Quoin Pharmaceuticals Ltd.: Form 10-Q for the period ended Sep 30, 2025

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in Part I-Item 1 of this Form 10-Q. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q.

Overview

We are a late-stage clinical specialty pharmaceutical company focused on the development and commercialization of therapeutic products that treat rare and orphan diseases for which there are currently either no approved or very limited treatments or cures. Our lead product, QRX003, is in clinical development as a potential treatment for Netherton Syndrome, a rare hereditary genetic disease. QRX003 is in two pivotal registrational clinical studies under an open IND application with the FDA. We have opened six clinical sites in the US . We have expanded our trials internationally in the Middle East, the United Kingdom and additional countries in Europe, including Spain and Germany. QRX003 is currently being tested in two pediatric NS patients at the Children’s Hospital in Dublin, Ireland and we are expanding this study to include additional children with NS in Austria and potentially in Spain, the United Kingdom and other countries. QRX003 is also being developed as a potential treatment for Peeling Skin Syndrome with the first subject being treated in New Zealand. We are planning to expand this study to include up to three additional pediatric subjects. In addition, we entered into a Research Agreement with the Queensland University of Technology, under which we have obtained an option for a global license to QRX008 for the potential treatment of scleroderma, as well as a Research Agreement with University College Cork for the development of novel topical formulations of Rapamycin (sirolimus) as potential treatments for a number of rare and orphan diseases for which there are either limited or no approved therapies or cures, including microcystic lymphatic malformations, venous malformations and angiofibroma’s. We have also entered into 9 commercial partnerships for QRX003 spanning 61 countries outside of its core commercial territories of the US, Western Europe and Japan. These partnership countries include Canada, Australia, New Zealand, the Middle East, China, Taiwan, Hong Kong Singapore, Israel, Central and Eastern Europe, Turkey as well as several countries in Latin America.

Our mission is to develop and commercialize proprietary therapeutic drug products that treat rare and orphan diseases, particularly those where none currently exists. To achieve this, we plan to:

• complete the late-stage clinical testing of QRX003 in NS and, if successful, file for marketing approval in the United States, Europe, Japan and the other territories for which we have commercial agreements in place;
• prepare to commercialize QRX003 by establishing our own sales infrastructure in the U.S. Europe, Japan and entering into distribution partnerships in other territories such as those currently established for Canada, Australia/New Zealand, the Middle East, China, Hong Kong, Taiwan, Latin America, Central and Eastern Europe, Turkey and Singapore; and
• pursue business development activities by seeking partnering, licensing, merger and acquisition opportunities or other transactions to further expand our pipeline and drug-development capabilities.

To date, no products have been commercialized and no revenue has been generated. We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the commercialization of QRX003 or any other product candidate. Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our operating activities through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to continue our operations. See “Liquidity and Capital Resources”.

Recent Developments

Increase in Authorized Capital

On August 21, 2025, at our 2025 Annual General Meeting of Shareholders (the “Annual Meeting”), our shareholders approved an amendment to our Amended and Restated Articles of Association, as amended to increase our authorized Ordinary Share capital from 100,000,000 Ordinary Shares to 5,000,000,000 Ordinary Shares.

Adoption of New Equity Plan

At the Annual Meeting, our shareholders approved the Quoin Pharmaceuticals Ltd. 2025 Equity Incentive Plan (the “2025 Plan”) and authorized the issuance pursuant to the 2025 Plan of up to 3,000,000 Ordinary Shares, subject to an automatic annual increase equal to the smaller of (a) fifteen percent (15%) of the number of Ordinary Shares issued and outstanding on a fully diluted basis on the immediately preceding December 31, or (b) an amount determined by our Board of Directors.

