SeaStar Medical Holding Corp: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis are intended to help you understand our business, financial condition, results of operations, liquidity, and capital resources. You should read this discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024 (filed March 27, 2025) and Form 10-K/A for the year ended December 31, 2024 (filed April 23, 2025).

In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Cautionary Note Regarding Forward Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, risks and uncertainties, including those set forth under “Risk Factors” included elsewhere (or incorporated by reference) in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “SeaStar Medical”, “we”, “us”, “our,” and “the Company” are intended to mean the business and operations of SeaStar Medical Holding Corporation and its consolidated subsidiaries following the Business Combination.

Overview

On October 28, 2022, LMAO consummated a series of transactions that resulted in the combination of LMF Merger Sub, Inc. and the Predecessor pursuant to an Agreement and Plan of Merger. Immediately upon consummation of the Business Combination, LMAO was renamed SeaStar Medical Holdings Corporation (as defined above).

We are a commercial-stage healthcare company focused on transforming treatments for critically ill patients facing organ failure and potential loss of life. Our Selective Cytopheretic Device (“SCD”) is designed as a disease-modifying device that neutralizes over-active immune cells and stops the cytokine storm that yields destructive hyperinflammation and creates a cascade of events that wreak havoc in the patient’s body. It has broad potential applications for patients suffering from both acute and chronic kidney disease as well as cardiovascular and other serious inflammatory diseases.

We received Food and Drug Administration (“FDA”) approval on February 21, 2024, under a Humanitarian Device Exemption (“HDE”) for our pediatric SCD therapy. It is the only FDA approved product for use in pediatric patients with acute kidney injury (“AKI”) due to sepsis or a septic condition requiring kidney replacement therapy. We shipped our first commercial pediatric SCD (“QUELIMMUNE”) in July 2024. In addition, we are currently conducting a pivotal clinical trial to assess the safety and efficacy of the SCD therapy in critically ill adult patients with AKI requiring continuous renal replacement therapy (“CRRT”).

Our SCD therapy has been awarded Breakthrough Device Designation (“BDD”) for six therapeutic indications by the FDA, including the use of the SCD therapy for adult patients with AKI, patients with cardiorenal syndrome awaiting left ventricular assist device (“LVAD”) implantation, patients with hepatorenal syndrome, patients with end stage renal disease (“ESRD”) and adult and pediatric patients undergoing cardiac surgery. The BDD enables the potential for a speedier pathway to approval and the ability to have more frequent and flexible meetings with the FDA.

The inflammatory response is essential to the healing process of critical organs; however, the overactivation of inflammatory cells, which can be triggered by many different bodily insults such as trauma, surgery or infection, can send the body into shock and cause severe damage to a variety of critical organs such as the heart, lungs and kidney. Central to inflammation are the cells within blood and lymph circulatory systems, called white blood cells (primarily neutrophils and monocytes). In a normal inflammatory response, neutrophils are the first immune cells to arrive at the site and are key to the entire immune response that kills pathogens and promotes tissue repair. These inflammatory cells release chemicals (cytokines) that trigger the immune system to eliminate foreign pathogens or damaged tissue, enhancing the immune response.

If the inflammatory response becomes excessive and dysregulated (referred to as proinflammatory), the inflammatory cells will continue to produce cytokines and other damaging molecules, further enhancing the dysregulated immune response, and altering feedback mechanisms that regulate the immune system. This results in damaging hyperinflammation spreading uncontrollably to other parts of the body, often leading to acute chronic solid organ dysfunction or failure, including the heart, lung, kidney, liver, and even death. This hyperinflammatory response is also known as the “cytokine storm,” referring to the body’s reaction to the category of small-secreted proteins released by hyperinflammatory cells that affect communication between cells. Currently, there are no therapeutic options that specifically neutralize the white blood cells that are primarily responsible for the destructive hyperinflammatory response.

