acrx20250331

acrx20250331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number: 001-35068

TALPHERA, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-2193603
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1850 Gateway Drive, Suite 175

San Mateo, CA 94404

(650) 216-3500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading symbol(s)	Name of Each Exchange on Which Registered:

Common Stock, $0.001 par value	TLPH	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes ☐ No ☒

As of May 7, 2025, the number of outstanding shares of the registrant’s common stock was 20,503,463.

TALPHERA, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2025

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		5

Item 1.	Financial Statements	5

	Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 (unaudited)	5

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024 (unaudited)	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2025 and 2024 (unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II. OTHER INFORMATION		23

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

Unless the context indicates otherwise, the terms “Talphera,” “we,” “us” and “our” refer to Talphera, Inc., and its consolidated subsidiary. “Niyad” and “Fedsyra” are trademarks, and “Zalviso” are registered trademarks, all owned by Talphera, Inc. This Quarterly Report also contains trademarks and trade names that are the property of their respective owners.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, or Form 10-Q, contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by that section. The forward-looking statements in this Form 10-Q are contained principally under “Part I. Financial Information - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II. Other Information - Item 1A. Risk Factors”. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Many important factors affect our ability to achieve our objectives, including:

•

our ability to obtain additional required financing and to continue as a going concern;

•

our ability to manage our operating costs and reduce our cash burn;

•

the accuracy of our estimates regarding the sufficiency of our cash resources, future revenues, expenses, and capital requirements;

•

our ability to maintain listing of our securities trading on the Nasdaq exchange;

•

the historical performance and high volatility in the market price of our common stock;

•

macroeconomic uncertainties, including tariffs, inflationary pressures, domestic and global supply chain disruptions, labor shortages, significant volatility in global markets, and recession risks;

•

our ability to conduct ourselves, or through a contract research organization, clinical trials in a timely and effective manner to advance the development of our product candidates, including our lead nafamostat developmental product candidate, Niyad™;

•

our ability to successfully file for and obtain regulatory approval for, and then successfully launch and commercialize our developmental product candidates;

•

the impact of the discontinuation by our corporate partner, Vertical Pharmaceuticals LLC, a wholly owned subsidiary of Alora Pharmaceuticals, LLC, or Alora, of its marketing, sales, and distribution of the DSUVIA product;

•

the extent of future sales of DSUVIA by Alora to the Department of Defense, or DoD, given the discontinuation of its marketing, sales and distribution efforts related to DSUVIA;

•

the size and growth potential of the potential markets for our developmental product candidates in the United States and in other jurisdictions, and our ability to serve those markets;

•

our estimates of the existence of, and commercial potential for, markets for our developmental product candidates, if approved;

•

our ability to develop sales and marketing capabilities in a timely fashion, whether alone through recruiting qualified employees, by engaging a contract sales organization, or with potential future collaborators;

•

successfully establishing and maintaining commercial manufacturing and supply chain relationships with domestic and global third-party service providers, including single sources of supply for Niyad active pharmaceutical ingredients and finished goods located outside the U.S.;

•

our ability to manage effectively, and the impact of any costs associated with, potential governmental investigations, inquiries, regulatory actions or lawsuits that may be, or have been, brought against us;

•

our ability to obtain adequate government or third-party payer reimbursement for our developmental product candidates, if approved;

•

our ability to gain access to formularies and establish and then maintain effective relationships with pharmaceutical benefit managers and/or group purchasing organizations for our developmental product candidates, if approved;

•

our ability to attract additional collaborators with development, regulatory and commercialization expertise;

•

our ability to identify and secure potential strategic partners to develop, secure regulatory approval for and then commercialize our developmental product candidates;

•

our ability to successfully retain our key commercial, scientific, engineering, medical or management personnel and hire new personnel as needed;

•

existing and future legislation and other regulatory developments in the United States and foreign countries;

•

the performance of our third-party suppliers and manufacturers, including any supply chain impacts or work limitations;

•

the success of competing therapies that are or become available; and

•

our ability to obtain and maintain intellectual property protection for our approved products and product candidates.

