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

- Company: [Outlook Therapeutics, Inc.](/companies/otlk.md) (CIK 1649989)
- Form: 10-Q
- Filed: 2025-02-14
- Accepted by EDGAR: Feb 14, 2025, 22:00 ET
- Period: 2024-12-31
- Accession: 0001558370-25-001022
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1649989/000155837025001022/otlk-20241231x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1649989/000155837025001022/

## 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 | $9.7m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-10-01 to 2024-12-31 | −$21.6m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-10-01 to 2024-12-31 | $17.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-10-01 to 2024-12-31 | $0.72 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-10-01 to 2024-12-31 | $0.72 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-10-01 to 2024-12-31 | 24,233,957 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-10-01 to 2024-12-31 | −$11.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-12-31 | $5.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-12-31 | $15.7m | us-gaap:AssetsCurrent |
| Total assets | at 2024-12-31 | $17.0m | us-gaap:Assets |
| Current liabilities | at 2024-12-31 | $48.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-12-31 | $67.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-12-31 | −$50.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 63,663 characters.

*You should read this section in conjunction with our unaudited interim consolidated financial statements and related notes included in Part I, Item 1 of this report and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the years ended September 30, 2024 and 2023 included in our Annual Report on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission, or SEC, on December 27, 2024.*

### Forward-Looking Statements

*This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “seek,” “should,” “will,” “would,” or the negative of these terms or similar expressions in this report. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other forward-looking information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause a material difference including, but not limited to, those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2024, filed with the SEC on December 27, 2024, and elsewhere in this report. See “Special Note Regarding Forward-Looking Statements.” Forward-looking statements are based on our management’s current beliefs and assumptions and based on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments.*

### Overview

We are a biopharmaceutical company working to launch the first ophthalmic formulation of bevacizumab approved by the European Commission in the European Union, or EU, the Medicines and Healthcare products Regulatory Agency, or MHRA, in the United Kingdom, or UK, and the U.S. Food and Drug Administration, or FDA, for use in retinal indications. Our initial goal is to launch directly in the EU and UK, and, if approved, to launch directly in the United States as the first and only approved ophthalmic bevacizumab for the treatment of retina conditions, including wet age-related macular degeneration, or wet AMD. Our plans also include seeking approval and launching the product in Japan and other markets. On May 27, 2024, we received a marketing authorization from the European Commission for ONS-5010/LYTENAVA for the treatment of wet AMD. The authorization is valid throughout the European Economic Area, or the EEA, and provides eight years of data exclusivity and 10 years of market exclusivity. On July 8, 2024, we also received marketing authorization for ONS-5010/LYTENAVA for the treatment of wet AMD in the UK, followed by a recommendation by the UK National Institute for Health and Care Excellence, or NICE, for LYTENAVA™ (bevacizumab gamma), as an option for the treatment of wet AMD on December 4, 2024. Outside of the United States, we are currently moving ahead with our plans to launch directly in the initial markets of Germany and the UK in the second quarter of calendar 2025.

Bevacizumab is a full-length, humanized anti-VEGF (Vascular Endothelial Growth Factor) recombinant monoclonal antibody, or mAb, that inhibits VEGF and associated angiogenic activity. In October 2022 we submitted a Marketing Authorization Application, or MAA, for ONS-5010/LYTENAVA with the European Medicines Agency, or EMA. The MAA was submitted as a ‘full-mixed marketing authorization application’ based on Article 8.3 of Directive 2001/83/EC. On March 22, 2024, the EMA’s Committee for Medicinal Products for Human Use, or CHMP issued a positive opinion concerning the authorization of ONS-5010/LYTENAVA (bevacizumab gamma), an investigational ophthalmic formulation of bevacizumab for the treatment of wet age-related macular degeneration, or wet AMD, in the EU. In May 2024, the European Commission granted the Marketing Authorization for ONS-5010/LYTENAVA for the treatment of wet AMD in the EU. The decision applied automatically in all 27 EU Member States, and, within 30 days, also to Iceland, Norway and Liechtenstein. Additionally, in April 2024, we submitted a MAA to the MHRA in the UK seeking approval of ONS-5010/LYTENAVA (bevacizumab gamma) for the treatment of wet AMD. The submission was completed under the new International Recognition Procedure, or IRP, which allows the MHRA to rely on an authorization received for the same product from one of MHRA’s specified Reference Regulators, or RRs, when considering an application for marketing authorization in the UK. These RRs include a positive opinion by the EMA’s CHMP concerning an application for grant of marketing authorization for the same product in the EU. In July 2024, the MHRA granted marketing authorization for ONS-5010/LYTENAVA for the treatment of wet AMD in the UK. ONS-5010/LYTENAVA is the first and only authorized ophthalmic formulation of bevacizumab for use in treating wet AMD in the EU and UK.

Separately, in March 2022, we submitted a BLA with the FDA for ONS-5010/LYTENAVA, an investigational ophthalmic formulation of bevacizumab, which we have developed to be administered as an intravitreal injection for the treatment of wet AMD and other retinal diseases. In May 2022, we voluntarily withdrew our BLA to provide additional information requested by the FDA. We re-submitted the BLA to the FDA for ONS-5010/LYTENAVA on August 30, 2022, and in October 2022, we received confirmation from the FDA that our BLA had been accepted for filing with a goal date of August 29, 2023 for a review decision by the FDA. On August 29, 2023, we received a Complete Response Letter, or CRL, in which the FDA concluded it could not approve the BLA during this review cycle due to several chemical, manufacturing and control, or CMC, issues, open observations from pre-approval manufacturing inspections, and a lack of substantial evidence. At subsequent Type A meetings with the FDA, we learned that the FDA requires the completion of an additional adequate and well-controlled clinical trial evaluating ONS-5010/LYTENAVA, as well as additional requested CMC data indicated in the CRL to approve ONS-5010/LYTENAVA for use in wet AMD.

