microneedle Array (D-MNA) to non-invasively treat basal cell carcinoma (BCC) of the skin.

On March 9, 2026, the Company announced additional context regarding the recently reported topline dataset from the Phase 2 SKNJCT-003 study evaluating SkinJect® microneedle delivery of D-MNA and P-MNA for basal cell carcinoma (BCC). The dataset demonstrated 73% clinical clearance and 40% histological clearance in the 200-µg treatment cohort at Day 57, representing the strongest treatment response observed in the study. The company described these findings as particularly notable given the device-based mechanism of SkinJect, where microneedle delivery itself may produce biological activity that can contribute to responses observed even in placebo active arm (P-MNA), that was not tip-loaded with the chemotherapeutic agent. Active placebo arms are not uncommon in device-drug combination trials and can be an acceptable regulatory data point. The study results demonstrate clear separation in clinical response between the D-MNA treatment arm (73%) and P-MNA treatment arm (38%) in the 200-µg cohort, supporting the continued development of SkinJect as a potential non-surgical treatment option for patients with basal cell carcinoma.

On March 30, 2026, the Company reported independent clinical validation of its Phase 2 SkinJect® dataset from Dr. Babar Rao, principal investigator of the SKNJCT-003 study and a globally recognized dermatology key opinion leader. Dr. Rao's independent assessment reinforces the Company's view that the dataset is clinically meaningful, decision-grade, and supportive of continued development and regulatory engagement.

Share Consolidation

On June 25, 2024, the Company's shareholders approved an amendment to the Company's articles of incorporation to provide for a share consolidation (the "Share Consolidation"), or reverse stock split, of the Company's issued and outstanding common shares at such a consolidation ratio to be determined by the Company's board of directors in its sole discretion, to permit the Company to satisfy all conditions and necessary regulatory approvals to list the common shares on a U.S. national securities exchange as the Company's board of directors may determine in its sole direction. Our board of directors approved the Share Consolidation on October 15, 2024, and the Share Consolidation was completed by the Company on October 28, 2024, at the ratio of 1-for-2.

After the completion of the Share Consolidation, the number of the Company's issued and outstanding common shares decreased from 21,693,560 to 10,846,721. The par value of the Company's common shares remains unchanged at $0 per share after the Share Consolidation. The Share Consolidation was completed in preparation for a U.S. listing.

Initial Public Offering

On November 14, 2024, the Company completed its initial public offering with the sale of 970,000 Units at the price of $4.125 per Unit, with each Unit (the "Unit") consisting of one common share and one warrant (the "Public Warrants" and with the Regulation A Warrants and the June 2030 Warrants, each as defined below, the "Warrants"). The Public Warrants expire five years from their date of issuance on November 15, 2029. In addition, the underwriters exercised an option to purchase 145,500 Public Warrants (the "Overallotment Warrants") at a price of $0.01 per warrant.

Total gross proceeds from our initial public offering were $4.0 million, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2.1 million, including underwriter fees, and legal and other professional fees incurred directly related to the issuance. No Public Warrants issued as part of our initial public offering were exercised during the three months ended March 31, 2026.

Regulation A Offering

On March 10, 2025, the Company completed an offering (the "Regulation A Offering") of 1,490,000 units at $2.80 per unit pursuant to Tier II of Regulation A under the Securities Act, with each unit consisting of one common share and one warrant (each, a "Regulation A Warrant"). The Regulation A Warrants have an exercise price of $2.80 and expire on March 10, 2030. The aggregate gross proceeds to the Company from the Regulation A Offering were $4.2 million. No Regulation A Warrants were exercised during the three months ended March 31, 2026.

Debentures

On May 2, 2025, the Company entered into a securities purchase agreement with YA II PN, Ltd. ("Yorkville"), under which the Company has issued and sold three debentures (the "Initial Debentures") to Yorkville in an aggregate principal amount totaling $5,000,000. The Initial Debentures were issued at a discounted price of 90% for proceeds to the Company of $4,500,000. Interest accrued on the outstanding principal amount of each Initial Debentures at an annual rate of 8%, subject to a potential increase to 18% per annum upon the occurrence of certain events of default. The Initial Debentures had a maturity date of February 2, 2026.

On September 17, 2025, the Company entered into securities purchase agreement with Yorkville to issue a new debenture (the "Debenture") with the principal amount of $8,000,000 issued at a discount of $633,707 for proceeds of approximately $7,366,293. Interest will accrue on the outstanding principal amount of the Debenture at an annual rate of 8%, subject to a potential increase to 18% per annum upon the occurrence of certain events of default. The Debenture will mature on September 17, 2026 and will be partially repaid using proceeds from the SEPA (as defined below).

