Outlook Therapeutics(OTLK) - 2026 Q1 - Quarterly Report

Product Launch and Market Overview - The company launched LYTENAVA (bevacizumab gamma) in Germany and the UK in June 2025, with plans for further expansion into other EU countries and potential U.S. approval [105]. - The total anti-VEGF retina market in Europe is estimated at approximately $3.6 billion, with around 1.52 million treated patients and 8.3 million total anti-VEGF units [106]. - The U.S. anti-VEGF retina market is estimated at $8.5 billion, with 55% of physicians preferring off-label repackaged bevacizumab as the first-line product [107]. - The global market for anti-VEGF retina is estimated to be approximately $16 billion [108]. - The company recognizes revenue from sales of LYTENAVA, which became available for commercial sale in the UK and Germany in June 2025 [121]. Financial Performance - The company reported a net loss of $23.1 million for the three months ended December 31, 2025, compared to a net income of $17.4 million for the same period in 2024 [115]. - For the three months ended December 31, 2025, the company reported net revenue of negative $1.2 million, primarily due to a $1.1 million increase in the returns reserve related to estimated product returns from the UK distributor [144]. - The company incurred a loss from operations of $13.5 million for the three months ended December 31, 2025, an improvement of $8.1 million compared to the loss of $21.6 million in the same period of 2024 [143]. - The company has not generated significant revenue from product sales and continues to incur net losses and negative cash flows from operations [152]. - As of December 31, 2025, the company reported a net cash used in operating activities of $14.9 million, primarily due to a net loss of $23.1 million [168]. Expenses and Cost Management - Research and development expenses for the three months ended December 31, 2025 totaled $3.6 million, a decrease of $6.0 million compared to the same period in 2024, mainly due to reduced expenses for the ONS-5010/LYTENAVA development [146][147]. - Selling, general and administrative expenses for the three months ended December 31, 2025 were $8.6 million, down $3.3 million from the prior year, attributed to decreased compensation and professional fees, partially offset by increased launch expenses for LYTENAVA in Europe [148]. - The total research and development expenses for the three months ended December 31, 2025 included $2.6 million specifically for ONS-5010/LYTENAVA development [146]. Going Concern and Financial Obligations - There is substantial doubt about the company's ability to continue as a going concern, as existing cash and cash equivalents are insufficient to fund operations for the next year [120]. - As of December 31, 2025, the company did not meet the required $3.0 million Quarterly Debt Reduction Obligation, resulting in a Major Trigger Event [116]. - A Major Trigger Event occurred due to the failure to meet a $3.0 million Quarterly Debt Reduction Obligation, resulting in a 10% increase to the outstanding balance of the March 2025 Note [160]. - The company plans to finance future operations through a combination of licensing arrangements, debt issuance, and equity sales, but faces potential dilution of ownership for existing shareholders [166]. Future Outlook and Strategic Plans - The company anticipates ongoing increases in general and administrative expenses as it expands its commercial presence and prepares for potential launches in additional territories [130]. - The company anticipates incurring additional losses until significant sales of ONS-5010/LYTENAVA or any other product candidates are generated, necessitating additional financing for future operations [153]. - The company plans to work with the FDA to discern a regulatory pathway for ONS-5010 and prepare for its potential launch, while expecting to incur net losses and negative cash flow from operations for the foreseeable future [163]. Stock and Financing Activities - The company sold 5,000,000 shares of common stock under the ATM Agreement, generating $2.4 million in net proceeds [118]. - The company generated approximately $14.9 million in net proceeds from the sale of 10,227,166 shares of common stock under the ATM Offering during the three months ended December 31, 2025 [156]. - The March 2025 Note issued for $33.1 million is convertible into common stock and bears interest at the prime rate plus 3%, with a minimum interest rate of 9.5% [173]. - The Conversion Price for the March 2025 Note is set at $2.26 per share prior to a Major Trigger Event, with adjustments for stock splits and combinations [179]. - Following the Major Trigger Event, the outstanding balance of the March 2025 Note automatically increased by 10% effective January 1, 2026 [181]. - The adjusted Conversion Price after the Major Trigger Event is the lesser of $2.26 or 90% of the lowest closing bid price over the three trading days preceding the conversion notice, with a floor price of $0.404 [181]. Accounting and Reporting - The Critical Accounting Policies and Significant Judgments and Estimates have not materially changed from the previous fiscal year ended September 30, 2025 [182]. - As a "Smaller Reporting Company," the company is not required to disclose certain market risk information [183].