Clinicians typically address hyperinflammation with therapies that are either immunosuppressive or that target one cytokine, both of which are generally suboptimal in the treatment of hyperinflammation. We believe our technology has the potential to overcome limitations in existing anti-inflammatory treatments and address the challenge of selectively targeting activated neutrophils and monocytes. Clinical and preclinical studies conducted over the last 15 years have demonstrated that our SCD therapy can modulate the degree of activity of proinflammatory cells to help reduce tissue damage and speed the repair and recovery of organ function. Data from our trials demonstrated that the use of our SCD therapy to reverse the cytokine storm in more than 150 pediatric and adult patients with acute kidney injury on CRRT reduced mortality rates by 50%, and of those patients who survived 60 days, none have required dialysis. We believe our SCD therapy has the potential to transform the treatment of acute organ failure in the intensive care unit (“ICU”) and to improve organ function in patients with chronic kidney disease, certain cardiovascular diseases, and other serious inflammatory diseases.

Preclinically, we evaluated our SCD therapy in various animal models representing multiple hyperinflammatory indications, including acute myocardial infarction, intracranial hemorrhage, chronic heart failure, sepsis, and acute respiratory distress syndrome. The animal models demonstrated the inflammatory response and how it was modified by our SCD therapy. We will continue to explore the application of our SCD therapy across a broad range of indications where proinflammatory activated neutrophils and monocytes contribute to disease progression or severity in both acute and chronic indications.

We are leveraging our patent protected and scalable SCD therapy platform to develop proprietary treatments that are organ agnostic and target both acute and chronic indications. The SCD therapy is delivered via an extracorporeal synthetic membrane device that easily integrates into existing CRRT systems that are commonly employed for patients with acute organ injury in hospitals, including in ICUs throughout the United States. It also has the potential to be integrated into kidney dialysis systems for chronic kidney disease patients receiving renal replacement therapy at centers throughout the United States. We believe that the ease of use and broad applicability of the therapy across multiple disease states should enable us to capture a sizable market for our SCD therapy with increasingly favorable economics.

Our senior management team has over a combined 21 years of experience in the healthcare industry, including expertise in regulatory and medical affairs, commercialization and distribution in our initial therapeutic priority areas. We also have assembled a team of well-respected scientific advisors who are experts in the development of our technology and products.

There is a substantial clinical need for safe and effective control of hyperinflammation and we believe that our first-in-class SCD therapy can address the large potential market of over one million patients each year that face life-threatening hyperinflammatory conditions, including organ failure and potential loss of life.

We have incurred net losses in each year since our inception in 2007. As of September 30, 2025 and December 31, 2024, we had an accumulated deficit of $148.8 million and $139.6 million, respectively. Our net losses were $9.3 million and $20.4 million for the nine months ended September 30, 2025, and 2024, respectively. For the nine months ended September 30, 2025, substantially all our net losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. For the nine months ended September 30, 2024, our net losses resulted from a combination of operating costs which were comprised of (i) research and development, and (ii) general and administrative, coupled with non-operating gains and losses due to changes in the fair value of certain liability classified financial instruments.

As of September 30, 2025, and December 31, 2024, we had cash of $13.8 million and $1.8 million, respectively.

Our accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business. Our unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable to continue as a going concern.

The recurring losses, working capital deficiency, the need for capital to fund our operations, including clinical trial and regulatory approval expenses, and the amount of cash reserve are factors that raise substantial doubt about our ability to continue as a going concern for the twelve-month period from the date the unaudited condensed consolidated financial statements are made available. See Note 1 to our unaudited condensed consolidated financial statements for the nine months ended September 30, 2025, included elsewhere in this Form 10-Q for additional information on our assessment.

Our need for additional capital will depend in part on the scope and costs of our development activities. To date, we have generated revenue of approximately $0.9 million from the sale of commercialized pediatric SCD products. Our ability to generate product revenue in the future will depend on the successful roll-out of our QUELIMMUNE pediatric SCD to hospitals and the development and eventual successful commercialization of our adult SCD. Until such time we are able to generate significant revenue from product sales, we expect to finance our operations through the sale of equity or debt, borrowings under credit facilities, potential collaborations, other strategic transactions or government and other grants. Adequate capital may not be available to us when needed or on acceptable terms. If we are unable to raise capital, we could be forced to delay, reduce, suspend or cease our research and development programs and any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition. See Part I, Item 1A “Risk Factors” for additional information.

Key Components of Results of Operations

Revenue

Our QUELIMMUNE received HDE approval from the FDA in February 2024. Since that time, we have begun to build out our commercial operations, develop our customer base and initiate commercial sales of QUELIMMUNE. We shipped our first commercial QUELIMMUNE units in July 2024. Through September 30, 2025, we have recognized approximately $0.9 million of revenue from the sale of QUELIMMUNE. Historically, prior period revenue has been primarily derived from government and other grants. We will continue to focus our efforts on generating revenue in the future based on product sales of QUELIMMUNE, as well as potential future payments from license or collaboration agreements and government and other grants.

