# Citius Oncology, Inc.: Form 10-Q for the period ended Dec 31, 2024

- Company: [Citius Oncology, Inc.](/companies/ctor.md) (CIK 1851484)
- Form: 10-Q
- Filed: 2025-02-14
- Accepted by EDGAR: Feb 14, 2025, 16:30 ET
- Period: 2024-12-31
- Accession: 0001213900-25-014320
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1851484/000121390025014320/ea0230776-10q_citius.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1851484/000121390025014320/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-10-01 to 2024-12-31 | $1.3m | us-gaap:ResearchAndDevelopmentExpense |
| Income tax | 3 months, 2024-10-01 to 2024-12-31 | $264.2k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-10-01 to 2024-12-31 | −$6.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-10-01 to 2024-12-31 | −$0.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-10-01 to 2024-12-31 | −$0.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-10-01 to 2024-12-31 | 71,552,402 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Cash and equivalents | at 2024-12-31 | $112 | us-gaap:Cash |
| Current assets | at 2024-12-31 | $17.1m | us-gaap:AssetsCurrent |
| Total assets | at 2024-12-31 | $90.5m | us-gaap:Assets |
| Current liabilities | at 2024-12-31 | $43.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-12-31 | $49.2m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-12-31 | $41.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 14,210 characters.

*The following discussion and analysis of our financial condition and results of operations for the three months ended December 31, 2024 and 2023 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Oncology, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on December 27, 2024, as amended on January 27, 2025. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report.*

### Business

Citius Oncology is a specialty biopharmaceutical company focused on developing and commercializing innovative targeted oncology therapies. We are commercializing LYMPHIR (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. LYMPHIR was approved by the FDA in August 2024.

We were incorporated in the Cayman Islands on March 1, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. In August 2024, we reincorporated in Delaware and completed the Merger whereby we acquired SpinCo as a wholly owned subsidiary and changed our name to Citius Oncology, Inc. SpinCo began operations in April 2022.

Since inception, we devoted substantially all of our efforts to business planning, research and development, and recruiting management and technical staff. The Company is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development by the Company or our competitors of research and development stage products, market acceptance of our approved products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to obtain additional financing and the Company’s compliance with governmental and other regulations.

### License Agreement with Eisai

In September 2021, Citius Pharma entered into an asset purchase agreement with Dr. Reddy’s and a license agreement with Eisai to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. Citius Pharma renamed E7777 as I/ONTAK and also obtained the trade name LYMPHIRTM for the product. Citius Pharma assigned these agreements to us effective April 1, 2022. Denileukin diftitox is referred to in this report as E7777, I/ONTAK or LYMPHIR, depending on the period of time and context that is being discussed.

Under the terms of these agreements, Citius Pharma acquired Dr. Reddy’s exclusive license for E7777 from Eisai and other related assets owned by Dr. Reddy’s which are now owned by us. The exclusive license rights include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally, we retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the India option), Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma paid Dr. Reddy’s a $40 million upfront payment, which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%) and up to $300 million for commercial sales milestones. We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10% to 15%). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. We will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of Citius Oncology’s payment obligations under these agreements.

At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable under the terms of the asset purchase agreement for which a balance of $22.5 million remains due as of December 31, 2024. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.

Under the license agreement, Eisai was to receive a $5.9 million milestone payment, upon FDA approval which is included in license payable at December 31, 2024, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22 million related to the achievement of net product sales thresholds. We were also required to reimburse Eisai for up to $2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and CMC activities through the filing of a BLA for LYMPHIR with the FDA. The BLA was approved by the FDA on August 8, 2024. The Company will be responsible for development costs associated with potential additional indications.

The term of the license agreement will continue until (i) if there has not been a commercial sale of a licensed product in the territory, the 10-year anniversary of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale of a licensed product in the territory within the 10-year anniversary of the original license effective date, the 10-year anniversary of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.

Under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.

### RESULTS OF OPERATIONS

### Three months ended December 31, 2024 compared with the three months ended December 31, 2023

|  | Three Months Ended December 31, 2024 | Three Months Ended December 31, 2023 |
| --- | ---: | ---: |
| Revenues | $— | $— |
| Operating expenses: |  |  |
| Research and development | 1,264,508 | 1,148,495 |
| General and administrative | 3,321,979 | 1,517,908 |
| Stock-based compensation – general and administrative | 1,808,478 | 1,917,000 |
| Total operating expenses | 6,394,965 | 4,583,403 |
| Loss before income taxes | (6,394,965) | (4,583,403) |
| Income tax expense | 264,240 | 144,000 |
| Net loss | $(6,659,205) | $(4,727,403) |

### Revenues

We did not generate any revenues for the three months ended December 31, 2024 and 2023.

### Research and Development Expenses

For the three months ended December 31, 2024, research and development expenses were $1,264,508 as compared to $1,148,495 for the three months ended December 31, 2023, an increase of $116,013 primarily related to costs associated with the two investigator immuno-oncology trials which are in process.

### General and Administrative Expenses

For the three months ended December 31, 2024, general and administrative expenses were $3,321,979 as compared to $1,517,908 for the three months ended December 31, 2023, an increase of $1,804,071. The primary reason for the increase was the efforts associated with the pre-commercial and commercial launch activities of LYMPHIR associated with market research, marketing, distribution and drug product reimbursement from health plans and payers.

### Stock-based Compensation Expense

For the three months ended December 31, 2024, stock-based compensation expense was $1,808,478 as compared to $1,917,000 for the three months ended December 31, 2023. The primary reason for the $108,522 decrease in stock-based compensation expense was the decrease in the weighted average grant date fair value of the options granted during the three months ended December 31, 2024 to $0.80 per share as compared to the weighted average grant date fair value of the options granted of $1.66 per share during the year ended September 30, 2024.

### Income Taxes

The Company recorded deferred income tax expense of $264,240 in the three months ended December 31, 2024 as compared to $144,000 in the three months ended December 31, 2023 related to the amortization for taxable purposes of its in-process research and development asset.

### Net Loss

For the three months ended December 31, 2024, we incurred a net loss of $6,659,205 compared to a net loss of $4,727,403 for the three months ended December 31, 2023. The $1,931,802 increase in the net loss was primarily due to the increase in our operating expenses.

### LIQUIDITY AND CAPITAL RESOURCES

### Liquidity and Working Capital

Citius Oncology has incurred operating losses since inception and incurred a net loss of $6,659,205 for the three months ended December 31, 2024. At December 31, 2024, we had an accumulated deficit of $45,937,792. The Company has no revenue and has relied on funding from Citius Pharma to finance its operations. At December 31, 2024, we had $112 in cash and a negative working capital of approximately $26.3 million.

We plan to continue to rely on funding from Citius Pharma, to raise capital through equity financings from outside investors and to generate revenue from the future sales of LYMPHIR. There is no assurance, however, that Citius Pharma will have the resources to continue funding us, that we will be successful in raising the needed capital and, if funding is available, that it will be available on terms acceptable to us or that we will find strategic partners or generate substantial revenue from the sale of LYMPHIR.

We expect that Citius Pharma will have sufficient funds to continue our operations through March 2025. We will need to raise additional capital in the future to support our operations beyond March 2025. There is no assurance, however, that we will be successful in raising the needed capital or that the proceeds will be received in an amount or in a timely manner to support our operations.

### Inflation

Our management believes that inflation has not had a material effect on our results of operations.

### Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

### Critical Accounting Policies and Estimates

The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.

Our critical accounting policies and use of estimates are discussed in, and should be read in conjunction with, the annual consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024, filed with the SEC on December 27, 2024, as amended on January 27, 2025.

## Controls and procedures

As filed, 1,886 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2024. In designing and evaluating disclosure controls and procedures, we recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of December 31, 2024, based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

### Changes In Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 241 characters.

There have been no material changes to the Company’s risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC on December 27, 2024, as amended on January 27, 2025.

Filed Feb 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001213900-25-014320. Last ingested by Listed: Nov 4, 2026, 17:46 ET. No prices; not investment advice.