Private Placement Offering

On October 10, 2025, we entered into a securities purchase agreement with several institutional and accredited investors relating to the issuance and sale in a private placement transaction (the “Private Placement”) of (i) ordinary shares represented by 15,152 American Depositary Shares (“ADSs”) and (ii) pre-funded warrants to purchase ordinary shares represented by 1,993,939 ADSs, together with (A) Series H Warrants to purchase ordinary shares represented by up to 2,009,091 ADSs, (B) Series I Warrants to purchase ordinary shares represented by up to 2,009,091 ADSs, (C) Series J Warrants to purchase ordinary shares represented by up to 2,009,091 ADSs, and (D) Series K Warrants to purchase ordinary shares represented by up to 2,009,091 ADSs. The Series H Warrants, Series I Warrants, Series J Warrants and Series K Warrants are collectively referred to herein as the “Ordinary Warrants.” The combined purchase price was $8.25 per each ADS and accompanying Ordinary Warrants and $8.2499 per each pre-funded warrant and accompanying Ordinary Warrants, which pricing was designed to be in accordance with the “Minimum Price” requirement as defined in the Nasdaq rules. The private placement closed on October 14, 2025 (the “Closing Date”). We received upfront net proceeds of approximately $15 million from the Private Placement, after deducting estimated offering expenses payable by us, including placement agent fees and expenses. We intend to use the upfront net proceeds from the Private Placement for general corporate purposes, which may include operating expenses, research and development, including completion of clinical development of QRX003 for Netherton Syndrome, working capital, future acquisitions and general capital expenditures. We may also receive up to an aggregate of $88 million of additional gross proceeds if the Ordinary Warrants are exercised in full for cash.

Dennis Langer, one of our directors, participated in the Private Placement. Mr. Langer purchased ordinary shares represented by 15,152 ADSs and accompanying Ordinary Warrants for a total purchase price of approximately $128,641, at a combined purchase price of $8.49. In accordance with Nasdaq Rules, Mr. Langer’s purchase price was based upon the consolidated closing bid price from the trading day immediately preceding the date we entered into the securities purchase agreement, plus $0.50.

Description of Warrants

Beneficial ownership limitation. A holder of the pre-funded warrants or the Ordinary Warrants issued in the October 2025 private placement may not exercise any portion of such holder’s pre-funded warrants or Ordinary Warrants for ADSs to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% of the number of ordinary shares outstanding immediately after giving effect to the issuance of the ordinary shares represented by the ADSs issuable upon exercise of the applicable warrant.

Pre-funded warrants. The pre-funded warrants have an exercise price of $0.0001 per ADS. The pre-funded warrants are exercisable at any time after their original issuance, subject to the beneficial ownership limitation (as described above) and will not expire until exercised in full. In addition, the pre-funded warrants may be exercised, in whole or in part, any time after issuance by means of a cashless exercise.

Ordinary Warrants. The Ordinary Warrants are exercisable at any time after their original issuance, subject to the beneficial ownership limitation (as described above). The Series H Warrants have an exercise price of $9.075 per ADS and may be exercised until the earlier of (i) five (5) years from the Closing Date or (ii) 30 days after the public announcement that we have received Type C meeting minutes from the FDA indicating openness to baseline-controlled pivotal studies for QRX003 for the treatment of Netherton Syndrome. The Series I Warrants have an exercise price of $10.3125 per ADS and may be exercised as follows: (i) 50% of the Series I Warrants may be exercised until the earlier of (A) five (5) years from the Closing Date or (B) 30 days after the public announcement that the primary endpoint has been met in the monotherapy pivotal trial of QRX003 for the treatment of Netherton Syndrome, and (ii) 50% of the Series I Warrants may be exercised until the earlier of (A) five (5) years from the Closing Date or (B) 30 days after the public announcement that the primary endpoint has been met in the adjuvant pivotal trial of QRX003 for the treatment of Netherton Syndrome. The Series J Warrants have an exercise price of $12.375 per ADS and may be exercised until the earlier of (i) five (5) years from the Closing Date or (ii) 30 days after the public announcement of the receipt of either accelerated or traditional approval by the FDA of QRX003 for the treatment of Netherton Syndrome. The Series K Warrants have an exercise price of $12.375 per ADS and may be exercised until the earlier of (i) five (5) years from the Closing Date or (ii) 30 days after the public announcement of the sale of a Priority Review Voucher (PRV).