We expect that any revenue we generate will fluctuate from quarter to quarter as we introduce QUELIMMUNE to pediatric hospital customers. We also continue to develop our adult SCD for which we are enrolling patients in a pivotal clinical trial to support FDA approval. If we fail to complete the development of or fail to obtain regulatory approval to commercialize our adult SCD in a timely manner, our ability to generate future revenue, and our results of operations and financial position, could be materially adversely affected.

Research and Development Expenses

Since inception, we have focused our resources on research and development activities, including conducting preclinical studies and clinical trials, and developing our process and activities related to regulatory filings for our products. Subject to the availability of additional funding, we plan to further increase our research and development expenses for the foreseeable future as we continue the development of our SCD as well as a next generation SCD. Research and Development expenses also include salaries and related costs for employees in clinical and medical affairs roles, which include stock-based compensation expenses and benefits for such employees.

The Company is continuously reviewing research and development spend to ensure it is aligned with the Company's objectives.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive, sales and commercial and finance roles, which also include stock-based compensation expenses and benefits for such employees.

Other significant general and administrative expenses include facilities costs, insurance, professional fees for accounting and legal services and expenses associated with obtaining and maintaining patents and obtaining financing. To the extent we expand and grow our operations, we expect that our general and administrative expenses will increase, including additional expenses relating to new hires, travel, an enterprise resource planning platform, and branding. However, the Company is also in the process, as evidenced by the results of the three and nine months ended September 30, 2025, of reducing overall general and administrative spend, and identifying efficiencies.

Loss from Operations and Operating Margin

Loss from operations consists of our gross profit less our operating expenses. Operating margin is loss from the operations as a percentage of our net sales.

Other Income (Expense), Net

Total other income (expense), net primarily consists of interest expense relating to interest incurred on our notes, interest income due to overnight sweep activity with the Company's main commercial financial institution, and change in the fair value of warrants liability for the three and nine months ended September 30, 2025.

Factors Affecting Operating Results

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges. Please see the factors discussed elsewhere in this Form 10-Q, including those discussed in Part II, Item 1A, “Risk Factors,” for additional information.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

The following table sets forth a summary of our results of operations. This information should be read together with our unaudited condensed consolidated financial statements and related Notes included elsewhere in this Form 10-Q.

($ in thousands)

(*) – there was no activity for the three months ended September 30, 2024.

Revenue, Cost of Goods Sold and Gross Profit

Revenue increased $0.1 million, while gross profit also increased $0.1 million for the three months ended September 30, 2025, compared to the same period ending September 30, 2024. This was because we first obtained an HDE for QUELIMMUNE in February 2024, and final regulatory clearance to sell commercially from the FDA under this HDE in July 2024. We currently have nine customer sites for QUELIMMUNE as of September 30, 2025. We did not recognize any cost of goods sold during the three months ended September 30, 2024, as the inventory was assigned no value under US GAAP as it was expensed to research and development expense upon purchase prior to obtaining final regulatory clearance to sell QUELIMMUNE commercially.

Research and Development Expenses

The following table discloses the breakdown of research and development expense for the three months ended September 30, 2025 compared to the same period ending September 30, 2024:

($ in thousands)

Research and development expenses for the three months ended September 30, 2025 and 2024 were $1.9 million and $2.3 million, respectively. The decline in research and development expenses of approximately $0.5 million, or 21%, was primarily driven by (i) $0.1 million decline in clinical trial expenses, due to the (a) $0.1 million expense offset due to funded research and development agreement with third-party for certain clinical research services (see Note 2), and (b) and a $0.2 million reduction in preclinical consulting services, (c) $0.1 million decline in consulting spend related to clinical trial activity, and (d) offset by $0.3 million increase in clinical trial site costs as we continue to fund its Neutralize-AKI study; (ii) $0.1 million decline in external services as a result of our reducing consulting spend as it brought in-house certain assembly and regulatory services, and (iii) $0.2 million net reduction in personnel costs, primarily driven by a $0.2 million favorable reduction in bonus expense as we are not expecting to fund bonuses for the 2025 fiscal year.