In addition, you should refer to “Part II. Other Information - Item 1A. Risk Factors” in this Form 10-Q for a discussion of these and other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Talphera, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)

	March 31, 2025			December 31, 2024⁽¹⁾
Assets
Current Assets:
Cash and cash equivalents	$	5,388		$	8,863
Prepaid expenses and other current assets		788			554
Total current assets		6,176			9,417
In-process research and development asset		8,819			8,819
Total assets	$	14,995		$	18,236

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	326		$	670
Accrued and other liabilities		1,013			1,254
Liabilities of discontinued operations, current portion		650			723
Total current liabilities		1,989			2,647
Warrant liability		880			1,061
Liability related to the sale of future payments		6,527			6,527
Total liabilities		9,396			10,235
Commitments and Contingencies
Stockholders’ Equity:
Common stock, $0.001 par value—200,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 17,098,345 and 17,029,469 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		17			17
Additional paid-in capital		465,405			465,214
Accumulated deficit		(459,823	)		(457,230	)
Total stockholders’ equity		5,599			8,001
Total Liabilities and Stockholders’ Equity	$	14,995		$	18,236

(1)	The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited financial statements as of that date included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

See notes to condensed consolidated financial statements.

Talphera, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)

	Three Months Ended March 31,
	2025			2024

Revenue	$	27		$	—
Operating costs and expenses:
Research and development		1,169			1,433
Selling, general and administrative		1,774			2,804
Total operating costs and expenses		2,943			4,237
Loss from operations		(2,916	)		(4,237	)
Other income (expense):
Interest income and other income, net		69			220
Gain on sale of future payments		—			1,246
Gain (loss) on change in fair value of warrant liability		181			(1,002	)
Non-cash interest expense on liability related to sale of future payments		—			(181	)
Total other income (expense), net		250			283
Net loss from continuing operations		(2,666	)		(3,954	)
Net income from discontinued operations– See Note 3		73			—
Net loss	$	(2,593	)	$	(3,954	)
Net (loss) income per share attributable to stockholders:
Basic and diluted, continuing operations	$	(0.10	)	$	(0.16	)
Basic and diluted, discontinued operations	$	0.00		$	0.00
Basic and diluted loss per share	$	(0.10	)	$	(0.16	)
Shares used in computing net loss per share of common stock, basic and diluted – See Note 7		26,268,209			24,721,964

See notes to condensed consolidated financial statements.

Talphera, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)

	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance as of January 1, 2025		17,029,469	$	17	$	465,214		$	(457,230	)	$	8,001
Stock-based compensation		—		—		196			—			196
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes		42,523		—		(18	)		—			(18	)
Issuance of common stock upon ESPP purchase		26,353		—		13			—			13
Net loss		—		—		—			(2,593	)		(2,593	)
Balance as of March 31, 2025		17,098,345	$	17	$	465,405		$	(459,823	)	$	5,599

	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance as of January 1, 2024		16,952,519	$	17	$	458,314		$	(444,226	)	$	14,105
Stock-based compensation		—		—		302			—			302
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes		23,952		—		(17	)		—			(17	)
Net proceeds from issuance of pre-funded warrants in connection with equity financing		—		—		5,884			—			5,884
Issuance of common stock upon ESPP purchase		16,255		—		14			—			14
Net loss		—		—		—			(3,954	)		(3,954	)
Balance as of March 31, 2024		16,992,726	$	17	$	464,497		$	(448,180	)	$	16,334

See notes to condensed consolidated financial statements.

Talphera, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net loss	$	(2,593	)	$	(3,954	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense on liability related to sale of future payments		—			181
Net amortization of discount on short-term investments		—			(72	)
Stock-based compensation		196			302
(Gain) loss on change in fair value of warrant liability		(181	)		1,002
Changes in operating assets and liabilities:
Accounts receivable		(27	)		—
Prepaid expenses and other assets		(207	)		826
Accounts payable		(345	)		(62	)
Accrued liabilities		(313	)		(1,106	)
Net cash used in operating activities		(3,470	)		(2,883	)
Cash flows from investing activities:
Purchase of investments		—			(4,230	)
Proceeds from maturities of investments		—			1,500
Net cash used in investing activities		—			(2,730	)
Cash flows from financing activities:
Gross proceeds from sale of future payments		—			6,654
Issuance costs related to sale of future payments		—			(521	)
Net proceeds from issuance of prefunded warrants in January 2024 private placement offering		—			5,884
Net proceeds from issuance of common stock through equity plans		(5	)		(3	)
Net cash (used in) provided by financing activities		(5	)		12,014
Net change in cash and cash equivalents		(3,475	)		6,401
Cash and cash equivalents—Beginning of period		8,863			5,721
Cash and cash equivalents—End of period	$	5,388		$	12,122

See notes to condensed consolidated financial statements.