June 2025 Public Offering

On June 2, 2025, the Company closed a public offering with gross proceeds of $7.0 million (the "June 2025 Public Offering"). The Company issued 2,260,000 units at a price of $3.10 per unit. Each unit consisted of one common share of the Company and one warrant to purchase one common share (the "June 2030 Warrants"). The June 2030 Warrants have an exercise price of $3.10 per share and will expire on June 2, 2030. No June 2030 Warrants were exercised during the three months ended March 31, 2026.

Warrant Inducement

On July 14, 2025, the Company entered into a warrant inducement agreement (the "Warrant Inducement Agreement") with an institutional investor, pursuant to which the investor agreed to exercise existing Regulation A Warrants to purchase up to 1,340,000 of the Company's common shares issued on March 10, 2025 and with an exercise price of $2.80 per common share, in consideration for receiving the 2,680,000 warrants (the "Series A and B Warrants") with an exercise price of $3.75. In accordance with the Warrant Inducement Agreement, the investor exercised its existing warrants for cash, for gross proceeds of $3.8 million to the Company.

On December 5, 2025, the Company entered into a warrant inducement agreement with an institutional investor (the "Second Warrant Inducement Agreement"), pursuant to which the investor agreed to exercise existing Series A and B Warrants to purchase up to 2,680,000 of the Company's common shares issued on July 14, 2025 with an amended exercise price of $1.92 per common share, in consideration for receiving 4,020,000 warrants (the "Series C and D Warrants") with an exercise price of $2.00. In accordance with the Second Warrant Inducement Agreement, the investor exercised its existing warrants for cash, for gross proceeds of approximately $5.1 million to the Company.

At-The-Market Program

On December 29, 2025, we entered into an equity distribution agreement (the "Equity Distribution Agreement") with Maxim Group LLC and Yorkville Securities, LLC, an affiliate of Yorkville as agents (together, the "Agents"), whereby the Agents may sell up to $15.3 million of our common shares as part of an at-the-market program (the "ATM").

Results of Operations

The following table outlines our statements of loss and comprehensive loss for the three months ended March 31, 2026 and 2025:

General and administrative

General and administrative expenses increased by $2,772,624 or 88.9% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This increase was primarily due to an increase in consulting fees, salaries and wages with increased headcount at board and management level and fees, expenses related to business development and investor relations and stock-based compensation. General and administrative expenses primarily include professional fees, consulting fees, salaries, wages and benefits, general office, insurance, administration expenditures, costs related to business development and investor relations, public relations, market awareness, advocacy and stock-based compensation associated with maintaining investor relations, public relations, market awareness, advocacy, director and officer insurance and compliance with applicable securities law requirements. In addition, there are additional costs, recurring and non-recurring, associated with increased regulatory requirements following the Company's initial public offering, transition to U.S. domestic issuer status, multiple financing transactions and the Antev acquisition.

Research and development ("R&D")

Research and development costs include costs incurred under agreements with third-party contract research organizations, contract manufacturing organizations and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidates, and other costs associated with our R&D programs, including laboratory materials and supplies.

R&D expenses increased by $698,179 or 34.8% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This increase is primarily due to to the start of the development of Teverelix, offset with a reduction in costs relating to SkinJect as we come to end of its Phase II trials. We expect our R&D expenses to increase going forward with the costs of two separate Phase II trials associated with Teverelix advancing.

The principal risks related to the Company's future performance are that the trials are unsuccessful, the Company does not receive FDA approval to proceed with the next stage of its research and development, or the Company is unsuccessful in obtaining future funding needed to continue its research and development. These are customary risks for a development stage pharmaceutical Company and are less acute than for a Company with a less advanced product. Nevertheless, there can be no assurance that the Company will be able to complete its trials of the MNA, that the trials will be successful, or that the product will ultimately reach commercialization.

Other income (expense)

Other income (expense) for the three months ended March 31, 2026, was an expense of $445,234 compared to an income of $23,866 for the three months ended March 31, 2025. Other income (expense) for the three months ended March 31, 2026 is primarily related to finance income of $56,561, interest expense of $374,712 and loss of SEPA settlements of $127,083. Other income (expense) for the three months ended March 31, 2025 is primarily related to interest income earned on short-term money market investments of $23,866.