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2025 and 2024 were approximately $1.9 million and $2.2 million, respectively. The $0.3 million decrease in general and administrative expenses was the result of (i) $0.1 million decline in legal related fees, (ii) $0.3 million decline in fees due to lower franchise tax expense and a contract exit cost incurred during the quarter ended September 30, 2024 and (iii) $0.1 million decline in SEC related costs due to the Company's filing, compliance and reporting needs in 2024, offset by a (i) $0.1 million net increase in compensation costs due to the termination of our former Chief Financial Officer, and (ii) $0.1 million increase in audit fees due to the timing of interim audit activity.

Other Income (Expense)

Other income (net) reversed to other income of approximately $0.1 million during the three months ended September 30, 2025 compared to other expense, net of $22 thousand for the three months ended September 30, 2024, primarily due to (i) $0.1 million increase in interest income as a result of increased cash-on-hand due to financing activities, offset by (i) we recognized a favorable gain during the three months ended September 30, 2024, from the decline in fair value of its liability classified warrants, which it did not recognize during the same period ended September 30, 2025, and (ii) $0.2 million interest expense was recognized during the three months ended September 30, 2024, which we did not incur during the same period ended September 30, 2025, as we had no outstanding debt during the three months ended September 30, 2025.

Income Tax Provision (Benefit)

We recorded no provision for income taxes for the three months ended September 30, 2025 and September 30, 2024. respectively.

Net Loss

During the three months ended September 30, 2025, we had a net loss of approximately $3.5 million compared to a net loss of approximately $4.5 million for the three months ended September 30, 2024. The reason for the decreased net loss of approximately $1.0 million has been disclosed in the above discussion.

Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

($ in thousands)

(*) - there was no activity for the nine months ended September 30, 2024.

Revenue, Cost of Goods Sold and Gross Profit

Revenue increased $0.7 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, as we first commenced commercial sales in July 2024. This was made possible because we obtained an HDE for QUELIMMUNE in February 2024, and final regulatory clearance to sell commercially from the FDA under this HDE in July 2024. We have nine customer sites for QUELIMMUNE as of September 30, 2025. We did not recognize any cost of goods sold during the three months ended September 30, 2024, as the inventory was assigned no value under US GAAP as it was expensed to research and development expense upon purchase prior to obtaining final regulatory clearance to sell QUELIMMUNE commercially.

Research and Development Expenses

The following table discloses the breakdown of research and development expenses:

($ in thousands)

Research and development expenses for the nine months ended September 30, 2025 and 2024 were $5.3 million and $6.4 million, respectively. The decline in research and development expenses of approximately $1.1 million, or 16%, was primarily driven by (i) a $0.3 million net reduction in personnel costs, primarily driven by a $0.7 million favorable reduction in bonus expense due to the agreement by certain employees involved in research and development to voluntarily forego unpaid 2023 and 2024 performance bonuses owed to them, offset by a $0.4 million increase in salaries and wages due to increased headcount , (ii) $0.2 million decline in clinical trial costs services, (iii) $0.6 million decline in external services such as non-clinical related consultant spend, and offset by (i) $0.1 million increase other research and development related costs.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2025 and 2024 were approximately $4.6 million and $6.8 million, respectively. The approximately $2.1 million decrease in general and administrative expenses was the result of (i) $0.1 million decline in personnel costs, net due to the voluntary foregoing of certain employee performance bonuses awarded in 2023 and 2024 that were offset by increase in compensation costs due to the termination of our former Chief Financial Officer, (ii) $0.1 million decline in employee conferences and seminars and travel, (iii) $0.4 million decline in accounting related fees, with respect to certain restatement activities during the spring of 2024, (iv) $0.4 million decline related to legal fees, (v) $0.1 million in recruiting fees that were avoided for the nine months ended September 30, 2025, (vi) $0.1 million decline in sponsorships and trade shows, and (vi) $0.5 million decline in Directors' compensation as the active Directors approved to voluntarily forego any earned-but-unpaid director fees through June 30, 2025 for active Directors, (vii) $0.2 million in consulting spend, (viii) $0.1 million reduction in insurance related expenses and (ix) $0.1 million reduction on other fees and services.