We agreed to conduct an additional adequate and well-controlled clinical trial following discussions with the FDA in support of our BLA for ONS-5010/LYTENAVA. In December 2023, we submitted a Special Protocol Assessment, or SPA, to the FDA for this study (NORSE EIGHT) seeking confirmation that, if successful, it will address the FDA’s requirement for a second adequate and well-controlled clinical trial to support our planned resubmission of the ONS-5010/LYTENAVA BLA. In January 2024, we received confirmation that the FDA had reviewed and agreed upon the NORSE EIGHT trial protocol pursuant to the SPA. If the NORSE EIGHT trial is successful, it would satisfy the FDA’s requirement for a second adequate and well-controlled clinical trial to address fully the clinical deficiency identified in the CRL. In addition, through a Type A meeting and additional interactions with the FDA, we identified the approaches needed to resolve the CMC comments in the CRL. We believe that we have addressed the open CMC items and have concluded a series of Type C and Type D meetings with the FDA to help resolve these comments. In November 2024, we reported that ONS-5010/LYTENAVA did not meet the pre-specified non-inferiority endpoint at week 8 set forth in the SPA. However, the preliminary data from the trial demonstrated an improvement in vision and the presence of biologic activity, as well as a continued favorable safety profile for ONS-5010/LYTENAVA. Analysis of the complete week 12 data set for NORSE EIGHT has now been completed and provided additional evidence of improvement in vision and biological activity. We plan to resubmit the BLA for ONS-5010/LYTENAVA in the first quarter of calendar 2025.

Our BLA and MAA submissions for ONS-5010/LYTENAVA in wet AMD involved three clinical trials, which we refer to as NORSE ONE, NORSE TWO and NORSE THREE. The study design for our clinical program to evaluate ONS-5010/LYTENAVA as an ophthalmic formulation of bevacizumab was reviewed at an end of Phase 2 meeting with the FDA in April 2018, and we filed our investigational new drug application, or IND, with the FDA in the first quarter of calendar 2019. In August 2020, we reported achieving the anticipated safety and efficacy proof-of-concept results from NORSE ONE, a clinical experience study. NORSE TWO was our pivotal Phase 3 clinical trial comparing ONS-5010/LYTENAVA to ranibizumab (LUCENTIS). The topline results reported from NORSE TWO in August 2021 showed that ONS-5010/LYTENAVA met the primary and key secondary endpoints for efficacy with clinically impactful change observed for treated patients. In March 2021, we reported that the results from NORSE THREE showed a positive safety profile for ONS-5010/LYTENAVA.

As agreed to with the FDA in the SPA, NORSE EIGHT is a randomized, controlled, parallel-group, masked, non-inferiority study of approximately 400 newly diagnosed, wet AMD subjects randomized in a 1:1 ratio to receive 1.25 mg ONS-5010/LYTENAVA or 0.5 mg ranibizumab intravitreal injections. Subjects received injections at Day 0 (randomization), Week 4, and Week 8 visits. The primary endpoint is the mean change in best corrected visual acuity (BCVA) from baseline to week 8. In November 2024, we reported that ONS-5010/LYTENAVA did not meet the pre-specified non-inferiority endpoint at week 8 set forth in the SPA. The difference in the means between the ONS-5010/LYTENAVA and ranibizumab arms in the NORSE EIGHT trial was -2.257 BCVA letters with a 95% confidence interval of (-4.044, -0.470) while the lower bound of the pre-specified non-inferiority margin in the SPA was -3.5 at a 95% confidence interval; the hypothesis of noninferiority was not met (p\>0.025). In the intent-to-treat, or ITT, primary dataset, NORSE EIGHT demonstrated a mean +4.2 letter improvement in BCVA in the ONS-5010/LYTENAVA arm and +6.3 letter improvement in BCVA in the ranibizumab arm. However, the preliminary data from the trial demonstrated an improvement in vision and the presence of biologic activity, as well as a continued favorable safety profile for ONS-

5010/LYTENAVA. In January 2025, we reported the complete week 12 data and safety results from NORSE EIGHT, which continued to demonstrate an improvement in vision and the presence of biologic activity, as well as a continued favorable safety profile. At week 12, the difference in the mean between ONS-5010/LYTENAVA and ranibizumab was -1.009 BCVA letters with a 95% confidence interval of (-2.865, 0.848) in the NORSE EIGHT trial. Applying the statistical parameters from the week 8 primary endpoint with the lower bound of the non-inferiority margin at -3.5 with a 95% confidence interval, the noninferiority margin was met at week 12, indicating that the two study arms are not different at this timepoint. In the ITT population, NORSE EIGHT demonstrated a mean 5.5 letter improvement in BCVA in the ONS-5010/LYTENAVA arm and 6.5 letter improvement in BCVA in the ranibizumab arm. Additionally, the change in central retinal thickness, a measure of anatomical response, was similar in both study arms at all three study timepoints. The safety results demonstrated across the full duration of NORSE EIGHT are consistent with previously reported safety results from the NORSE ONE, NORSE TWO, and NORSE THREE clinical trials, with no cases of retinal vasculitis reported in either study arm. We plan to resubmit the BLA application for ONS-5010/LYTENAVA in the first quarter of calendar 2025. If approved, we expect to receive 12 years of regulatory exclusivity in the United States.

Previously, in November 2021, we began enrolling patients in our NORSE SEVEN clinical trial. The study compares the safety of ophthalmic bevacizumab in vials versus pre-filled syringes in subjects diagnosed with a retinal condition that would benefit from treatment with intravitreal injection of bevacizumab, including exudative age-related macular degeneration, DME, or BRVO. Subjects will be treated for three months, and the enrollment of subjects in the arm of the study receiving ONS-5010/LYTENAVA in vials has been completed.

We have also received agreement from the FDA on three Special Protocol Assessments, or SPAs, for three additional registration clinical trials for our ongoing Phase 3 program for ONS-5010/LYTENAVA. The agreements reached with the FDA on these SPAs cover the protocols for NORSE FOUR, a registration clinical trial evaluating ONS-5010/LYTENAVA to treat BRVO, and NORSE FIVE and NORSE SIX, two registration clinical trials evaluating ONS-5010/LYTENAVA to treat DME. The timing for initiating these studies has not been determined pending initial FDA approval for wet AMD.

Because there are no approved bevacizumab products for the treatment of retinal diseases in the United States and other major markets, we submitted a standard BLA and are not using the biosimilar drug regulatory pathway that would be required if Avastin were an approved drug for the targeted diseases. If approved in the United States, we believe ONS-5010/LYTENAVA has potential to mitigate risks associated with off-label use of unapproved bevacizumab. In the United States, 66.3% of retina physicians state off-label repackaged bevacizumab is their most commonly used first-line anti-VEGF (ASRS 2022 Membership Survey Presented at ASRS NY 2022).

### Going Concern

On January 16, 2025, we entered into warrant exercise inducement offer letter agreements, or the Warrant Inducement Transaction, with GMS Ventures and Investments, or GMS, and certain other holders of existing warrants to purchase the Company’s common stock, pursuant to which the holders agreed to exercise their existing warrants, or Existing Warrants, for an aggregate of 7,074,637 shares of common stock at a reduced exercise price of $2.51 per share. In exchange, we issued two new inducement warrants for each Existing Warrant exercised, or the Inducement Warrants, which are exercisable for an aggregate of up to 14,149,274 shares of common stock, or the Inducement Warrant Shares, at an exercise price of $2.26 per share. We received net proceeds of $15.7 million, after capital markets advisory fees and estimated offering costs, from the Warrant Inducement Transaction.

Concurrently with the Warrant Inducement Transaction, we entered into a warrant exercise inducement offer letter agreement, or the Syntone Warrant Inducement Transaction, with Syntone Ventures, LLC, or Syntone, pursuant to which Syntone agreed to exercise existing warrants, or the Existing Syntone Warrants, for an aggregate of 1,071,429 shares of common stock at a reduced exercise price of $2.51 per share. In exchange, we agreed to issue two new inducement warrants for each Existing Syntone Warrant exercised, or the Syntone Inducement Warrants, which will be exercisable for up to 2,142,858 shares of common stock, or the Syntone Inducement Warrant Shares, at an exercise price of $2.26 per share. The closing of the Syntone Warrant Inducement Transaction is subject to receipt of certain regulatory approvals. We expect to generate net proceeds of approximately $2.4 million after capital markets advisory fees and estimated offering costs. For further details on the Warrant Inducement Transaction and the Syntone Warrant Inducement Transaction, refer to Note 11 to the unaudited consolidated interim financial statements included elsewhere in this Quarterly Report on Form 10-Q.

On January 31, 2025, we entered into a Securities Purchase Agreement, or SPA, with Avondale Capital, LLC, or Avondale, pursuant to which we agreed to issue to Avondale an unsecured convertible promissory note for $33,100,000, or the January 2025 Note. We expect to use the proceeds from the January 2025 Note to repay in full the remaining obligations, including accrued and unpaid interest and the applicable exit fee, owed under the December 2022 Note with Streeterville Capital, or, as amended, the December 2022 Note. The December 2022 Note will be cancelled in connection with the issuance of the January 2025 Note. The closing of the transaction, or Note Closing, is expected to occur shortly after our 2025 annual meeting of stockholders, subject to certain closing conditions, including stockholder approval of the issuances of shares of our common stock in excess of 19.99% of the outstanding common stock upon conversion of the January 2025 Note. For a description of the SPA and the January 2025 Note, see “Description of Indebtedness” below for additional detail.

Through December 31, 2024, we have funded substantially all of our operations with $532.6 million in net proceeds from the sale and issuance of our equity and debt securities. We have also received $29.0 million pursuant to our collaboration and licensing agreements through such date. Our net income for the three months ended December 31, 2024 was $17.4 million. We also had a net loss of $11.2 million for the three months ended December 31, 2023. We have not generated any revenue from product sales. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of ONS-5010/LYTENAVA or any other product candidate we may develop.

We evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern. We do not believe that the existing cash and cash equivalents as of December 31, 2024, together with net proceeds from the sale of shares of common stock in the Warrant Inducement Transaction, are sufficient to fund our operations through one year from the date of this Quarterly Report on Form 10-Q. As a result, there is substantial doubt about our ability to continue as a going concern. For further details on the warrants to purchase shares of common stock, refer to Note 9 of the unaudited consolidated interim financial statements included elsewhere in this Quarterly Report on Form 10-Q. The Company’s consolidated financial statements do not include any adjustments that might be necessary if it is unable to continue as a going concern.

### Collaboration, License and Strategic Partnership Agreements

From time to time, we enter into collaboration and license agreements for the research and development, manufacture and/or commercialization of our products and/or product candidates. These agreements generally provide for non-refundable upfront license fees, development and commercial performance milestone payments, cost sharing, royalty payments and/or profit sharing. We have also licensed rights to our inactive biosimilar program product candidates (ONS-3010, ONS-1045 and ONS-5010/LYTENAVA) in other markets.

### Syntone – PRC Joint Venture

In May 2020, we entered into a stock purchase agreement with Syntone, the United States-based affiliate of Syntone Technologies Group Co. Ltd., or Syntone PRC, pursuant to which we sold and issued in June 2020, in a private placement, 800,000 shares of our common stock at a purchase price of $20.00 per share, for aggregate gross proceeds of $16.0 million. In connection with the entry into the stock purchase agreement, we entered into a joint venture agreement with Syntone PRC pursuant to which we agreed to form a People’s Republic of China, or PRC joint venture, Beijing Syntone Biopharma Ltd, or Syntone JV, that is 80% owned by Syntone PRC and 20% owned by us. Upon formation of Syntone JV in April 2021, we entered into a royalty-free license with Syntone JV for the development, commercialization and manufacture of ONS-5010/LYTENAVA in the greater China market, which includes Hong Kong, Taiwan and Macau.

We used approximately $0.9 million of the proceeds from the May 2020 private placement to Syntone to fund our initial capital contribution to Syntone JV and are committed to making capital contributions to Syntone JV of approximately $2.1 million, based upon the development plan contemplated in the license agreement. The maximum exposure to a loss as a result of our involvement in Syntone JV is limited to the initial investment and the future capital contributions totaling approximately $2.1 million.

### Selexis SA

In October 2011, we entered into a research license agreement with Selexis whereby we acquired a non-exclusive license to conduct research internally or in collaboration with third parties to develop recombinant proteins from cell lines created in mammalian cells using the Selexis expression technology, or the Selexis Technology. The research license expired on October 9, 2018 and accordingly, we are no longer using the Selexis Technology in our research.

Selexis also granted us a non-transferrable option to obtain a perpetual, non-exclusive, worldwide commercial license under the Selexis Technology to manufacture, or have manufactured, a recombinant protein produced by a cell line developed using the Selexis Technology for clinical testing and commercial sale. We exercised this option in April 2013 and entered into three commercial license agreements with Selexis for our ONS-3010, ONS-1045 (which covers ONS-5010) and ONS-1050 product candidates. We paid an upfront licensing fee to Selexis for each commercial license and also agreed to pay a fixed milestone payment for each licensed product. In addition, we are required to pay a single-digit royalty on a final product-by-final product and country-by-country basis, based on worldwide net sales of such final products by us or any of our affiliates or sub-licensees during the royalty term. At any time during the term, we have the right to terminate our royalty payment obligation by providing written notice to Selexis and paying Selexis a royalty termination fee. The initiation of our Phase 3 clinical program for ONS-5010/LYTENAVA triggered a CHF 65,000 (approximately $0.1 million) milestone payment under the commercial license agreement, which we paid in November 2019.

### Components of our Results of Operations

### Research and Development Expenses

Research and development expense consists of expenses incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:

- expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;
- expenses incurred by us directly, as well as under agreements with contract manufacturing organizations, or CMOs, for manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials, including manufacturing validation batches;
- outsourced professional scientific development services;
- employee-related expenses, which include salaries, benefits and stock-based compensation;
- payments made under a third-party assignment agreement, under which we acquired intellectual property;
- expenses relating to regulatory activities, including filing fees paid to regulatory agencies;
- laboratory materials and supplies used to support our research activities; and
- allocated expenses, utilities and other facility-related costs.

The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from any of our other product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including:

- the number of clinical sites included in the trials;
- the length of time required to enroll suitable patients;
- the number of patients that ultimately participate in the trials;
- the number of doses patients receive;
- the duration of patient follow-up;
- the results of our clinical trials;
- the establishment of commercial manufacturing capabilities;
- the receipt of marketing approvals; and
- the commercialization of product candidates.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our biosimilar product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Full product commercialization will take several years and millions of dollars in additional costs.

Research and development activities are central to our business model. 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, complexity and duration of later-stage clinical trials.

### General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation, travel expenses and recruiting expenses. Other general and administrative expenses include facility related costs, patent filing and prosecution costs and professional fees for business development, legal, auditing and tax services and insurance costs.

We anticipate that our general and administrative expenses will increase if and when we believe a regulatory approval of a product candidate appears likely, and we anticipate an increase in payroll and expense as a result of our preparation for commercial operations, particularly as it relates to the sales and marketing of our product.

### Loss (income) on Equity Method Investment

Loss (income) on equity method investment represents our proportionate share for the period of the net loss (income) of our investee to which the equity method of accounting is applied. We account for equity investments where we own a non-controlling interest, but have the ability to exercise significant influence, under the equity method of accounting.

### Interest income

Interest income is earned from short term investments primarily money market investments.

### Interest Expense

Interest expense consists of cash paid and non-cash interest expense related to our senior secured notes, equipment loans, lease liabilities and other finance obligations.

### Change in Fair Value of Promissory Notes

The change in fair value relates to convertible promissory notes that we elected to account for at fair value. As permitted under ASC 825, we elected the fair value option to account for our convertible promissory notes. We recorded the convertible promissory note at fair value with changes in fair value recorded in the consolidated statements of operations.

### Change in Fair Value of Warrant Liability

We issued warrants to purchase our common stock in conjunction with convertible senior secured notes issued pursuant to a certain Note and Warrant Purchase Agreement dated December 22, 2017. Additionally, we issued warrants in connection with private placements that closed on March 18, 2024 and April 15, 2024. These warrants are categorized as liabilities and recorded at fair value. The warrants are subject to re-measurement at each balance sheet date, and we recognize any change in fair value in our statements of operations.

### Income Taxes

Since inception, we have not recorded any U.S. federal or state income tax benefits (excluding the sale of New Jersey state NOLs and research and development, or R&D, tax credits) for the net losses we have incurred in each year or on our earned R&D tax credits, due to our uncertainty of realizing a benefit from those items. As of September 30, 2024, we had federal and state NOL carryforwards of $406.7 million and $242.5 million, respectively, that will begin to expire in 2030 and 2039, respectively. As of September 30, 2024, we had federal foreign tax credit carryforwards of $0.3 million available to reduce future tax liabilities, which begin to expire starting in 2023. As of September 30, 2024, we also had federal and state R&D tax credit carryforwards of $13.0 million and $0.8 million, respectively, that will begin to expire in 2032 and 2033, respectively.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs to offset future taxable income. We have not completed a study to assess whether an ownership change has occurred in the past. Our existing NOLs may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in connection with or after our Initial Public Offering, or IPO, our ability to utilize NOLs could be further limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. Our NOLs are also subject to international regulations, which could restrict our ability to utilize our NOLs. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

### Results of Operations

### Comparison of Three Months Ended December 31, 2024 and 2023

| ​ ​ ​ Operating expenses: | ​ ​ ​ | ​ ​ Three months ended December 31, 2024 ​ ​ | ​ ​ | ​ ​ 2023 ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Change ​ ​ |
| --- | --- | --- | --- | --- | --- | --- |
| Research and development | ​ | $9,660,150 | ​ | $4,529,358 | ​ | $5,130,792 |
| General and administrative | ​ | ​ 11,946,702 | ​ | ​ 5,793,764 | ​ | ​ 6,152,938 |
| Loss from operations | ​ | ​ (21,606,852) | ​ | ​ (10,323,122) | ​ | ​ (11,283,730) |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Loss (income) on equity method investment | ​ | ​ 33,295 | ​ | ​ (2,548) | ​ | ​ 35,843 |
| Interest income | ​ | ​ (48,881) | ​ | ​ (188,677) | ​ | ​ 139,796 |
| Loss from change in fair value of promissory notes | ​ | ​ 1,304,000 | ​ | ​ 993,000 | ​ | ​ 311,000 |
| (Gain) loss from change in fair value of warrant liability | ​ | ​ (40,272,880) | ​ | ​ 53,342 | ​ | ​ (40,326,222) |
| Net income (loss) | ​ | $17,377,614 | ​ | $(11,178,239) | ​ | $28,555,853 |

#### Research and development expenses

The following table summarizes our research and development expenses by functional area for the three months ended December 31, 2024 and 2023:

| ​ ​ ​ | ​ ​ | ​ ​ Three months ended December 31, 2024 | ​ | ​ ​ 2023 |
| --- | --- | --- | --- | --- |
| ONS-5010/LYTENAVA development | ​ | $8,725,849 | ​ | $3,326,461 |
| Compensation and related benefits | ​ | ​ 569,127 | ​ | ​ 750,224 |
| Stock-based compensation | ​ | ​ 110,029 | ​ | ​ 231,416 |
| Other research and development | ​ | ​ 255,145 | ​ | ​ 221,257 |
| Total research and development expenses | ​ | $9,660,150 | ​ | $4,529,358 |

Research and development expenses for the three months ended December 31, 2024 increased by $5.1 million compared to the three months ended December 31, 2023. The increase was due to an increase in ONS-5010/LYTENAVA development expenses related to conducting the NORSE EIGHT clinical trial, which was initiated and began enrolling patients in January 2024.

#### General and administrative expenses

The following table summarizes our general and administrative expenses by type for the three months ended December 31, 2024 and 2023:

| ​ ​ ​ | ​ ​ | ​ ​ Three months ended December 31, 2024 | ​ | ​ ​ 2023 |
| --- | --- | --- | --- | --- |
| Professional fees | ​ | $2,321,458 | ​ | $2,142,669 |
| Compensation and related benefits | ​ | ​ 2,780,189 | ​ | ​ 1,977,487 |
| Stock-based compensation | ​ | ​ 3,562,391 | ​ | ​ 1,041,195 |
| Europe prelaunch expenses | ​ | ​ 2,466,342 | ​ | ​ — |
| Facilities, fees and other related costs | ​ | ​ 816,322 | ​ | ​ 632,413 |
| Total general and administrative expenses | ​ | $11,946,702 | ​ | $5,793,764 |

General and administrative expenses for the three months ended December 31, 2024 increased by $6.2 million when compared to the three months ended December 31, 2023. This increase was due to $2.5 million in prelaunch expenses for Europe and an increase of $3.3 million in combined cash and stock-based compensation, which was primarily related to severance costs from the resignation of our former Chief Executive Officer and our December 2024 reduction in headcount.

#### Interest income

Interest income for the three months ended December 31, 2024 and 2023 was earned from short term investments primarily money market investments.

#### Change in fair value of promissory notes

The change in fair value relates to the promissory notes that we elected to account for at fair value. As permitted under ASC 825, we elected the fair value option to account for our promissory note. We record the promissory note at fair value with changes in fair value recorded in the unaudited interim consolidated statements of operations.

#### Change in fair value of warrant liability

We issued warrants to purchase our common stock in conjunction with convertible senior secured notes issued pursuant to a certain Note and Warrant Purchase Agreement dated December 22, 2017. Additionally, we issued warrants in connection with private placements that closed on March 18, 2024 and April 15, 2024. These warrants are categorized as liabilities and recorded at fair value. The warrants are subject to re-measurement at each balance sheet date, and we recognize any change in fair value in our statements of operations. The gain recorded during the quarter ended December 31, 2024 was primarily due to the reduction in the price per share of common stock from September 30, 2024 to December 31, 2024.

### Liquidity and Capital Resources

We have not generated any revenue from product sales. Since inception, we have incurred net losses and negative cash flows from our operations. Through December 31, 2024, we have funded substantially all of our operations with $532.6 million in net proceeds from the sale and issuance of our equity securities, debt securities and borrowings under debt facilities. We have also received an aggregate of $29.0 million pursuant to emerging markets collaboration and licensing agreements for our inactive biosimilar development programs.

We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of ONS-5010/LYTENAVA or any other product candidate we may develop. We will need additional financing to fund our operations and to commercially develop ONS-5010/LYTENAVA or any other product candidate we may develop and to continue as a going concern. Management is currently evaluating various strategic opportunities to obtain the required funding for future operations. These strategies may include but are not limited to potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, the issuance of equity securities, including through an at-the-market offering program, the issuance of additional debt, and revenues from potential future product sales, if any. Alternatively, we may be required to, among other things, modify our clinical trial plans for ONS-5010/LYTENAVA in additional indications, make reductions in our workforce, scale back our plans and place certain activities on hold, discontinue our development programs, liquidate all or a portion of our assets, and/or seek protection under the provisions of the U.S. Bankruptcy Code.

On May 16, 2023, the Company entered into an At-the-Market Sales Agreement with BTIG, LLC, or BTIG, as sales agent, as amended, the BTIG ATM Agreement or the BTIG ATM Offering, under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $100.0 million from time to time through BTIG. Under the BTIG ATM Agreement, the Company pays BTIG a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the BTIG ATM Agreement. The offering of common stock pursuant to the BTIG ATM Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the BTIG ATM Agreement or (ii) termination of the BTIG ATM Agreement in accordance with its terms.

During the three months ended December 31, 2024, we sold 1,000,000 shares of common stock under the BTIG ATM Offering and generated approximately $1.7 million in net proceeds.

In January 2025, we sold 36,907 shares of common stock under the BTIG ATM Agreement and generated $0.1 million in net proceeds after paying fees to BTIG and other issuance costs assessed as immaterial.

On December 22, 2022, we entered into a Securities Purchase Agreement and issued the December 2022 Note with a face amount of $31.8 million to Streeterville Capital, LLC, or the Lender, the holder of our November 2021 Note. The December 2022 Note has an original issue discount of $1.8 million. A portion of the proceeds from the December 2022 Note were used to repay in full the remaining outstanding principal and accrued interest on the November 2021 Note, which was cancelled upon repayment. We received net proceeds of $18.1 million upon the closing on December 28, 2022, after deducting the Lender’s transaction costs in connection with the issuance and November 2021 Note repayment. In December 2023, the Company extended the maturity of the December 2022 Note from January 1, 2024 to April 1, 2024. The Company incurred a $475 thousand extension fee. The December 2022 Note bore interest at 9.5% per annum through April 1, 2024. On January 22, 2024, the Company entered into an amendment to the December 2022 Note, or the Note Amendment, with the Lender, which became effective on April 1, 2024 after satisfaction of certain closing conditions, including various required stockholder approvals and the closing of the private placement that closed on March 18, 2024. The maturity of the December 2022 Note was extended to July 1, 2025. An extension fee of $2.7 million (calculated as 7.5% of the outstanding balance of the December 2022 Note) was added to the outstanding balance on March 18, 2024. Under the Note Amendment, the initial conversion price with respect to $15.0 million in aggregate principal amount of the December 2022 Note was changed to $7.00, the price per share in the private placement that closed on March 18, 2024 and the remaining aggregate principal amount is converted at a price of $40.00 per share. Effective April 1 2024, the December 2022 Note bears interest at the prime rate (as published in the Wall Street Journal) plus 3% (subject to a floor of 9.5%) and the Company has an obligation to repay at least $3.0 million (by either cash or conversion into common stock) of the outstanding balance of the December 2022 Note for each calendar quarter beginning with the second calendar quarter of 2024 (subject to adjustment for conversions by the Lender and to payment of an exit fee as set forth in the December 2022 Note) and continuing until the December 2022 Note is repaid in full. The December 2022 Note contains customary covenants, including a restriction on the Company’s ability to pledge certain of the Company’s assets, subject to certain exceptions, without the Lender’s consent. See “Description of Indebtedness” below for additional detail.

On January 16, 2025, we entered into a Warrant Inducement Transaction with GMS and certain other holders of Existing Warrants, pursuant to which the holders agreed to exercise their Existing Warrants for an aggregate of 7,074,637 shares of common stock at a reduced exercise price of $2.51 per share. In exchange, we issued two new Inducement Warrants for each Existing Warrant exercised, which are exercisable for an aggregate of up to 14,149,274 Inducement Warrant Shares at an exercise price of $2.26 per share. We received net proceeds of $15.7 million, after capital markets advisory fees and estimated offering costs, from the Warrant Inducement Transaction.

Concurrently with the Warrant Inducement Transaction, the Company entered into the Syntone Warrant Inducement Transaction, pursuant to which Syntone agreed to exercise the Existing Syntone Warrants for an aggregate of 1,071,429 shares of common stock at a reduced exercise price of $2.51 per share. In exchange, the Company agreed to issue two new Syntone Inducement Warrants for each existing warrant exercised, which will be exercisable for up to 2,142,858 Syntone Inducement Warrant Shares at an exercise price of $2.26 per share. The closing of the Syntone Warrant Inducement Transaction is subject to receipt of certain regulatory approvals. The Company expects to generate net proceeds of approximately $2.4 million after capital markets advisory fees and estimated offering costs. For further details on the Warrant Inducement Transaction and Syntone Warrant Inducement Transaction, refer to Note 11 to the unaudited consolidated interim financial statements included elsewhere in this Quarterly Report on Form 10-Q.

On January 31, 2025, we entered into a SPA with Avondale, pursuant to which we agreed to issue to Avondale the January 2025 Note. We expect to use the proceeds from the January 2025 Note to repay in full the remaining obligations, including accrued and unpaid interest and the applicable exit fee, owed under the December 2022 Note. The December 2022 Note will be cancelled in connection with the issuance of the January 2025 Note. The Note Closing is expected to occur shortly after our 2025 annual meeting of stockholders, subject to certain closing conditions, including stockholder approval of the issuances of shares of our common stock in excess of 19.99% of the outstanding common stock upon conversion of the January 2025 Note. For a description of the SPA and the January 2025 Note, see “Description of Indebtedness” below for additional detail.

We evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern. We do not believe that the existing cash and cash equivalents as of December 31, 2024, together with the net proceeds from the sale of shares of common stock in the Warrant Inducement Transaction, are sufficient to fund the Company’s operations through one year from the date of this Quarterly Report on Form 10-Q. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. For further details on the warrants to purchase shares of common stock, refer to Note 10 of the unaudited consolidated interim financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Our future operations are highly dependent on a combination of factors, including: (i) the timely and successful completion of additional financing discussed above; (ii) our ability to successfully begin marketing of our product candidates or complete revenue-generating partnerships with other companies; (iii) the success of our research and development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately; (v) regulatory approval and market acceptance of our proposed future products. Additionally, the global financial markets have experienced significant disruptions due to various macroeconomic factors, including, among other things, the impacts of ongoing overseas conflict, resulting in a general global economic slowdown. Furthermore, inflation rates, particularly in the United States and the United Kingdom, have increased recently to levels not seen in decades. In addition, the U.S. Federal Reserve has raised interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks. Moreover, the recent closures of Silicon Valley Bank, Signature Bank and First Republic Bank have resulted in broader financial institution liquidity risk and concerns. If other banks and financial institutions fail or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments may be threatened and our ability to raise additional capital could be substantially impaired. If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our ability to pursue our business strategy.

#### Funding Requirements

We plan to focus in the near term on supporting the review of our BLA submission for ONS-5010/LYTENAVA with the FDA and to prepare for the potential launch of LYTENAVATM, if approved, to support the generation of commercial revenues. We anticipate we will incur net losses and negative cash flow from operations for the foreseeable future. We may not be able to successfully commercialize ONS-5010/LYTENAVA if, among other things, the FDA does not approve our BLA when we expect, or at all, or if we are not able to secure sufficient funding of our expected post-launch commercial costs.

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, manufacturing and facility costs, external research and development services, legal and other regulatory expenses and administrative and overhead costs. Our future funding requirements will be heavily determined by the resources needed to support the development of our lead product candidate and any other product candidates we may choose to pursue.

We do not believe that the existing cash and cash equivalents as of December 31, 2024, together with the net proceeds from the sale of shares of common stock in the Warrant Inducement Transaction, are sufficient to fund our operations through one year from the date of this Quarterly Report on Form 10-Q. For further details on the warrants to purchase shares of common stock, refer to Note 10 of the unaudited consolidated interim financial statements included herein. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We plan to finance our future operations with a combination of proceeds from potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, sale of the development and commercial rights to our drug product candidates in regions outside of the U.S., the issuance of additional debt, the issuance of equity securities, including accessing capital through at-the-market offering agreements, and revenues from potential future product sales, if any. If we raise additional capital through the sale of equity or convertible debt securities, your ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock. Further, due to current market volatility, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. There are no assurances that we will be successful in obtaining an adequate level of financing for the commercialization of ONS-5010/LYTENAVA or the development of any other current or future product candidates. Alternatively, we will be required to, among other things, modify our clinical trial plans for ONS-5010/LYTENAVA in additional indications, make reductions in our workforce, scale back our plans and place certain activities on hold, discontinue our development programs, liquidate all or a portion of our assets, and/or seek protection under the provisions of the U.S. Bankruptcy Code.

### Cash Flows

The following table summarizes our cash flows for each of the periods presented:

| ​ ​ ​ | ​ ​ | ​ ​ Three months ended December 31, 2024 | ​ | ​ ​ 2023 |
| --- | --- | ---: | --- | ---: |
| Net cash used in operating activities | ​ | $(10,967,335) | ​ | $(13,032,169) |
| Net cash provided by financing activities | ​ | ​ 1,742,373 | ​ | ​ (3,183) |
| Net decrease in cash and cash equivalents | ​ | $(9,224,962) | ​ | $(13,035,352) |

#### Operating Activities

During the three months ended December 31, 2024, we used $11.0 million of cash in operating activities resulting primarily from our net income of $17.4 million. This use of cash was partially offset by $35.2 million of non-cash items such as stock-based compensation, change in fair value of promissory notes, change in fair value of warrant liability, loss on equity method investment and depreciation and amortization expense. The net cash inflow of $6.9 million from changes in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $4.4 million primarily due to timing of payments and a decrease in prepaid expenses of $5.6 million associated with ONS-5010/LYTENAVA development costs relating to clinical trial and drug development costs partially offset by an increase in inventory of $3.1 million relating to commercial inventory manufactured during the period.

During the three months ended December 31, 2023, we used $13.0 million of cash in operating activities resulting primarily from our net loss of $11.2 million. This use of cash was partially offset by $2.3 million of non-cash items such as stock-based compensation, change in fair value of promissory notes, change in fair value of warrant liability, income on equity method investment and depreciation and amortization expense. The net cash outflow of $4.2 million from changes in our operating assets and liabilities was primarily due to a net decrease in accounts payable and accrued expenses of $1.8 million and a decrease in prepaid expenses of $2.4 million for timing of payments associated with ONS-5010/LYTENAVA development costs.

#### Financing Activities

During the three months ended December 31, 2024, net cash provided by financing activities was $1.7 million, primarily attributable to net proceeds from the sale of common stock under our BTIG ATM Offering.

During the three months ended December 31, 2023, net cash used in financing activities was immaterial.

### Description of Indebtedness

On December 22, 2022, we entered into the Securities Purchase Agreement and issued the December 2022 Note to the Lender. The December 2022 Note, which was amended in December 2023, has a face value of $31.8 million and an original issue discount of $1.8 million. In December 2023, the Company extended the maturity of the December 2022 Note from January 1, 2024 to April 1, 2024. On January 22, 2024, the Company entered into an amendment to the December 2022 Note with the Lender, which became effective on April 1, 2024 after satisfaction of certain closing conditions, including various required stockholder approvals and the closing of the private placement that closed on March 18, 2024. Effective April 1, 2024, the initial conversion price with respect to $15.0 million in aggregate principal amount of the December 2022 Note was changed to $7.00, the price per share in the private placement that closed on March 18, 2024 and bears interest at the prime rate (as published in the Wall Street Journal) plus 3% (subject to a floor of 9.5%) and the Company has an obligation to repay at least $3.0 million (by either cash or conversion into common stock) of the outstanding balance of the December 2022 Note for each calendar quarter beginning with the second calendar quarter of 2024 (subject to adjustment for conversions by the Lender and to payment of an exit fee as set forth in the December 2022 Note) and continuing until the December 2022 Note is repaid in full. Any amount converted by the Lender during a given calendar quarter in excess of $3.0 million will be credited toward meeting the quarterly requirement for the next quarter or quarters.

The December 2022 Note contains customary covenants, including a restriction on the Company’s ability to pledge certain of the Company’s assets, subject to certain exceptions, without the Lender’s consent. Beginning on April 1, 2023, the

Lender had the right to convert the December 2022 Note at the Conversion Price (as defined below). The principal amount and conversion price of the December 2022 Note were subject to adjustment upon certain triggering events. In addition, the Company had the right to convert all or any portion of the outstanding balance under the December 2022 Note into shares of common stock at the Conversion Price if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the common stock on Nasdaq equals or exceeds $50.00 per share (subject to adjustments for stock splits and stock combinations) for a period of 30 consecutive trading days. Payments may be made by the Company (i) in cash, (ii) in shares of common stock, with the number of shares being equal to the portion of the applicable payment amount divided by the Conversion Price (as defined below), or (iii) a combination of cash and shares of common stock. Any payments made by the Company in cash, including prepayments or repayment at maturity, will be subject to an additional fee of 7.5%. Upon the occurrence of certain events described in the December 2022 Note, including, among others, the Company’s failure to pay amounts due and payable under the December 2022 Note, events of insolvency or bankruptcy, failure to observe covenants contained in the Securities Purchase Agreement and the December 2022 Note, breaches of representations and warranties in the Securities Purchase Agreement, and the occurrence of certain transactions without the Lender’s consent (each such event, a “Trigger Event”), the Lender shall have the right, subject to certain exceptions, to increase the balance of the December 2022 Note by 10% for a Major Trigger Event (as defined in the December 2022 Note) and 5% for a Minor Trigger Event (as defined in the December 2022 Note). If a Trigger Event is not cured within ten (10) trading days of written notice thereof from the Lender, it will result in an event of default (such event, an “Event of Default”). Following an Event of Default, the Lender may accelerate the December 2022 Note such that all amounts thereunder become immediately due and payable, and interest shall accrue at a rate of 22% annually until paid. Prior to April 1, 2024, under the December 2022 Note, “Conversion Price” meant, prior to a Major Trigger Event, $40.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i) $40.00 per share (subject to adjustment for stock splits and stock combinations), and (ii) 90% multiplied by the lowest closing bid price of the Company’s common stock in the three trading days prior to the date on which the conversion notice is delivered. If the Conversion Price is below $3.51 per share, the Company will be required to satisfy a conversion notice from the Lender in cash. Subject to certain exceptions, while the December 2022 Note is outstanding, the Lender will have a consent right on any future variable rate transactions or any debt and a 10% participation right in any future debt or equity financings.