Talphera, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except where otherwise noted)

1. Organization and Summary of Significant Accounting Policies

The Company

Talphera, Inc., or the Company, or Talphera, was incorporated in Delaware on July 13, 2005 as SuRx, Inc. The Company subsequently changed its name to AcelRx Pharmaceuticals, Inc. and, on January 9, 2024 to Talphera, Inc. The Company’s operations are based in San Mateo, California.

Talphera is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for use in medically supervised settings. The Company’s product development portfolio features Niyad™ (a regional anticoagulant for the dialysis circuit), LTX-608 (a nafamostat formulation for direct IV infusion) that the Company intends to develop for one or more of the following indications: disseminated intravascular coagulation, or DIC, acute respiratory distress syndrome, or ARDS, acute pancreatitis, or as an anti-viral treatment.

On January 7, 2022, the Company acquired Lowell Therapeutics, Inc., or Lowell, a privately held company (see Note 4, “Asset Acquisition” to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K for additional information) and, as a result acquired the Niyad™developmental product, a regional anticoagulant for the dialysis circuit during continuous renal replacement therapy for acute kidney injury patients in the hospital, that the Company is studying under an investigational device exemption, or IDE, and which has received Breakthrough Device Designation status from the FDA. While not approved for commercial use in the United States, the active drug component of Niyad, nafamostat, has been approved in Japan and South Korea as a regional anticoagulant for the dialysis circuit, disseminated intravascular coagulation, and acute pancreatitis. Niyad is a lyophilized formulation of nafamostat, a broad-spectrum, synthetic serine protease inhibitor, with anticoagulant, anti-inflammatory, and potential anti-viral activities. The second intended indication for Niyad is as a regional anticoagulant for the dialysis circuit for chronic kidney disease patients undergoing intermittent hemodialysis in dialysis centers. In addition, the Company acquired LTX-608, a nafamostat formulation for direct IV infusion, that it intends to develop for the treatment of one or more of the following indications: ARDS, DIC, acute pancreatitis or as an anti-viral agent.

Liquidity and Going Concern

The condensed consolidated financial statements for the three months ended March 31, 2025 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. The Company has incurred recurring operating losses and negative cash flows from operating activities since inception and expects to continue to incur operating losses and negative cash flows in the future. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Considering the Company’s current cash resources and its current and expected levels of operating expenses for the next twelve months, management expects to need additional capital to fund its planned operations prior to the 12-month anniversary of the date this Quarterly Report on Form 10-Q is filed with the United States Securities and Exchange Commission, or the SEC.

Management may seek to raise such additional capital through public or private equity offerings, debt securities, a new debt facility, monetizing or securitizing certain assets, entering into product development, license or distribution agreements with third parties, or divesting any of the Company’s remaining product candidates. While management believes its plans to raise additional funds will alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not entirely within the Company’s control and cannot be assessed as being probable of occurring.

Additional funds may not be available when the Company needs them on terms that are acceptable to the Company, or at all. If adequate funds are not available, the Company may be required to further reduce its workforce, delay the ongoing clinical trial for Niyad, or delay the development of its regulatory filing plans for its product candidates in advance of the date on which the Company’s cash resources are exhausted to ensure that the Company has sufficient capital to meet its obligations and continue on a path designed to preserve stockholder value. In addition, if additional funds are raised through collaborations, strategic alliances or licensing arrangements with third parties, the Company may have to relinquish rights to its technologies, future revenue streams or product candidates, or to grant licenses on terms that may not be favorable to the Company.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, or GAAP, and with the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, related to quarterly reports on Form 10-Q, and accordingly, they do not include all the information and disclosures required by GAAP for annual financial statements. These condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on March 31, 2025. The unaudited financial information for the interim periods presented herein reflects all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of its financial position and the condensed consolidated results of operations for the periods presented. Results of operations for interim periods covered by this Quarterly Report on Form 10-Q may not necessarily be indicative of results of operations for the full fiscal year or any other interim period.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management believes its most significant accounting estimates relate to fair value of warrants, impairment of long-lived assets, management’s assessment of going concern, revenue recognition, liability related to the sale of future payments and accrued clinical trial liabilities. Management evaluates its estimates on an ongoing basis including critical accounting policies. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in its Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2025, from those previously disclosed in its 2024 Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid. The Company has adopted ASU 2023-09 for its period beginning January 1, 2025, and it will be applied on a prospective basis. The adoption of ASU 2023-09 will not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, or ASU 2024-03, which is intended to enhance transparency into the nature and function of expenses, primarily through additional disclosures on certain cost and expenses. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This authoritative guidance is effective for the Company beginning with its annual disclosures for 2027 and interim periods beginning in 2028. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is in the process of evaluating the impact of this new guidance on its disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the condensed consolidated financial statements.

2. Investments and Fair Value Measurement

Investments

The Company classifies its marketable securities as available for sale and records its investments at fair value. Available-for-sale securities are carried at estimated fair value based on quoted market prices or observable market inputs of almost identical assets, with the unrealized holding gains and losses included in accumulated other comprehensive income (loss).

As of March 31, 2025, and December 31, 2024, the contractual maturity of all investments held was less than one year.

The tables below summarize the Company’s cash and cash equivalents (in thousands):

	As of March 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	725	$	—	$	—	$	725
Money market funds		1,755		—		—		1,755
U.S. government agency securities		2,908		—		—		2,908
Total cash and cash equivalents	$	5,388	$	—	$	—	$	5,388

	As of December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	364	$	—	$	—	$	364
Money market funds		2,632		—		—		2,632
U.S. government agency securities		5,867		—		—		5,867
Total cash and cash equivalents	$	8,863	$	—	$	—	$	8,863

At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic conditions. There were no material realized or unrealized gains or losses on marketable securities for the three months ended March 31, 2025 or the twelve months ended December 31, 2024. As such, the Company did not record a credit allowance for the three months ended March 31, 2025 or the year ended December 31, 2024.

Fair Value Measurement

The Company’s financial instruments consist of Level I and II assets. Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. For Level II instruments, the Company estimates fair value by utilizing third-party pricing services in developing fair value measurements where fair value is based on valuation methodologies such as models using observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data. Such Level II instruments typically include U.S. Treasury, U.S. government agency securities and commercial paper. As of March 31, 2025 and December 31, 2024, the Company held, in addition to Level II assets, a warrant liability related to the December 2022 Common Stock Warrants. The fair value of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years; equity volatility; and risk-free interest rate. The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The estimated fair value of the warrant liability represents a Level III measurement. Changes to the estimated fair value of these liabilities are recorded in change in fair value of warrant liability in the condensed consolidated statements of operations.

The following tables set forth the fair value of the Company’s financial assets by level within the fair value hierarchy (in thousands):

	As of March 31, 2025
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	1,755	$	1,755	$	—	$	—
U.S. government agency securities		2,908		—		2,908		—
Total assets measured at fair value	$	4,663	$	1,755	$	2,908	$	—
Liabilities
Warrant liability	$	880	$	—	$	—	$	880
Total liabilities measured at fair value	$	880	$	—	$	—	$	880

	As of December 31, 2024
	Fair Value		Level I		Level II		Level III
Assets
Money market funds	$	2,632	$	2,632	$	—	$	—
U.S. government agency securities		5,867		—		5,867		—
Total assets measured at fair value	$	8,499	$	2,632	$	5,867	$	—
Liabilities
Warrant liability	$	1,061	$	—	$	—	$	1,061
Total liabilities measured at fair value	$	1,061	$	—	$	—	$	1,061

The following tables set forth a summary of the changes in the fair value of the Company’s Level III warrant liability for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31, 2025			Three Months Ended March 31, 2024
Fair value—beginning of period	$	1,061		$	1,778
Gain (loss) on change in fair value of December 2022 Common Stock Warrants liability		(181	)		1,002
Fair value—end of period	$	880		$	2,780

The common warrants issued in December 2022 to purchase an aggregate of 4,227,052 shares of common stock, or the December 2022 Common Stock Warrants, were accounted for by the Company as a liability. At March 31, 2025, the December 2022 Common Stock Warrants were valued at approximately $0.9 million, using the Black-Scholes option pricing model as follows: exercise price of $2.07 per share, stock price of $0.495 per share, expected life of 3.75 years, volatility of 98.15%, a risk-free rate of 3.93% and 0% expected dividend yield.

There were no transfers between Level I, Level II or Level III of the fair value hierarchy during the three months ended March 31, 2025, and the year ended December 31, 2024.

3. Discontinued Operations

On March 12, 2023, the Company entered into the Asset Purchase Agreement with Alora Pharmaceuticals, LLC, or Alora, for Alora’s acquisition of all assets related to DSUVIA, including inventories, equipment and intellectual property in exchange for consideration at closing of $1.1 million, a 15% payment on commercial sales of DSUVIA, 75% payment on sales of DSUVIA to the Department of Defense and up to $116.5 million in sales-based milestones, or the DSUVIA Agreement. The transaction closed on April 3, 2023 (see Note 3, “Discontinued Operations” to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K for additional information).

The following table presents the results of the discontinued operations for the three-month period ended March 31, 2025 and March 31, 2024 (in thousands):

	Three months ended
	March 31,
	2025		2024
Change in estimated net liabilities of discontinued operations	$	73	$	—
Net income from discontinued operations	$	73	$	—

The following table summarizes the carrying amounts of major classes of liabilities of discontinued operations for each of the periods presented (in thousands).

	March 31, 2025			December 31, 2024
Accrued liabilities	$	650		$	723
Total current liabilities of discontinued operations		650			723
Net liabilities of discontinued operations	$	(650	)	$	(723	)

4. Sale of Future Payments

On January 12, 2024, the Company and XOMA (US) LLC, or XOMA, entered into a Payment Interest Purchase Agreement, or the Purchase Agreement, for the sale by the Company to XOMA, in exchange for $8.0 million, of the Company’s right, title and interest in and to certain amounts payable to the Company, or collectively the Purchased Receivables, pursuant to the DSUVIA Agreement. See Note 7, “Sale of Future Payments” and Note 3, “Discontinued Operations” to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K for additional information on the Purchase Agreement and DSUVIA Agreement, respectively.

The allocation of the consideration for the Purchase Agreement resulted in proceeds of $1.4 million reduced by $0.2 million of transaction costs being allocated to the sale of all future interest in payments related to commercial sales of DSUVIA representing its fair value. As a result of the Company’s loss of control, no further continuing involvement in, or rights to future payments related to commercial sales of DSUVIA, the Company recognized other income of $1.2 million in January 2024.

The Company evaluated the terms of the Purchase Agreement and concluded that the features of the Purchased Receivables are similar to those of a debt instrument. Accordingly, the Company recorded the allocated proceeds of approximately $6.6 million reduced by approximately $0.5 million of transaction costs, as a liability. The Company accounts for the value of the debt at amortized cost. The amounts received by the Company will be accreted to the total estimated amount of the payments necessary to extinguish the Company’s obligation under the Purchase Agreement, which will be recognized as interest expense. The carrying value of the debt will decrease for payments made to XOMA.

In October 2024, Alora Pharmaceuticals, LLC, or Alora, notified the Company that they are discontinuing their DSUVIA sales efforts to non-DoD customers. At this time, the Company is uncertain as to the impact of this decision on sales of DSUVIA to the DoD. As a result, the Company estimates that future payments under the Purchase Agreement will be less than the proceeds from the sale of such future payments. Accordingly, the Company will not recognize any related non-cash interest expense. When the expected payments under the sale of future payments are lower than the gross proceeds of $6.6 million received, the Company defers recognition of any probable contingent gain until the Company has met its obligations under the liability related to the sale of future payments. For the three months ended March 31, 2025, and 2024, the estimated effective interest rate under the agreement was approximately 0% and 13.3%, respectively.

The Company did not recognize any non-cash revenue or non-cash interest expense for the three months ended March 31, 2025, and did not recognize any non-cash payment interest revenue and recognized non-cash interest expense of approximately $0.2 million during the three months ended March 31, 2024. The interest and amortization of issuance costs are reflected as non-cash interest expense for the sale of future payments in the condensed consolidated statements of operations.