December 2024 Warrants Exercise. On October 14, 2025 a further $3.3 million was received by the Company further to the exercise of certain warrants issued by the Company in December 2024.

Regulatory Update

On October 21, 2025, we announced that the FDA has granted Orphan Drug Designation to QRX003, for the treatment of Netherton Syndrome. The designation follows previously granted Orphan Drug Designation by the European Medicines Agency (the “EMA”) in May 2025. The FDA’s Orphan Drug Designation program provides orphan status to therapies intended for the treatment, diagnosis, or prevention of rare diseases that affect fewer than 200,000 people in the United States. This designation provides certain benefits, including tax credits for qualified clinical testing, waiver or partial payment of FDA application fees and seven years of market exclusivity, if approved.

Components of Our Results of Operations

Operating Expenses

Our current operating expenses consist of two components - research and development expenses, and general and administrative expenses.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. We utilize outside consultants and third parties to conduct the majority of our research and development, under the supervision of our management team.

Future research and development expenses may include:

• employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses, share-based compensation, overhead related expenses and travel related expenses for our research and development personnel;
• expenses incurred under agreements with CROs, as well as consultants that support the implementation of the clinical studies described above;
• manufacturing and packaging costs in connection with conducting clinical trials and for stability and other studies required to support the NDA filing as well as manufacturing drug product for commercial launch;
• formulation, research and development expenses related to QRX003; and other product candidates we may choose to develop; and
• costs for sponsored research.

Research and development activities will continue to be central to our business plan. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to be significant over the next several years as personnel and compensation costs increase and we conduct late-stage clinical studies and prepare to seek regulatory approval for QRX003 and any other future product candidate.

The duration, costs and timing of clinical trials of QRX003 and any other future product candidate will depend on a variety of factors that include, but are not limited to:

• the number of trials required for approval;
• the per patient trial costs;
• the number of patients that participate in the trials;
• the number of sites included in the trials;
• the countries in which the trial is conducted;
• the length of time required to enroll eligible patients;
• the number of doses that patients receive;
• the drop-out or discontinuation rates of patients;
• the potential additional safety monitoring or other studies requested by regulatory agencies;
• the duration of patient follow-up;
• the timing and receipt of regulatory approvals; and
• the efficacy and safety profile of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation and employee related expenses including non-cash stock-based compensation, professional fees and other corporate expenses. We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities. These increases will likely include compensation and employee-related expenses including stock-based compensation, increased costs related to the potential hiring of personnel, travel costs and fees to outside consultants, lawyers and accountants.

Other Expenses (income)

Other expenses (income) consist primarily of interest income and unrealized loss (gain) on investments.

Results of Operations – Three months ended September 30, 2025 compared to the three months ended September 30, 2024

The following table sets forth our results of operations for the three months ended September 30, 2025, compared to the three months ended September 30, 2024:

General and Administrative Expenses

General and administrative expenses were approximately $1,739,000 and $1,448,000, in the three months ended September 30, 2025 and 2024, respectively, representing an increase of $290,000, or approximately 20%. The increase was primarily due to an increase of $379,000 in payroll and benefits due to severance costs, $68,000 in consulting costs, $87,000 in legal and professional fees, $52,000 in public company costs, $29,000 in marketing and website expenses, and $16,000 in office supply expenses offset by, decreases of $151,000 in board fees from board members being granted stock options in lieu of cash payments, $22,000 in travel costs, $14,000 in insurance costs, and non-cash stock-based compensation expense of $159,000 due to the reversal of unvested stock options from an employee reduction.

Research and Development Expenses

Our research and development expenses during the three months ended September 30, 2025 and 2024 were approximately $2,281,000 and $1,080,000, respectively, representing an increase of $1,202,000, or approximately 111%. The increase was primarily due to $1,174,000 in increased external expenditures on our development programs, as we advance our work related to the clinical studies for the development of QRX003 and a $27,000 increase in non-cash stock-based compensation expense allocated to research and development expenses.