On January 31, 2025, we executed a SPA with Avondale, pursuant to which we agreed to issue to Avondale an unsecured convertible promissory note in the amount of $33,100,000. The funds generated from the January 2025 Note will be utilized to completely settle the December 2022 Note, which will be fully extinguished. The Note Closing outlined in the SPA and the January 2025 Note is anticipated to occur shortly after our 2025 annual meeting of stockholders, contingent upon the fulfillment of customary closing conditions, as well as obtaining stockholder approval for the issuance of shares exceeding 19.99% of the outstanding common stock upon conversion of the January 2025 Note. Until the Note Closing, we have agreed not to sell common stock, other than issuances pursuant to our at-the-market offering, below a per share price of $2.26 and must maintain its Nasdaq listing. We have agreed to file a registration statement registering the resale of common stock issuable upon conversion of the January 2025 Note within seven days of the Note Closing, with an objective for effectiveness within 45 days; failure to achieve this will result in an increase of the January 2025 Note balance by 0.5% on a monthly basis until effectiveness is attained.

The January 2025 Note will initially bear interest at the prime rate as published in the Wall Street Journal, plus an additional 3%, subject to a floor of 9.5%. The January 2025 Note is scheduled to mature on July 1, 2026, and will be convertible into common stock. The Company is obligated to repay a minimum of $3,000,000 of the outstanding balance of the January 2025 Note each calendar quarter starting with the second calendar quarter of 2025, subject to adjustments for conversions by Avondale and the payment of an exit fee of 7.5%, or the Quarterly Debt Reduction Obligations. Any amount converted by Avondale during a given calendar quarter in excess of the Quarterly Debt Reduction Obligations will be credited toward meeting the Quarterly Debt Reduction Obligations for the next quarter or quarters.

Commencing on the earlier of (i) six months following the issuance of the January 2025 Note or (ii) the date on which the Registration Statement is declared effective, or the Conversion Commencement Date, Avondale shall have the right to convert all or any portion of the outstanding balance under the January 2025 Note into shares of common stock, calculated by dividing the amount of the January 2025 Note being converted by the Conversion Price (as defined below). Furthermore, the Company retains the right to convert any portion of the outstanding balance under the January 2025 Note into shares of common stock at the Conversion Price, provided certain conditions are met at the time of conversion, including, but not limited to, the condition that the daily volume-weighted average price of our common stock on Nasdaq equals or exceeds

$3.00 per share (subject to adjustments for stock splits and combinations) for a period of 30 consecutive trading days, and that the median daily dollar trading volume during the preceding 30 trading day period meets or exceeds $1,000,000. We reserve the right to make payments (i) in cash, (ii) in shares of common stock, calculated as the applicable payment amount divided by the Conversion Price, or (iii) a combination of both cash and shares of common stock. Any cash payments made by us, including prepayments or payments made at maturity, will incur an additional fee of 7.5%.

The January 2025 Note stipulates that we shall not permit any conversion of the January 2025 Note if, following such conversion, Avondale and its affiliates would beneficially own shares of common stock exceeding 4.99% of the total number of outstanding shares as of that date, or the Beneficial Ownership Limitation. However, this limitation shall increase to 9.99% when the our market capitalization falls below $25,000,000. Avondale may, by written notice to us, adjust the Beneficial Ownership Limitation for itself, though any such adjustment will not take effect until the 61st day after such notice is received.

In the event of specific occurrences outlined in the January 2025 Note—such as our failure to fulfill payment obligations, non-compliance with the Quarterly Debt Reduction Obligations, insolvency or bankruptcy events, breaches of covenants in the SPA and the January 2025 Note, and unauthorized transactions without Avondale’s consent, collectively referred to as Trigger Events—Avondale reserves the right to increase the balance of the January 2025 Note by 10% in the case of a Major Trigger Event (as defined in the January 2025 Note) and by 5% for a Minor Trigger Event (as defined in the January 2025 Note). Should any Trigger Event persist without resolution for ten trading days following written notification from Avondale, this will constitute an event of default, such event, an Event of Default. Upon an Event of Default, Avondale may accelerate the January 2025 Note, resulting in all amounts becoming immediately due and payable, with interest accruing at a rate of 22% per annum until full payment is made.

Under the terms of the January 2025 Note, the “Conversion Price” is defined as $2.26 per share prior to a Major Trigger Event (subject to adjustments for stock splits and combinations). Following a Major Trigger Event, the Conversion Price will be the lesser of (i) $2.26 per share (subject to adjustments) or (ii) 90% of the lowest closing bid price over the three trading days preceding the conversion notice. Furthermore, if the Conversion Price falls below $0.404 per share (subject to adjustments), we will be required to fulfill a conversion notice from Avondale in cash.

### Critical Accounting Policies and Significant Judgments and Estimates

The Critical Accounting Policies and Significant Judgments and Estimates included in our Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC on December 27, 2024, have not materially changed.

## Controls and procedures

As filed, 2,519 characters.

### Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our management, with the participation of our interim chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our interim chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of the end of the period covered by this report.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(d) 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 during our first fiscal quarter ended December 31, 2024.

## Risk factors

As filed, 228 characters.

As of December 31, 2024, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended September 30, 2024 filed with the SEC on December 27, 2024.

Filed Feb 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-001022. Last ingested by Listed: Oct 24, 2026, 15:14 ET. No prices; not investment advice.