Liquidity and Capital Resources

We are a clinical stage development company, and we currently do not earn any revenues from our drug development programs and are therefore considered to be in the R&D stage. As required, the Company will continue to finance its operations through the sale of equity or pursue alternative funding sources available to the Company in the future. The continuation of our R&D activities is dependent on our ability to obtain financing.

The financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. In addition to the ATM, SEPA and Debenture (as defined herein), management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, it is possible that the Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. Further, the terms of any financing may adversely affect the holdings or the rights of the Company's shareholders. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to progress its research and development program, pursue product portfolio expansion or commercialize its current or future products, each of which is critical to the realization of the Company's business plan and its future operations. This uncertainty, along with the Company's history of losses, indicates that substantial doubt exists about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements and this MD&A do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

The Company is subject to risks associated with any specialty biotechnology company that has substantial expenditures for research and development. There can be no assurance that the Company's research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable.

As of March 31, 2026, the Company had cash and cash equivalents of $6,365,624 compared to cash and cash equivalents of $3,982,430 as of March 31, 2025. During the three months ended March 31, 2026, the Company received $5,808,013 of net proceeds from issuance of common shares other than under the SEPA and $4,102,740 of proceeds from issuance of common shares under the SEPA. For the three months ended March 31, 2026, cash used in operating activities was $(8,969,688) compared to $(3,940,994) for the three months ended March 31, 2025. As of March 31, 2026, the Company has an accumulated deficit of $(73,390,261) (March 31, 2025 - $(34,006,311)) and net loss of $(9,042,311) for the three months ended March 31, 2026 (March 31, 2025 - $(5,102,408)). The Company has a working capital of $1,328,773 as of March 31, 2026 (March 31, 2025 - $1,751,860).

On March 10, 2025, the Company completed the Regulation A Offering of 1,490,000 units at $2.80 per unit. None of the 1,490,000 Regulation A Warrants have been exercised during the three months ended March 31, 2026.

On June 2, 2025, the Company closed its public offering with gross proceeds of $7.0 million. The Company issued 2,260,000 units at a price of $3.10 per unit. Each unit consisted of one common share of the Company and one June 2030 Warrant. The June 2030 Warrants have an exercise price of $3.10 per share and will expire June 2, 2030. As of March 31, 2026, no June 2030 Warrants have been exercised.

On July 14, 2025, the Company entered into the Warrant Inducement Agreement with an institutional investor, pursuant to which the investor agreed to exercise existing Regulation A Warrants to purchase up to 1,340,000 of the Company's common shares issued on March 10, 2025 and with an exercise price of $2.80 per common share, in consideration for receiving the 2,680,000 Series A and B Warrants with an exercise price of $3.75. In accordance with the Warrant Inducement Agreement, the investor exercised its existing warrants for cash, for gross proceeds of $3.8 million to the Company.

On December 5, 2025, the Company entered into The Second Warrant Inducement Agreement with an institutional investor, pursuant to which the investor agreed to exercise existing Series A and B Warrants to purchase up to 2,680,000 of the Company's common shares issued on July 14, 2025 with an amended exercise price of $1.92 per common share, in consideration for receiving 4,020,000 Series C and D Warrants with an exercise price of $2.00. In accordance with the Second Warrant Inducement Agreement, the investor exercised its existing warrants for cash, for gross proceeds of approximately $5.1 million to the Company.

On December 29, 2025, the Company entered into the Equity Distribution Agreement with Maxim Group LLC and Yorkville Securities, LLC, an affiliate of Yorkville as agents, whereby the Agents may sell up to $15.3 million of our common shares as part of an at-the-market program. As of March 31, 2026, the Company has issued 9,482,380 common shares as part of the program. The gross proceeds from the issuance were $5,808,013.

As of March 31, 2026, no Public Warrants issued as part of the initial public offering have been exercised for cash for nil proceeds to the Company during the three months ended March 31, 2026.

As of March 31, 2026, the Company had issued 5,336,780 common shares at an aggregate market price of $4,229,823 for net proceeds of $4,102,740 under the SEPA.

Standby Equity Purchase Agreement

The Company has entered into a standby equity purchase agreement dated February 10, 2025 (the "SEPA") with Yorkville, an investment fund managed by Yorkville Advisors Global, LP. Pursuant to the SEPA, the Company has the option, at its sole discretion, to sell up to $15,000,000 of the Company's common shares to Yorkville at any time during the 36-months following the date of the SEPA.

The Investor's obligation to purchase the common shares is subject to a number of conditions, including that the Company file a registration statement with the SEC registering the resale of the common shares issuable thereunder, and that the registration statement is declared effective by the SEC. Such current registration statement, as amended, was originally filed with the SEC on September 29, 2025 and declared effective by the SEC on November 14, 2025.

The issuance of common shares under the SEPA is subject to further limitations, including that the common shares beneficially owned by Yorkville and its affiliates at any one time will not exceed 4.99% of the then-outstanding common shares.

Common shares issued and sold to Yorkville under the SEPA will be priced at 97% of the market price (as defined in the SEPA) of the common shares during a specified three-day pricing period. The Company reserves the right to set a minimum acceptable price for the common share issuances.

As of March 31, 2026, the Company issued 5,336,780 common shares at market price of $4,229,823 for proceeds of $4,102,740. During the three months ended March 31, 2026, $3,223,980 of the gross proceeds were held back to partially repay the Company's outstanding debenture and interest to Yorkville.

Cash flows

Cash flows used in operating activities

Cash flows used in operating activities for the three months ended March 31, 2026 were $(8,969,688) compared to cash flows used in operating activities of $(3,940,994) for the three months ended March 31, 2025. The increase is primarily due to increased spending on research and development and general and administrative expenses.

Cash flows provided by financing activities

Cash flows provided by financing activities for the three months ended March 31, 2026, were $6,825,151 compared to cash flows provided by financing activities of $3,759,101 for the three months ended March 31, 2025. The increase is primarily due to increased proceeds from issuance of common shares in equity offerings and under SEPA, during the three months ended March 31, 2026, compared to proceeds from the issuance of common shares and warrants, net of offering costs from the Regulation A Offering, during the three months ended March 31, 2025.

Contractual Obligations

We have no significant contractual arrangements other than those noted in our financial statements.

Off-Balance Sheet Arrangements

As of March 31, 2026, we have not entered into any off-balance sheet arrangements.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in the MD&A section in our Annual Report.

Updated share information

As of March 31, 2026, we had 39,995,463 common shares issued and outstanding. In addition, there were 3,435,000 common shares issuable upon the exercise of outstanding stock options and 7,281,795 common shares issuable upon the exercise of warrants.

Recent Accounting Pronouncements

See Note 2 to our consolidated financial statements.

Subsequent Events

On April 6, 2026, the Company announced its submission of an optimized Phase 2 clinical study design to the FDA for Teverelix, for the prevention of recurrent acute urinary retention in men with benign prostatic hyperplasia as part of the Company's existing open investigational new drug for Teverelix.

On April 17, 2026, the Company announced its submission of an orphan drug designation application to the FDA for SkinJect for the treatment of BCC in patients with Gorlin Syndrome, a rare genetic disorder characterized by the development of multiple, recurrent skin cancers.

On April 21, 2026, the Company received written notice from the Listing Qualifications Department of Nasdaq, notifying the Company that the closing bid price for the common shares had been below $1.00 per share for the previous 30 consecutive business days, and that the Company is therefore not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5550(a)(2). In accordance with the Nasdaq Listing Rule 5810(c)(3)(A), the Company has a period of 180 calendar days, or until October 19, 2026, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the common shares must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period. The Notice has no immediate effect on the listing or trading of the common shares on the Nasdaq Capital Market.

On April 23, 2026, the Company and the Agents entered into an amendment to the Equity Distribution Agreement, up-sizing the ATM program from $15.3 million to up to $50 million.

On May 6, 2026, the Company announced results from a pre-specified expanded dataset analysis demonstrating positive dose response from its Phase 2 SKNJCT-003 study evaluating safety and efficacy of Doxorubicin Microneedle Array (D-MNA) to treat nodular basal cell carcinoma (BCC) of the skin, the most common type of skin cancer. This additional pre-specified analysis, builds upon the previously reported positive topline results, provides expanded biological, histologic, and safety insights that further strengthen SkinJect's therapeutic profile and future registrational discussions with the U.S. Food and Drug Administration (FDA). These additional findings are also consistent with prior Phase 1 clinical observations in the SKNJCT-001 study in March 2021, and interim analysis of SKNJCT-003 in March 2025, reinforcing reproducibility across studies.

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of March 31, 2026, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

Our management, including our Executive Chairman & Chief Executive Officer and President & Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2026 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on the results of this evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2026.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q include the risk factors described in the 2025 Annual Report. Any of these risk factors could result in a significant or material adverse effect on the Company's business, financial condition and/or results of operations. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the 2025 Annual Report.