Other Expense

Other expenses (net) decreased approximately $7.2 million, a decline of approximately 99% for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The key drivers for this decrease were as follows: (i) the Company recognized a loss of $6.1 million for changes in the fair value of convertible notes during the nine months ended September 30, 2024, however, the Company did not have any convertible notes outstanding during the nine months ended September 30, 2025, (ii) the Company recognized a gain of $32 thousand for its liability classified warrants for the nine months ended September 30, 2025, while incurring a loss of approximately $0.8 million for the nine months ended September 30, 2024, largely driven by the value of the Company's stock and certain features of warrants that were in existence during the nine months ended September 30, 2024, that are no longer outstanding in 2025, (iii) the Company recognized interest income, net of expenses of $0.2 million during the nine months ended September 30, 2025, compared to net interest expense of $0.4 million during the nine months ended September 30, 2024. This was because the Company reduced its outstanding debt obligations such that there are no outstanding debt or notes payable obligations as of September 30, 2025. This was offset by a $0.3 million fee paid to a third-party investor related to the Company's standby equity purchase agreement ("SEPA") during the nine months ended September 30, 2025.

Income Tax Provision

We recorded a provision for income taxes of $3 thousand for both the nine months ended September 30, 2025, and September 30, 2024, respectively.

Net Loss

During the nine months ended September 30, 2025, we had a net loss of approximately $9.2 million compared to a net loss of approximately $20.4 million for the nine months ended September 30, 2024. The decreased net loss of approximately $11.2 million has been disclosed in the above discussion.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have financed our operations primarily through the sale of equity securities and convertible debt and, to a lesser extent, through grants from governmental and other agencies. Since our inception, we have incurred significant operating losses and negative cash flows. As of September 30, 2025 and December 31, 2024, we had stockholders' equity of approximately $11.4 million and deficit of $2.2 million, respectively, and we had an accumulated deficit of approximately $148.8 million and $139.6 million, respectively.

As of September 30, 2025, and December 31, 2024, we had cash of $13.8 million and $1.8 million, respectively. Based on our results of our operations and liquidity as of September 30, 2025, and even when taking into account (i) a public offering in the second quarter of 2025, (ii) a registered direct offering in the first quarter of 2025, and (iii) access to raise money on an at-the-market facility ("ATM Facility") and standby equity purchase agreement ("SEPA"), we believe our cash and cash equivalents are insufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of our unaudited condensed consolidated financial statements for the nine months ended September 30, 2025, are made available. We believe that this raises substantial doubt about our ability to continue as a going concern. While the Company raised additional capital since September 30, 2025, this additional subsequent increase in our available cash would not be sufficient to change this conclusion had that capital raise occurred prior to September 30, 2025.

To finance our operations, we will need to raise additional capital. As described below, we cannot expect to receive any cash proceeds from the exercise of warrants in the near term, because the exercise of warrants is not in our control. We are seeking additional cash to fund our growth through future debt or equity financing transactions; however, there can be no assurance that we will be able to obtain additional capital on terms acceptable to us, if at all, or that we will generate sufficient future revenues and cash flows to fund our operations. We do not currently have any committed external source of funds. We have concluded that these circumstances raise doubt about our ability to continue as a going concern within one year after the issuance date of this Form 10-Q. See Note 1 to our unaudited condensed consolidated financial statements for the period ended September 30, 2025.

In April 2025, the Company entered into a $15 million SEPA and as of September 30, 2025, unused available capacity on the ATM Facility that will allow us to potentially raise up to approximately $2.2 million (The ATM is subject baby-shelf limitations as the Company is currently limited by general instruction I.B.6 to Form S-3)

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. 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 acquisitions or capital expenditures. Debt financing would also result in fixed payment obligations. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results, and financial condition. See the section titled “Risk Factors” for additional risks associated with our substantial capital requirements.

If exercised, we could receive the proceeds from any exercise of warrants that are exercised for cash pursuant to their terms. To the extent any warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease. We would expect to use any such proceeds received from warrants that are exercised for cash in the future for general corporate and working capital purposes, which would increase our liquidity. However, we will only receive such proceeds if and when the warrant holders exercise the warrants. The exercise of the warrants, and any proceeds we may receive from their exercise, are highly dependent on the price of our common stock and the spread between the exercise price of the warrant and the price of our common stock at the time of exercise. There is no assurance that the warrant holders will elect to exercise for cash any or all of such warrants, and we believe that any such exercise currently is unlikely to occur. The likelihood that warrant holders will exercise the warrants, and therefore the amount of cash proceeds that we would receive from such exercise, is dependent upon the trading price of our common stock. If the trading price for our common stock remains less than the respective exercise price of our outstanding warrants, we believe our warrant holders will be unlikely to exercise their warrants. There is no guarantee that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless, and we may not receive any proceeds from the exercise of the warrants. To the extent that any of the warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease.