5. Commitments and Contingencies

Litigation

On June 8, 2021, a securities class action complaint was filed in the U.S. District Court for the Northern District of California against the Company and two of its officers. The plaintiff is a purported stockholder of the Company. The complaint alleged that defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by making false and misleading statements and omissions of material fact about the Company’s disclosure controls and procedures with respect to its marketing of DSUVIA. The complaint sought unspecified damages, interest, attorneys’ fees, and other costs. On December 16, 2021, the Court appointed co-lead plaintiffs. Plaintiffs’ amended complaint was filed on March 7, 2022. The amended complaint named the Company and three of its officers and continued to allege that defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by making false and misleading statements and omissions of material fact about the Company’s disclosure controls and procedures with respect to its marketing of DSUVIA. The amended complaint also asserted a violation of Section 20A of the Exchange Act against the individual defendants for alleged insider trading. The amended complaint sought unspecified damages, interest, attorneys’ fees, and other costs. The Court granted three motions to dismiss plaintiffs’ complaint: the first on September 28, 2022, the second on November 28, 2022, and the third, with prejudice on May 7, 2024. Judgment was entered for defendants on plaintiffs’ claims on May 7, 2024. On June 5, 2024, plaintiffs filed a notice of appeal in the United States Court of Appeals for the Ninth Circuit. Briefing on the appeal was complete on January 21, 2025. Oral argument for the appeal is set for June 12, 2025.

On July 6, 2021, a purported shareholder derivative complaint was filed in the U.S. District Court for the Northern District of California. The complaint names ten of the Company’s officers and directors and asserts state and federal claims based on the same alleged misstatements as the securities class action complaint. On September 30, 2021, October 26, 2021, and November 17, 2021, three additional purported shareholder derivative complaints were filed in the U.S. District Court for the Northern District of California. The complaints name nine of the Company’s officers and directors and also assert state and federal claims based on the same alleged misstatements as the securities class action complaint. All four complaints seek unspecified damages, attorneys’ fees, and other costs. On December 6, 2021, the Court entered an order consolidating all four actions and staying the consolidated action pending the outcome of any motion to dismiss the securities class action.

On February 16, 2024, another purported shareholder derivative complaint was filed in the Court of Chancery of the State of Delaware, asserting the same claims as those in the previously filed derivative actions. The case has been stayed pending the outcome of any motion to dismiss the securities class action.

Please see “Part II., Item 1A. Risk Factors—Risks of a General Nature—Litigation may substantially increase our costs and harm our business.”

The Company believes that these lawsuits are without merit and intends to vigorously defend against them. Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from these actions. It is reasonably possible that this estimate may change in the near term. An adverse outcome regarding these matters could materially adversely affect the Company’s financial condition, results of operations, and cash flows.

6. Stock-Based Compensation

The Company recorded total stock-based compensation expense for stock options, restricted stock units, or RSUs, and the Amended and Restated 2011 Employee Stock Purchase Plan, or the Amended ESPP, as follows (in thousands):

	March 31, 2025		March 31, 2024
Research and development	$	77	$	107
Selling, general and administrative		119		195
Total	$	196	$	302

The following table summarizes restricted stock unit activity under the Company’s equity incentive plans:

				Weighted
	Number of			Average
	Restricted			Grant Date
	Stock Units			Fair Value
Restricted stock units outstanding, January 1, 2025		212,923		$	1.59
Granted		—			—
Vested		(69,897	)		2.59
Forfeited		—			—
Restricted stock units outstanding, March 31, 2025		143,026		$	1.10

Upon vesting, certain of the Company’s RSUs may be settled on a net-exercise basis to cover any required withholding tax with the remaining amount converted into an equivalent number of shares of common stock. There were 27,374 shares of common stock underlying vested RSUs that were withheld during the quarter ended March 31, 2025, based on the value of the RSUs as determined by the Company’s closing stock price on the applicable vesting date.

The following table summarizes stock option activity under the Company’s equity incentive plans:

	Number of Stock Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
								(in thousands)
January 1, 2025		1,786,900		$	12.48
Granted		—			—
Forfeited		—			—
Expired		(8,000	)		37.70
Exercised		—			—
March 31, 2025		1,778,900		$	12.37		7.4	$	—
Vested and exercisable options— March 31, 2025