We amortize licensed or acquired intellectual property over its expected useful life, included in research and development expenses set out above. Amortization of intangible assets was approximately $25,000 and $25,000 in each of the three month periods ended September 30, 2025 and 2024.

Other (Income) and Expenses:

We had approximately $9,000 in unrealized gain and $62,000 in realized gain and accrued interest income in the three months ended September 30, 2025 from our cash and cash equivalents and investments in marketable debt securities. We had approximately $32,000 in unrealized gain and $146,000 in realized gain and accrued interest income in the three months ended September 30, 2024 from our cash and cash equivalents and investments in marketable debt securities.

Results of Operations – Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

The following table sets forth our results of operations for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024:

General and Administrative Expenses

General and administrative expenses were approximately $5,064,000 and $4,571,000, in the nine months ended September 30, 2025 and 2024, respectively, representing an increase of $493,000, or approximately 11%. The increase was primarily due to an increase of $144,000 in payroll and benefits due to severance costs, $243,000 in consulting costs, $225,000 in legal and professional fees, $154,000 in public company costs, $76,000 in marketing and website expenses, $52,000 in corporate Delaware tax costs and $14,000 in office supply expenses offset by decreases of $107,000 in board fees from board members being granted stock options in lieu of cash payments, $58,000 in travel costs, $68,000 in insurance costs, and non-cash stock-based compensation expense of $185,000 due to the reversal of unvested stock options from an employee reduction.

Research and Development Expenses

Our research and development expenses during the nine months ended September 30, 2025 and 2024 were approximately $6,706,000 and $2,552,000, respectively, representing an increase of $4,154,000, or approximately 163%. The increase was primarily due to $4,037,000 in increased external expenditures on our development programs, including work related to the clinical studies for the development of QRX003, a $115,000 increase in non-cash stock-based compensation expense allocated to research and development expenses.

We amortize licensed or acquired intellectual property over its expected useful life, included in research and development expenses set out above. Amortization of intangible assets was approximately $75,000 and $75,000 in each of the nine month periods ended September 30, 2025 and 2024.

Other (Income) and Expenses:

We had approximately $4,000 in unrealized gain and $310,000 in realized and accrued interest income in the nine months ended September 30, 2025 from our cash and cash equivalents and investments in marketable debt securities. We earned approximately $23,000 in unrealized gain and $449,000 in realized and accrued interest income in the nine months ended September 30, 2024 from our cash and cash equivalents and investments in marketable debt securities.

Liquidity and Capital Resources

We have incurred net losses every year since inception and had an accumulated deficit of approximately $66.6 million at September 30, 2025. We have a limited operating history and have historically funded our operations through debt and equity financings. We incurred net losses of approximately $11.5 million and negative cash flows from operations of $8.5 million for the nine months ended September 30, 2025. At September 30, 2025, we had cash and cash equivalent balances totaling $1.8 million and investments of $3.6 million. In addition, on October 10, 2025, the Company entered into a Securities Purchase Agreement with several institutional and accredited investors for the issuance and sale in a private placement of securities for gross proceeds of approximately $16.6 million. On October 14, 2025 a further $3.3 million was received by the Company further to the exercise of certain warrants issued by the Company in December 2024. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of planned clinical trials and our expenditures on other research and development activities. After taking into account the net proceeds we received in connection with the Private Placement that closed on October 14, 2025, we have determined that we have sufficient resources to effect our business plan for at least one year from the issuance of the unaudited consolidated financial statements included in this report. We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our product candidates, which is subject to uncertainty. Additional financing may be required to fund our other operating requirements until we reach commercial profitability, if ever, which may not be available at acceptable terms, if at all.