As of the date of this Quarterly Report, we have neither included nor intend to include any potential cash proceeds from the exercise of our warrants in our short-term or long-term liquidity projections. We will continue to evaluate the probability of warrant exercise over the life of our warrants and the merit of including potential cash proceeds from the exercise in our liquidity projections.

Future Funding Requirements

We expect to incur significant expenses in connection with our ongoing activities as we seek to (i) continue clinical development of our adult SCD for approval by the FDA, invest in commercialization of QUELIMMUNE and continue to develop the next generation SCDs and (ii) if regulatory approval is obtained, to launch and commercialize our adult SCD in the U.S. market, including potential subsequent launches in key international markets. We will need additional funding in connection with these activities. Our future funding requirements, both short-term and long-term, will depend on many factors, including:

• our ability to receive cash proceeds from new and existing funding sources;
• the progress and results of our clinical trials and interpretation of those results by the FDA and other regulatory authorities;
• the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and
• the costs of operating as a public company, including personnel expense as well as increased director and officer insurance premiums, audit and legal fees, investor relations fees and expenses related to compliance with public company reporting requirements under the Securities Exchange Act of 1934, as amended, and rules implemented by the SEC and Nasdaq.

Our estimates of our results of operations, working capital and capital expenditure requirements may be different than our actual needs, and those estimates may need to be revised if, for example, our actual revenue is lower, and our net operating losses are higher, than we project, and our cash and cash equivalents position is reduced faster than anticipated. Until such time, if ever, as we are able to generate significant revenue from the commercialization of our products, we expect to continue financing our operations through the sale of equity, debt, borrowings under credit facilities or through potential collaborations with other companies, other strategic transactions or government or other grants. Adequate capital may not be available to us when needed or on acceptable terms.

Contractual Obligations and Commitments

As of September 30, 2025, the Company does not have any contractual obligations or commitments outstanding. During June 2025, the Company paid down the remaining $0.2 million of outstanding insurance financing obligation that was originally to be paid down through October 2025.

Cash Flows

The following table shows a summary of our cash flows for each of the periods shown below:

($ in thousands)

Net cash used in operating activities for the nine months ended September 30, 2025 was $9.5 million compared to $11.3 million for the nine months ended September 30, 2024. The decrease in cash used for operating activities of $1.8 million is primarily due to the (i) $11.1 million decline the Company's net loss, offset by approximately $6.9 million in non-cash charges and $2.5 million favorable changes in the Company's working capital.

Net cash provided by financing activities for the nine months ended September 30, 2025 was $21.5 million, was primarily related to (i) $14.3 million received from the issuance of new shares of common stock, (ii) $5.9 million in proceeds from issuance of pre-funded warrants, and (iii) $1.8 million in proceeds received from the exercise of warrants. This was offset by approximately $0.6 million paid to settle outstanding notes payable.

Critical Accounting Policies and Estimates

The preparation of the unaudited consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income and expenses during the periods reported. Although actual results could materially differ from those estimates, such estimates are developed based on the best information available to management and management's best judgments at the time.

There has been no material change from the policies or methods disclosed in our Annual Report to Form 10-K filed March 27, 2025, and as amended by Form 10-K/A filed April 23, 2025, for the year-ended December 31, 2025.

Emerging Growth Company Status

We are an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups (“JOBS”) Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they apply to private companies. We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Since we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

We will remain an EGC under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the closing of the Business Combination, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a “large-accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that 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 financial disclosures.

During the fiscal period covered by this report, our management, with the participation of our Chief Executive Officer; who is also acting as Interim Chief Financial Officer; carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of September 30, 2025, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in our reports is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and our other public filings, which could materially affect our business, financial condition or future results. No additional risk factors have arisen that have not already been disclosed in our Annual Report on Form 10-K for the year-ended December 31, 2024, filed March 27, 2025, except as set forth below.

There is substantial doubt about our ability to continue as a going concern, and we will need additional financing to execute our business plan, to fund our operations and to continue as a going concern, and, if we are unable to obtain additional financing, may be required to pursue a restructuring of our operations or reorganization proceedings under applicable U.S. bankruptcy or insolvency laws.

Developing medical device products, including conducting preclinical studies and clinical trials, is expensive. We expect our research and development expenses to increase in connection with our ongoing activities, particularly as we advance our clinical programs. As of September 30, 2025, we have positive working capital of $10.8 million while we had negative working capital of $3.1 million on December 31, 2024, respectively. We currently do not have sufficient capital to support our operations and complete our planned regulatory approval process. We will need to secure additional capital to continue our operations, and such funding may not be available on acceptable terms, or at all.

Since inception, we have experienced recurring operating losses and negative cash flows and we expect to continue to generate operating losses and consume significant cash resources for the foreseeable future. There is substantial doubt regarding our ability to continue as a going concern. Our independent registered public accounting firm has expressed in its auditors’ report on our 2024 financial statements, included in our Annual Report on Form 10-K filed on March 27, 2025, an emphasis of matter paragraph relating to our ability to continue as a “going concern,” meaning that our recurring losses from operations and negative cash flows from operations raise substantial doubt regarding our ability to continue as a going concern. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our financial statements do not include any adjustment to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty, with the exception that all borrowings are classified as current on the balance sheets.

Even if we receive sufficient capital in the future, we will be required to raise additional funds to support our operations and complete our planned regulatory approval process, and such funding may not be available in sufficient amounts or on acceptable terms to us, or at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

• significantly delay, scale back or discontinue the development or commercialization of our product candidates;
• seek corporate partners on terms that are less favorable than might otherwise be available; or
• relinquish or license on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves.

If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we will be prevented from pursuing development and commercialization efforts, including completing the clinical trials and regulatory approval process for our SCD product candidates, which would have a material adverse impact on our business, results of operations and financial condition.

In the event we pursue a restructuring or reorganization under applicable law, we will be subject to the risks and uncertainties associated with such proceedings.

In the event we seek to pursue a restructuring, or if we file for relief under the United States Bankruptcy Code, either Chapter 7, Chapter 11 or other proceedings, our operations, our ability to develop and execute our business plan and our continuation as a going concern will be subject to the risks and uncertainties associated with bankruptcy proceedings, including, among others: our ability to execute, confirm and consummate a plan of reorganization; the high costs of bankruptcy proceedings and related fees; our ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute our business plan post-emergence, and our ability to comply with terms and conditions of that financing; our ability to continue our operations in the ordinary course; our ability to maintain our relationships with our customers, business partners, counterparties, employees and other third parties; our ability to obtain, maintain or renew contracts that are critical to our operations on reasonably acceptable terms and conditions; our ability to attract, motivate and retain key employees; the ability of third parties to use certain limited safe harbor provisions to terminate contracts; and the actions and decisions of our stakeholders and other third parties who have interests in our proceedings that may be inconsistent with our operational and strategic plans. Any delays in our proceedings would increase the risks of our being unable to reorganize our business and emerge from any such proceedings and may increase our costs associated with the process or result in prolonged operational disruption for us. Also, we would need the prior approval of a court for transactions outside the ordinary course of business during the course of any such proceedings, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with any such proceedings, we cannot accurately predict or quantify the ultimate impact of events that could occur during any such proceedings. There can be no guarantees that if we seek available protections, we will emerge from protection as a going concern or that holders of our common stock will receive any recovery.

Proposed legislation in the U.S. Congress, including changes in U.S. tax law, may adversely impact us and the value of our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares.

Changes to U.S. tax laws (which changes may have retroactive application) could adversely affect us or holders of our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares. In recent years, many changes to U.S. federal income tax laws have been proposed and made, and additional changes to U.S. federal income tax laws are likely to continue to occur in the future.