Future Funding Requirements

We will need to obtain further funding through public or private offerings of our capital stock, debt financing, collaboration and licensing arrangements or other sources, the requirements for which will depend on many factors, including:

• the scope, timing, rate of progress and costs of our drug development efforts, preclinical development activities, the timing of laboratory testing and clinical trials for our product candidates;
• the number and scope of clinical programs we decide to pursue;
• the cost, timing and outcome of preparing for and undergoing regulatory review of our product candidates;
• the scope and costs of development and commercial manufacturing activities;
• the cost and timing associated with commercializing our product candidates, if they receive marketing approval;
• the extent to which we acquire or in-license other product candidates and technologies;
• the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
• our ability to establish and maintain collaborations on favorable terms, if at all;
• our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates and, ultimately, the sale of our products, following FDA approval;
• our implementation of operational, financial and management systems; and
• the costs associated with being a public company.

Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of QRX003, any future product candidate, or potentially discontinue operations.

To the extent that we raise additional capital through the sale of our equity or convertible debt securities, and pursuant to the exercise of the warrants issued to the investors in our prior public offerings, the ownership interest of our equity holders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our equity holders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or proposed products, or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market any future product that we would otherwise prefer to develop and market ourselves.

Summary Statement of Cash Flows

As of September 30, 2025, we had approximately $5,413,000 in cash and cash equivalents and investments in marketable securities. The table below presents our cash flows for the nine month periods ended September 30, 2025 and 2024:

Operating Activities

Net cash used in operating activities was approximately $8,506,000 and $5,621,000 in the nine months ended September 30, 2025 and 2024, respectively. The increase in 2025 was primarily due to an increase in net loss, offset by an increase in accounts payable and accrued expenses and a decrease in prepaid expenses.

Investing Activities

Investment activities provided net cash of $6,991,000 and $1,290,000 in the nine months ended September 30, 2025 and 2024, respectively. The cash provided in investing activities for the nine months ended September 30, 2025 consisted of net sales and redemptions of US Treasury Bills and Notes. The cash provided in investing activities for the nine months ended September 30, 2024 consisted of net purchases of short maturity US Treasury Bills and Notes from the proceeds of the March 2024 public offering.

Financing Activities

Net cash (used in) financing activities was approximately $277,000 for the nine months ended September 30, 2025. The net cash used in financing activities was due to repayments of amounts due to officers of $450,000, partially offset by the receipt of approximately $173,000 in net proceeds from the exercise of warrants. Net cash provided by financing activities was approximately $5,046,000 for the nine months ended September 30, 2024. The net cash provided increased due to the receipt of approximately $5.5 million in net proceeds from our March 2024 public offering partially offset by repayments of amounts due to officers of $450,000.

Research and Development Commitments

In October 2019, Quoin Inc. entered into the Exclusive Licensing Agreement (as amended from time to time, the “License Agreement”) with Skinvisible Pharmaceuticals, Inc. (“Skinvisible”), under which Skinvisible granted us an exclusive royalty-bearing license relating to the production and manufacture of prescription drug products related to certain patents held by Skinvisible, including those related to QRX003 and QRX004. We made Skinvisible a one-time non-refundable, non-creditable license fee of $1 million (the “License Fee”). In addition, we agreed to pay Skinvisible a single digit royalty percentage of our net sales revenues for any licensed product covered by the patent rights licensed under the License Agreement. We also agreed to pay Skinvisible 25% of any revenues we receive as royalties in the event that we sublicense any licensed products to a third party. The License Agreement also requires that we make a $5 million payment to Skinvisible upon receiving approval in the U.S. or European Union, whichever occurs first, for the first drug product developed using intellectual property licensed thereunder.

In November 2020, Quoin Inc. entered into a Master Service Agreement with Therapeutics Inc. for the management of the preclinical and clinical development of QRX003 for Netherton Syndrome. The initial term of the agreement was three years with automatic one year extensions, and the agreement required the execution of individual work orders. Quoin Inc. may terminate any work order for any reason with 90 days written notice subject to costs incurred through termination and a defined termination fee, unless there is a material breach by Therapeutics Inc. A work order was entered into in June 2022 for the first QRX003 clinical study at an expected estimated cost of approximately $4.4 million through 2024. An additional change order was entered into in December 2022 for a second QRX003 clinical study at an expected estimated cost of approximately $830,000. An amended and restated change order for the two studies was entered into in December 2024 at an estimated total remaining cost from August 2024 of approximately $3.6 million for the two studies combined. For the three and nine months ended September 30, 2025 and 2024, we incurred a research and development expense under these agreements of approximately $522,000 and $1,281,000 and $275,000 and $926,000 respectively.

In November 2021, we entered into a research agreement with Queensland University of Technology (QUT) for a pre-clinical research program for the development of a product to treat Netherton Syndrome of approximately $250,000. In May 2022, we entered into a second research agreement with QUT for the development of a product to treat Scleroderma of approximately $610,000. Each agreement remains in place until the completion of the research program, which in each case was initially anticipated to be 18 months from execution. For the three and nine months ended September 30, 2025 and 2024, we did not incur any costs related to these agreements. In July 2025 we announced that, in light of the expected near-term completion of the QRX003 clinical program for Netherton Syndrome, we have discontinued Netherton Syndrome research program with QUT. We are planning to schedule a meeting with QUT to discuss the future direction of the Scleroderma research program.

In June 2024, we entered into a research agreement with The School of Pharmacy at UCC. The scope of the agreement encompasses the development of novel topical formulations of Rapamycin (sirolimus) as potential treatments for a number of rare and orphan diseases for which there are currently very limited or no approved therapies or cures. Under the terms of the agreement, based on the achievement of certain milestones, we will fund up to approximately €567,000 ($665,000) plus VAT over an anticipated 2-1/2 year period to support the UCC research program to investigate the development of a number of topical rapamycin formulations for future development as potential treatments for several rare and orphan diseases. Following completion of the research program, we will have the option to advance the clinical development of rapamycin formulations developed by UCC. Work on this research project commenced in December 2024. For the three and nine months ended September 30, 2025, we incurred a research and development expense under these agreements of approximately $48,000 and $168,000 respectively.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

We are a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information otherwise required under this Item 3.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, which are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15e under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as set forth below, there have been no material changes in our risk factors from the risks previously reported in Part 1, Item 1A, “Risk Factors” of our Form 10-K. You should carefully consider the factors discussed in Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our ADSs.

Our ADSs are listed on the Nasdaq Capital Market, which imposes, among other requirements, a minimum bid requirement.

On April 29, 2024, we received a letter from the Listing Qualifications staff of The Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that the closing bid price per ADS was below the required minimum of $1.00 for a period of 30 consecutive business days and that we did not meet the Minimum Bid Price Requirements set forth in Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Rule 5810(c)(3)(A), we had an initial period of one hundred eighty (180) calendar days, or until October 29, 2024, which was subsequently extended a further one hundred eighty (180) calendar days, or until April 28, 2025 (the “Compliance Period”), to regain compliance with Nasdaq’s Minimum Bid Price Requirement. To regain compliance with the Nasdaq Listing Rules, on April 9, 2025, we effected a change in the ratio of ADSs evidencing Ordinary Shares from one (1) ADS representing one (1) Ordinary Share to one (1) ADS representing thirty-five (35) Ordinary Shares. On April 29, 2025, we received a letter from Nasdaq stating that our closing bid price per ADS was at $1.00 or greater for the last 13 consecutive business days. Accordingly, we regained compliance with Listing Rule 5550(a)(2) and the matter was closed.

Nasdaq Listing Rule 5810(c)(3)(A)(iv) states that any listed company that fails to meet the Minimum Bid Price Requirement and has effected a reverse stock split over the prior one-year period, or has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, will not be eligible for an automatic 180-day grace compliance period and the Nasdaq Listing Qualifications Department is obligated to immediately issue a delisting determination. Therefore, if we were to fall out of compliance with the Minimum Bid Price Requirement prior to April 9, 2026, we would not be able to effect a reverse stock split and would immediately be issued a delisting determination. Further, the Nasdaq rule provides that a company will not be considered to have regained compliance with the Minimum Bid Price Requirement if the company takes an action to achieve compliance (such as a reverse split) and that action results in the Company’s security falling below the numeric threshold for another listing requirement.

There can be no assurance that we will be able to maintain compliance with Nasdaq’s Minimum Bid Price Requirement or other continued listing requirements. As of September 30, 2025, our stockholders’ equity was below the minimum requirement of $2,500,000 set forth in Nasdaq Listing Rule 5550(b)(1). Although the Private Placement, which closed on October 14, 2025, likely increased our stockholders’ equity, there can be no assurance that we will regain compliance with the stockholder’s equity requirement. If we fail to comply with the Nasdaq listing requirements and do not regain compliance, our ADSs will be subject to delisting by Nasdaq. In the event our ADSs are delisted, our ADS price and market liquidity of our ADSs will be adversely affected, which will impact our ability to sell securities in the market. Further, delisting from Nasdaq could also have other negative effects, including potential loss of confidence by partners, suppliers and employees.

There can be no assurance that our ADSs will continue to trade on Nasdaq or trade on the over-the counter markets or any public market in the future. In the event our ADSs are delisted, our ADS price and market liquidity of our ADSs will be adversely affected which will impact your ability to sell your securities in the market.

If we fail to meet any of Nasdaq’s listing standards, our ADS will be subject to delisting. If that were to occur, our ADS would be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in our ADS. This would adversely affect the ability of investors to trade our ADS and would adversely affect the value of our ADS. Delisting from Nasdaq would cause us to pursue eligibility for trading of our ADS on other markets or exchanges, or on an over-the-counter market. In such case, our stockholders’ ability to trade or obtain quotations of the market value of our ADS would be severely limited because of lower trading volumes and transaction delays. These factors could contribute to lower prices and larger spreads in the bid and ask prices of these securities. There can be no assurance that our ADS, if delisted from Nasdaq, would be listed on a national securities exchange, a national quotation service or the over-the-counter markets. Delisting from Nasdaq could also result in negative publicity, adversely affect the market liquidity of our ADS, decrease securities analysts’ coverage of us or diminish investor, supplier and employee confidence. In addition, our stock could become a “penny stock,” which would make trading of our ADS more difficult.

The delisting of our ADS from Nasdaq may make it more difficult for us to raise capital on favorable terms in the future, or at all. Such a delisting would likely have a negative effect on the price of our ADS and would impair your ability to sell or purchase our ADS when you wish to do so. Further, if our ADS were to be delisted from Nasdaq, our ADS would cease to be recognized as a covered security, and we would be subject to additional regulation in each state in which we offer our securities. Moreover, there is no assurance that the actions that we have taken to restore our compliance with the Nasdaq Minimum Bid Price Requirement will stabilize the market price or improve the liquidity of our ADS, prevent our ADS from falling below the Nasdaq minimum bid price required for continued listing again or prevent future non-compliance with other applicable Nasdaq listing requirements.

We have incurred significant losses since our inception and have limited cash available for our operations.

To date, we have not commercialized any products and have not generated any revenue. We have incurred net losses every year since inception and we have an accumulated deficit of approximately $66.6 million at September 30, 2025. We have historically funded our operations through debt and equity financings. At September 30, 2025, we had cash and cash equivalent balances totaling $1.8 million and investments of $3.6 million. Following the completion of the Private Placement on October 14, 2025, we believe that we have sufficient cash and liquidity for operating our business for twelve months from the date of filing this Form 10-Q. We are subject to risks common to late-stage clinical specialty pharmaceutical companies including, but not limited to, unanticipated or higher than expected clinical trial costs and the ability to estimate such occurrences, if any, on our cash, liquidity, additional financing requirements, and availability. Accordingly, we may need to raise additional funds during this period. We have devoted a majority of our financial resources to research and development, including our preclinical and ongoing clinical development activities. To date, we have funded our operations primarily through our founders’ funding expenditures and the sale of equity and convertible securities.

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our product candidates or these candidates participate in Early Access or Named Patient programs, which we expect will take a number of years and is subject to significant uncertainty. Additional financing will be required to complete the research and development of our product candidates and our other operating requirements, which may not be available at acceptable terms, if at all. If we are unable to obtain additional funding when it becomes necessary, the development of our product candidates will be impacted and we would likely be forced to delay, reduce, or terminate some or all of our development programs, all of which could have a material adverse effect on our business, results of operations and financial condition.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we:

• continue and/or initiate clinical development of our product candidates, including—QRX003—a topical lotion comprised of a broad-spectrum serine protease inhibitor, formulated with the proprietary Invisicare® technology, which is under clinical development as a potential treatment for Netherton Syndrome (“NS”);
• further enhance our internal control systems;
• initiate the development of additional product candidates for other rare disease indications;
• acquire or in-license other products and technologies and advance those product candidates into clinical trials;
• seek marketing approvals for our product candidates that successfully complete clinical trials;
• ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
• maintain, expand and protect our intellectual property portfolio;
• hire additional clinical, regulatory, research, executive and administrative personnel; and
• create additional infrastructure to support our operations and our product development and planned future commercialization efforts.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of increased expenses and when we will be able to achieve or maintain profitability, if ever. In addition, our expenses could increase beyond expectations if we are required by the FDA or other foreign regulatory agencies to perform studies and trials in addition to those that we currently anticipate.

Even if one or more of the product candidates that we independently develop is approved for commercial sale, we may incur significant costs associated with commercializing any approved product. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

Limits on our ability to sell securities under the Purchase Agreements may affect our ability to finance our operations.

Pursuant to the terms of the Purchase Agreement that we entered into in connection with the Private Placement that closed on October 14, 2025, we agreed, subject to certain exceptions, (i) to not enter into variable rate financings for a period of 180 days following the Closing Date, (ii) to not enter into any equity financings until the later of 60 days after the effective date of the initial registration statement required to be filed pursuant to the Registration Rights Agreement (or, if earlier, if all applicable securities have been sold, or could be sold without restriction, pursuant to Rule 144 or Section 4(a)(1)) and 90 days after the Closing Date (the “Initial Standstill Period”), and (iii) to not enter into any equity financings at an effective price per ADS or Ordinary Share that is less than $8.25 from the last day of the Initial Standstill Period until 180 days after the effective date of the initial registration statement required to be filed pursuant to the Registration Rights Agreement (or, if earlier, if all applicable securities have been sold, or could be sold without restriction, pursuant to Rule 144 or Section 4(a)(1)). The Purchase Agreement further provides that the Purchasers have a right of participation in certain subsequent financings by us or any of our subsidiaries in an amount equal to up to an aggregate of 25% of such subsequent financings for 12 months following the date of the Purchase Agreement. If we require additional funding while these restrictive covenants remain in effect, we may be unable to effect a financing transaction on terms acceptable to us, or at all, while also remaining in compliance with the terms of the Purchase Agreement, or we may be forced to seek a waiver from the Purchasers, which such Purchasers are not obligated to grant to us.If we are unable to obtain additional funding when it becomes necessary, the development of our product candidates will be impacted, which could have a material adverse effect on our business.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shutdowns, or other disruptions to these agencies’ staffing and operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

Currently, federal agencies in the U.S. are operating under a federal government shutdown due to the expiration of the continuing resolution that expired on September 30, 2025. The duration of the current government shutdown is unknown. In addition, the current U.S. administration is focused on reducing costs of the federal government generally, including significantly reducing the number of government employees. Without appropriation of additional funding to federal agencies, our business operations related to our product development activities for the U.S. market could be impacted. The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other federal agencies, including substantial leadership departures, personnel cuts, and policy changes, may also slow the time necessary for new drugs to be reviewed and/or approved, which would harm our business. These changes have been reported by some within the pharmaceutical industry as creating instances of delays in the FDA’s responsiveness or in its ability to review IND submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all.

If the current U.S. federal government shutdown is prolonged or if the FDA, NIH, SEC or the USPTO experiences significant decreases in funding or personnel, it could significantly impact the ability of the FDA to issues licenses needed for conduct of our clinical trials, the NIH to conduct research or provide grants, and the abilities of the FDA and the USPTO to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.