The U.S. Congress is currently considering numerous items of legislation which may be enacted prospectively or with retroactive effect, which legislation could adversely impact our financial performance and the value of our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares. Additionally, states in which we operate or own assets may impose new or increased taxes. If enacted, most of the proposals would be effective for the current or later years. The proposed legislation remains subject to change, and its impact on us and purchasers of our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares is uncertain

On May 22, 2025, the U.S. House of Representatives passed a tax bill, which the Senate Finance Committee subsequently modified and released on June 16, 2025, that, if enacted into law in its current form, may affect the U.S. federal income tax considerations applicable to certain non-U.S. investors in our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares. In particular, the bill proposes to add new Section 899 to the Code, which could significantly increase the aggregate tax liability of certain non-U.S. investors with respect to their investment in our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares. The likelihood of the bill or other similar legislation being enacted is uncertain, and the provisions of the bill or other similar legislation may change prior to enactment. Non-U.S. investors are urged to consult their tax advisors regarding the potential application of proposed Section 899 of the Code with respect to their investment in our shares of Common Stock, Pre-Funded Warrants, Warrants and Warrant Shares.

Our Common Stock may be delisted from Nasdaq if we do not maintain compliance with Nasdaq’s continued listing requirements. If our Common Stock is delisted, it could negatively impact us.

Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards. There can be no assurance that we will be able to comply with the applicable listing standards. We have in the past received notifications of noncompliance with Nasdaq’s continued listing standards and there is no guarantee that we will not receive such notifications in the future.

For example, on June 24, 2024, we received a written notification from the Listing Qualifications staff of Nasdaq that we were not in compliance with the requirement to maintain a minimum market value of listed securities of $35 million, as set forth in the MVLS Rule, because the market value of our Securities had been below $35 million for 30 consecutive business days. We had an initial 180 days, or until December 23, 2024, to regain compliance with the MVLS Requirement.

On December 24, 2024, we received the Notification from Nasdaq stating that we had not regained compliance with the Rule. Pursuant to the Notification, the Securities were subject to delisting from Nasdaq on January 3, 2025, unless we requested a hearing before the Panel by December 31, 2024.

We requested a hearing before the Panel by December 31, 2024. As disclosed in a Form 8-K on March 13, 2025, on March 11, 2025, we received a letter from the Panel granting our request to continue listing our Common Stock on Nasdaq, subject to certain conditions. The Panel’s decision provided us with an exception until June 22, 2025, to demonstrate compliance with the Minimum Stockholders’ Equity Requirement (as defined below) for continued listing set forth in Nasdaq Listing Rule 5550(b). The Panel reviewed our compliance plan, which includes the continuation of fundraising efforts that began in 2024 and strategies for achieving long-term compliance with the Stockholders’ Equity Requirement. As part of the conditions outlined in the Panel’s decision, we are required to, on or before June 22, 2025:

• file a public disclosure describing the transactions undertaken to increase our equity and providing an indication of our equity following those transactions; and
• provide the Panel with an update on our fundraising plans and updated income projections for the next 12 months, with all underlying assumptions clearly stated.

On July 1, 2025, we received a letter from Nasdaq confirming that we have regained compliance with Nasdaq’s minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Requirement”). Nasdaq noted in its letter that to maintain compliance, we will have to raise additional funds, otherwise we will be below the Minimum Stockholders’ Equity Requirement by the end of July.

Pursuant to Nasdaq Listing Rule 5815(d)(4)(B), we will be subject to a Mandatory Panel Monitor until July 1, 2026. If, within that one-year monitoring period, the Nasdaq Listing Qualifications staff (the “Staff”) finds us again out of compliance with the Minimum Stockholders’ Equity Requirement, notwithstanding Nasdaq Listing Rule 5810(c)(2), we would not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff would not be permitted to grant additional time for us to regain compliance with respect to that deficiency, nor would we be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810(c)(3). Instead, the Staff would issue a “Delist Determination Letter” and we would have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable.

On July 31, 2025, we received a letter from Nasdaq notifying us that we were not in compliance with the $1.00 per share minimum bid price requirement for continued inclusion on Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2).

This letter had no immediate effect on the listing of the Company’s Common Stock on Nasdaq and we have 180 calendar days from the date of the notice, or until January 27, 2026, to regain compliance with the Bid Price Requirement.

There can be no assurance that we will be able to comply with the Stockholder’s Equity Requirement or Bid Price Requirement, or maintain compliance with other Nasdaq listing requirements. If we fail to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, the Securities could be subject to delisting from Nasdaq, unless another exception is granted by Nasdaq.

If our Common Stock ultimately were to be delisted for any reason, it could negatively impact us by (i) reducing the liquidity and market price of our Common Stock; (ii) reducing the number of investors willing to hold or acquire our Common Stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees.