CTXR 10-Q
Citius Pharmaceuticals, Inc. (CTXR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
OR
For the transition period from ______________ to ______________
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
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.
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).
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 | ☐ |
| ☒ | 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 Rule 12b-2 of the Exchange Act). Yes ☐
No
As of August 13, 2026, there were
Citius Pharmaceuticals, Inc.
FORM 10-Q
TABLE OF CONTENTS
June 30, 2026
i
EXPLANATORY NOTE
In this Quarterly Report on Form 10-Q, and unless the context otherwise requires, the “Company,” “Citius Pharma,” “we,” “us,” and “our” refer to Citius Pharmaceuticals, Inc. and its wholly-owned subsidiary Leonard-Meron Biosciences, Inc., and its majority-owned subsidiaries, Citius Oncology, Inc. (Nasdaq: CTOR) (“Citius Oncology”) and NoveCite, Inc., taken as a whole.
Mino-Lok® is our registered trademark and LYMPHIR® (denileukin diftitox) is a registered trademark of Citius Oncology. All other trade names, trademarks and service marks appearing in this quarterly report are the property of their respective owners. We have assumed that the reader understands that all such terms are source-indicating. Accordingly, such terms, when first mentioned in this report, appear with the trade name, trademark or service mark notice and then throughout the remainder of this report without trade name, trademark or service mark notices for convenience only and should not be construed as being used in a descriptive or generic sense.
ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this Report and in other documents which we file with the Securities and Exchange Commission (the “SEC”). In addition, such statements could be affected by risks and uncertainties related to:
| ● | our independent registered public accounting firm’s report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern; | |
| ● | our need for substantial additional funds and our ability to raise those funds; | |
| ● | our ongoing evaluation of strategic alternatives; | |
| ● | the ability of Citius Oncology to commercialize LYMPHIR, including covering the costs of licensing payments, product manufacturing and other third-party goods and services; | |
| ● | our ability to regain compliance with the continued listing requirements of the Nasdaq Stock Market LLC (“Nasdaq”); | |
| ● | our ability to recognize the anticipated benefits of the August 2024 reverse merger whereby Citius Oncology became a standalone publicly-traded company and our majority-owned subsidiary (the “Merger”), which may not be realized fully, if at all, or may take longer to realize than expected; | |
| ● | our ability to obtain regulatory approval for and successfully commercialize Mino-Lok; | |
| ● | the cost, timing, and results of our pre-clinical and clinical trials for our other product candidates; | |
| ● | our ability to apply for, obtain and maintain required regulatory approvals for our other product candidates; | |
| ● | the estimated markets for LYMPHIR, Mino-Lok or any of our future product candidates and the acceptance thereof by any market; | |
| ● | our ability to obtain, perform under and maintain financing and strategic agreements and relationships; | |
| ● | the commercial feasibility and success of our technology and our product candidates; | |
| ● | our ability to recruit and retain qualified management and technical personnel to carry out our operations; and | |
| ● | the other factors discussed in the “Risk Factors” section of our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended on January 28, 2026. |
Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this Report.
iii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | September 30, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowances | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Deposits | ||||||||
| In-process research and development, net of accumulated amortization | ||||||||
| Goodwill | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| License payable | ||||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Note payable | ||||||||
| Operating lease liability | ||||||||
| Total Current Liabilities | ||||||||
| Deferred tax liability | ||||||||
| Notes payable, net of deferred financing fees | - | |||||||
| Operating lease liability – noncurrent | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock - $ | ||||||||
| Common stock - $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Citius Pharmaceuticals, Inc. Stockholders’ Equity | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
Reflects a 1-for-25 reverse stock split effective November 25, 2024.
1
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| Amortization of in-process research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Stock-based compensation – general and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Gain on sale of New Jersey net operating losses | ||||||||||||||||
| Amortization of deferred financing costs | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expense), Net | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before Income Taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ||||||||||||||||
| Net loss applicable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Share - Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic and diluted (includes pre-funded warrants) | ||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
Reflects a 1-for-25 reverse stock split effective November 25, 2024.
2
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| Preferred | Common Stock | Additional Paid-In | Accumulated | Total Citius Pharmaceuticals, Inc. Stockholders’ | Non- Controlling | Total | ||||||||||||||||||||||||||
| Stock | Shares | Amount | Capital | Deficit | Equity | Interest | Equity | |||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
| Issuance of common stock, net of costs of $ | ||||||||||||||||||||||||||||||||
| October 2025 sale of common stock and pre-funded warrants, net of costs of $ | ||||||||||||||||||||||||||||||||
| December 2025 sale of common stock and pre-funded warrants by Citius Oncology, net of costs of $ | - | |||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||||||
| Issuance of common stock warrant for note payable extension | - | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | ( | ) | |||||||||||||||||||||||||||||
| Balance, December 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||
| Proceeds from exercise of Citius Oncology pre-funded warrants | - | |||||||||||||||||||||||||||||||
| December 2025 offering costs | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | ( | ) | - | ||||||||||||||||||||||||||||
| Balance March 31, 2026 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock and pre-funded warrants in April 2026 registered direct offering, net of costs of $ | ||||||||||||||||||||||||||||||||
| Proceeds from exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||||||||||
| Citius Oncology net proceeds from exercise of warrants, net of costs of $ | - | |||||||||||||||||||||||||||||||
| Citius Oncology warrants issued for loan agreement | - | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | ( | ) | |||||||||||||||||||||||||||||
| Balance June 30, 2026 | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
| Sale of common stock, net of costs of $ | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | ( | ) | |||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock, net of costs | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | ( | ) | |||||||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock, net of costs of $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock and pre-funded warrants in April 2025 registered direct offering, net of costs of $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock and pre-funded warrants in June 2025 registered direct offering, net of costs of $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||||||||||
| Sale of Series A preferred stock | - | |||||||||||||||||||||||||||||||
| Redemption of Series A preferred stock | ( | ) | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | ( | ) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
Reflects a 1-for-25 reverse stock split effective November 25, 2024.
3
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Issuance of common stock for services | ||||||||
| Issuance of common stock warrant | ||||||||
| Amortization of in-process research and development | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Amortization of deferred financing costs | ||||||||
| Deferred income tax expense (benefit) | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net of allowances | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| License fee payments | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from (repayment of) note payable and advance from employee | ( | ) | ||||||
| Repayment of advance from employee | ( | ) | ||||||
| Net proceeds from loan agreement | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Deferred Financing Costs | ( | ) | ||||||
| Proceeds from sale of Series A preferred stock | ||||||||
| Redemption of Series A preferred stock | ( | ) | ||||||
| Net proceeds from common stock offerings | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net Change in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents - Beginning of Period | ||||||||
| Cash and Cash Equivalents - End of Period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information and Non-cash Transactions: | ||||||||
| Interest paid | $ | $ | ||||||
| Operating lease right-of-use asset and liability recorded | $ | $ | ||||||
| Warrants issued for loan agreement included in deferred financing costs | $ | $ | ||||||
| Deferred financing costs included in accrued expenses | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
4
CITIUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Citius Pharmaceuticals, Inc. (“Citius Pharma,” and together with its subsidiaries, the “Company”, “we” or “us”) is a late-stage biopharmaceutical company dedicated to the development and commercialization of first-in-class critical care products with a focus on oncology, anti-infectives in adjunct cancer care, unique prescription products and stem cell therapies.
On March 30, 2016, Citius Pharma acquired Leonard-Meron
Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary. We acquired all the outstanding stock of LMB by issuing shares of
our common stock. The net assets acquired included identifiable intangible assets of $
On September 11, 2020, we formed NoveCite, Inc.
(“NoveCite”), a Delaware corporation, of which we own
On August 23, 2021, we formed Citius Oncology,
Inc. (“Citius Oncology”), as a wholly-owned subsidiary in conjunction with the acquisition of LYMPHIR, which began operations
in April 2022. On August 12, 2024, Citius Pharma and Citius Oncology entered into a merger agreement with TenX Keane Acquisition, and
its wholly owned subsidiary, TenX Merger Sub Inc (“Merger Sub”), whereby Merger Sub merged with and into Citius Oncology.
After the merger and recapitalization (the “Merger”), the newly combined publicly traded company was owned
Since our inception, we have devoted substantially all our efforts to business planning, research and development, recruiting management and technical staff, and raising capital. We are subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, the Company’s ability to obtain additional financing, risks related to the development by the Company or its competitors of research and development stage products, regulatory approval and market acceptance of its products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners and the Company’s compliance with governmental and other regulations.
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Preparation - The accompanying
unaudited condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., its wholly-owned subsidiary
LMB and its majority-owned subsidiaries NoveCite and Citius Oncology. On August 12, 2024, Citius Oncology, previously a wholly-owned subsidiary,
became a majority-owned subsidiary. As of June 30, 2026, Citius Oncology was approximately a
The operations of NoveCite and Citius Oncology are included in the consolidated results. The portion of equity that is not attributable to the Company is presented as a non-controlling interest within stockholders’ equity. Unless excluded by shareholder agreements, the portion of net loss attributable to non-controlling interests is included in the statement of operations. All significant inter-company balances and transactions have been eliminated in consolidation.
5
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of June 30, 2026, and the results of its operations and cash flows for the three and nine months ended June 30, 2026 and 2025. The operating results for the three and nine months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026. These unaudited condensed consolidated financial statements 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 September 30, 2025 filed with the Securities and Exchange Commission (“SEC”) on December 23, 2025, as amended on January 28, 2026.
Use of Estimates - The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for revenue recognition, in-process research and development, stock-based compensation, net realizable value of inventory and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share - Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants, were not included in the calculation of the diluted loss per share because they were anti-dilutive, with pre-funded warrants being included in the loss per share.
Recently Issued Accounting Standards
Other than as disclosed in our Form 10-K, we are not aware of any other recently issued accounting standards not yet adopted that may have a material impact on our financial statements.
2. GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLAN
The accompanying unaudited consolidated financial
statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. We incurred a net loss of $
On April 24, 2026, Citius Pharma closed a
registered direct equity offering for net proceeds of approximately $
On May 5, 2026, Citius Oncology received net proceeds
of approximately $
Citius Oncology entered into a term loan agreement
with two lenders for up to $
The Company estimates that its and Citius Oncology’s collective available cash resources will be sufficient to fund our operations through November 2026. We will need to raise additional capital in the future to support our operations beyond November 2026, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.
6
The Company is currently engaged in capital raising initiatives, as well as separate capital raising initiatives through its subsidiary Citius Oncology, in an effort to extend its cash runway. Citius Oncology has retained Jefferies LLC as its exclusive financial advisor in evaluating strategic alternatives aimed at maximizing shareholder value.
The Company has generated limited operating revenue, which commenced in December 2025, and has principally raised capital through the issuance of debt and equity instruments to finance its operations. However, the Company’s continued operations beyond November 2026, including its development plans for Mino-Lok, Halo-Lido and NoveCite, will depend on its ability to obtain regulatory approval for Mino-Lok and generate substantial revenue from the sale of LYMPHIR and on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. However, the Company can provide no assurances on regulatory approval, commercialization, or future sales of LYMPHIR or that financing or strategic relationships will be available on acceptable terms, or at all. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of LYMPHIR, there would be a material adverse effect on its business. Further, the Company expects in the future to incur additional expenses as it continues to develop its product candidates, including seeking regulatory approval, and protecting its intellectual property. The accompanying financial statements do not include any adjustments that might result from the outcome of the above uncertainty.
3. REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE
Revenue Recognition
We recognize revenue in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. In determining the appropriate amount and timing of revenue to be recognized under this guidance, we perform the following five steps: (i) identify the contract(s) with our customer; (ii) identify the promised goods or services in the agreement and determine whether they are performance obligations, including whether they are distinct in the context of the agreement; (iii) measure the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations based on stand-alone selling prices; and (v) recognize revenue when (or as) we satisfy each performance obligation. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We distribute LYMPHIR in the U.S. through third party specialty distributors who are our customers. The third-party specialty distributors subsequently resell our product to health care providers, hospitals and infusion centers. Separately, we have or may enter into payment arrangements with various third-parties including government healthcare programs who provide coverage and reimbursement for our product that have been prescribed to a patient. Through a regional distribution partner, we distribute LYMPHIR internationally as part of our Named Patient Program.
Net Revenues
We recognize net revenue from LYMPHIR sales, net of variable consideration and consideration payable to parties other than our customers consisting of estimates related to allowances for sales returns, government chargebacks, patient coupon programs, and specialty distributor fees. Revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, upon delivery based on the contractual shipping terms of a contract.
We estimate variable consideration using the expected value method, constrained to amounts for which it is probable that a significant reversal of cumulative revenue will not occur when uncertainties are resolved. Calculating certain of these items involves estimates and judgments based on sales or invoice data, contractual terms, historical or expected utilization rates, new information regarding changes in applicable regulations and guidelines that would impact the amount of the actual allowance and our expectations regarding future utilization rates and channel inventory data. We will review the adequacy of our provisions for all gross-to-net adjustments on a quarterly basis. Amounts reserved for these adjustments are made when trends or significant events indicate that adjustment is appropriate reflecting actual experience.
The Company elected the practical expedient in ASC 606-10-32-18 and does not assess whether a significant financing component exists for contracts in which payment is expected within one year. No other practical expedients were applied.
7
Gross-to-Net Adjustments
Specialty Distributor Fees
We pay fees for distribution services, such as fees for certain data that customers provide us. We expect our customers will earn these fees and accordingly deduct these fees from gross product sales and accounts receivable at the time we recognize the related revenues.
Product Returns
Customers have the right to return products if they are damaged, defective, or expired, or as it is defined in their customer agreement. We have estimated product returns based on the experience of similar products in the market, and will continue to estimate returns based on our actual returns, sales data, and inventory levels in the distribution channel. These estimates are recorded as a reduction against gross product sales at the time of the sales.
Chargebacks
Chargebacks will occur when federal agencies who we contract with, or may contract with, can purchase off the Federal Supply Schedule or when Public Health Service 340B covered entities purchase directly from our customers at discounted prices. Our customers then charge us the difference between their purchase price and the discounted price. We estimate chargebacks considering the terms of the applicable arrangement and our visibility regarding utilization. These chargebacks are recorded in the same period as the related revenue, as a reduction against gross product sales and accounts receivable.
Co-payment Assistance
We offer co-payment assistance to patients with
commercial insurance that have coverage and are allowed such co-payment assistance. We estimate the average co-payment assistance amounts
for our products based on expected customer utilization and record any such amounts as a reduction from gross product revenue at the time
of sale.
| Three Months Ended |
Nine Months Ended |
|||||||
| June 30, 2026 |
June 30, 2026 |
|||||||
| Gross Product Revenue | $ | $ | ||||||
| Gross-to-net adjustments: | ||||||||
| Net Revenue | $ | $ | ||||||
Accounts receivable, net
Accounts receivable, net is stated at amounts
invoiced less allowances for distributor fees, chargebacks, and estimated returns. At June 30, 2026, these sales allowances totaled $
8
4. INVENTORY
Inventory is stated at the lower of actual accumulated
costs or net realizable value related to the manufacturing of LYMPHIR commercial products, which became available for sale in December
2025. Cost is determined using the first-in, first-out (FIFO) method. No reserves against inventory were deemed necessary based on an
evaluation of the product expiration dating.
| June 30, 2026 | September 30, 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Total | $ | $ | ||||||
Cost of Revenue
Cost of goods sold consists of direct and indirect costs associated with manufacturing and distributing LYMPHIR. These costs include amounts paid to third-party contract manufacturing organizations for production-related services, including raw materials, drug substance, drug product manufacturing, fill-finish activities, certain testing, and packaging. Cost of goods sold also includes distribution, storage shipping, and handling fees, as well as royalties owed under the Company’s licensing arrangements.
5. PREPAID EXPENSES
Prepaid expenses include advance payments made
for the preparation of long-lead time drug substance and product costs, which will be utilized in research and development activities
or in the manufacturing of LYMPHIR for sales. Other prepaid expenses include insurance, service fees and marketing costs.
| June 30, 2026 | September 30, 2025 | |||||||
| Prepaid manufacturing | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Prepaid annual service fees | ||||||||
| Prepaid marketing costs | ||||||||
| Total | $ | $ | ||||||
6. IN-PROCESS RESEARCH AND DEVELOPMENT, NET
In process research and development consists of
a beginning carrying value for LYMPHIR of $
| Year Ending September 30, | Amount | |||
| 2026 (excluding the nine months ended June 30, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total | $ | |||
9
7. PATENT AND TECHNOLOGY LICENSE AGREEMENTS
Patent and Technology License Agreement – Mino-Lok
LMB has a patent and technology license agreement
with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive,
worldwide sub-licensable basis, as amended. LMB pays an annual maintenance fee each June until commercial sales of a product subject to
the license commence. The Company recorded an annual maintenance fee expense of $
LMB will also pay annual royalties on net sales
of licensed products, with a low double-digit royalty rate (within a range of
Unless earlier terminated by NAT, based on the failure to achieve certain development and commercial milestones, the license agreement remains in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent rights have been cancelled, withdrawn, or expressly abandoned.
License Agreement with Eterna
On October 6, 2020, our subsidiary, NoveCite,
entered into a license agreement with Novellus Therapeutics Limited (“Novellus”), whereby NoveCite acquired an exclusive,
worldwide license, with the right to sublicense, develop and commercialize a stem cell therapy based on the Novellus’s patented
technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. Upon execution of
the license agreement, we paid $
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). Pursuant to this transaction, the NoveCite license was assumed by Brooklyn with all original terms and conditions. In connection with that transaction, the stock subscription agreement was amended to assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership. In October 2022, Brooklyn changed its name to Eterna Therapeutics Inc. (“Eterna”).
We are responsible for the operational activities of NoveCite and bear all costs necessary to operate NoveCite. Our officers are also the officers of NoveCite and oversee the business strategy and operations of NoveCite. As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.
Eterna has no contractual rights in the profits or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.
10
Under the license agreement, NoveCite is obligated
to pay Eterna up to an aggregate of $
Under the terms of the license agreement, in the
event that Eterna receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit to
NoveCite
The term of the license agreement continues on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term. Either party may terminate the license agreement upon written notice if the other party is in material default. NoveCite may terminate the license agreement at any time without cause upon 90 days prior written notice.
Eterna will be responsible for preparing, filing, prosecuting, and maintaining all patent applications and patents included in the licensed patents in the territory, provided however, that if Eterna decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s sole cost and expense.
License Agreement with Eisai
In September 2021, we entered into an asset purchase agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr. Reddy’s”) and a license agreement with Eisai Co., Ltd. (“Eisai”) to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. We renamed E7777 as I/ONTAK and also obtained the trade name of LYMPHIRTM for the product. We assigned these agreements to Citius Oncology effective April 1, 2022 and we received a Biologics License Application (“BLA”) approval from the FDA for LYMPHIR in August 2024.
Under the terms of these agreements, we acquired
Dr. Reddy’s exclusive license of E7777 from Eisai and other related assets owned by Dr. Reddy’s (which are now owned by Citius
Oncology). The exclusive license include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of
Asia. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia,
Thailand, Malaysia, Brunei, Singapore, India, Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh,
Bhutan, Nepal, Mongolia, and Papua New Guinea. We paid Dr. Reddy’s a $
11
At the time of the FDA approval for LYMPHIR, a
$
Under the license agreement, Eisai was due a $
On March 28, 2025, Citius Oncology and Eisai entered
into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain
unpaid invoices. We agreed to pay Eisai $
The term of the license agreement will continue
until the 10-year anniversary of the first commercial sale on a country-by-country basis. The first commercial sale in the United States
occurred in December 2025. The term of the license may be extended for additional 10-year periods for all countries in the territory by
notifying Eisai and paying an extension fee equal to $
Under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction; though approved in August 2024, Dr. Reddy’s waived the six-month requirement and the launch of LYMPHIR in December 2025 satisfied this requirement in the U.S.
As part of the definitive agreement with Dr. Reddy’s, Citius Pharma acquired method of use patents in which LYMPHIR is administered in combination with the programmed cell death protein 1 (“PD-1”) pathway inhibitor drug class. PD-1 plays a vital role in inhibiting immune responses and promoting self-tolerance through modulating the activity of T-cells, activating apoptosis of antigen-specific T cells and inhibiting apoptosis of regulatory T cells.
The following patents were acquired and subsequently transferred to us:
| ● | US Provisional Application No. 63/070,645, which was filed on August 26, 2020, and subsequently published as US 2022/0062390 A1 on March 3, 2022, entitled Methods of Treating Cancer. |
| ● | International Patent Application Number: PCT/IB2021/0576733, which was filed with the World Intellectual Property Organization on August 23, 2021, and subsequently published as WO 2022/043863 A1 on March 3, 2022, entitled, Combination for Use in Methods of Treating Cancer. |
12
8. DEBT AGREEMENTS
Note Payable
On June 2, 2025, the Company borrowed $
On December 2, 2025, we extended the due date
to January 2, 2026 and the note was paid in full on January 5, 2026. As consideration for the extension, we issued a five-year warrant
to purchase
Interest expense on the note payable was $
Term Loan Agreement
| June 30, 2026 | ||||
| Notes payable principal balance | $ | |||
| Deferred financing costs, net of accumulated amortization | ( | ) | ||
| Notes payable, net of deferred financing costs | $ | |||
On May 5, 2026, Citius Oncology entered into a
term loan agreement with two lenders for up to $
The loans bear interest at the greater of the
prime rate plus
Citius Oncology issued five-year warrants to the
lenders to purchase
The lenders have the right, while any loan is
outstanding, to convert up to $
In addition, Citius Oncology granted the lenders
the right to invest up to $
In connection with the loan agreement, Citius
Oncology incurred deferred financing costs totaling $
13
9. STOCKHOLDERS’ EQUITY
Authorized Common Stock and Reverse Stock Split
The Company filed a Certificate of Change with
the Secretary of State of the State of Nevada to (i) effect a
Series A Preferred Stock and Authorized Common Stock
On April 17, 2025, the Company entered into an
agreement with Leonard Mazur (Chairman and Chief Executive Officer of the Company), pursuant to which the Company sold
On April 17, 2025, the Company filed a certificate
of designation with the Nevada Secretary of State, designating the powers, rights, privileges and restrictions of the Series A Preferred
Stock. The certificate provides that each share of Series A Preferred Stock had
Pursuant to its terms, on June 9, 2025, the outstanding
share of Series A Preferred Stock was redeemed automatically for $
Common Stock Issued for Services
On July 1, 2025, we issued
On October 2, 2025, we issued
14
Common Stock Offerings
November 2024 Offering
On November 15, 2024, Citius Pharma sold
We paid the placement agent a fee of
January 2025 Offering
On January 7, 2025, Citius Pharma sold
We paid the placement agent a fee of
April 2025 Offering
On April 1, 2025, Citius Pharma sold
We paid the placement agent a fee of
June 2025 Offering
On June 11, 2025, Citius Pharma sold
We paid the placement agent a fee of
15
July 2025 Citius Oncology Offering
On July 17, 2025, Citius Oncology sold
Citius Oncology paid the placement agent a fee
of
September 2025 Citius Oncology Offering
On September 10, 2025, Citius Oncology sold
Citius Oncology paid the placement agent a fee
of
October 2025 Offering
On October 21, 2025, Citius Pharma sold
We paid the placement agent a fee of
16
December 2025 Citius Oncology Offering
On December 10, 2025, Citius Oncology sold
Citius Oncology paid the placement agent a fee
of
April 2026 Registered Direct Offering
On April 24, 2026, Citius Pharma closed a
registered direct offering for the sale of
We paid the placement agent a fee of
May 2026 Warrant Inducement Transaction
On May 5, 2026, Citius Oncology entered into an
agreement with the holder of certain existing warrants to purchase
As an inducement to the holder for exercising
the
Citius Oncology paid the placement agent a fee
of
17
Citius Pharma At the Market Offering Agreement
On August 12, 2024, we entered into a sales agreement to sell from time to time during the term of the agreement shares of our common stock.
During the three months ended March 31, 2025,
we sold
During the three months ended June 30, 2025, we
sold
During the three months ended September 30, 2025,
we sold
During the three months ended December 31, 2025,
we sold
Citius Pharma Stock Option Plans
Under our 2014 Stock Plan, we reserved
Under our 2018 Stock Plan, we reserved
Under our 2020 Stock Plan, we reserved
Under our 2021 Stock Plan, we reserved
Under our 2023 Stock Plan, we reserved
The fair value of each stock option award is estimated
on the date of grant using the Black-Scholes option pricing model. Volatility is estimated using the trading activity of our common stock.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term
assumption. The expected term of stock options granted, all of which qualify as “plain vanilla,” is based on the average of
the contractual term (generally
A summary of option activity under our stock option plans (excluding the NoveCite and Citius Oncology Stock Plans) is presented below:
| Option Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||
| Outstanding at September 30, 2025 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Exercised | ||||||||||||||
| Forfeited or expired | ( | ) | ||||||||||||
| Outstanding at June 30, 2026 | $ | $ | ||||||||||||
| Exercisable at June 30, 2026 | $ | $ | ||||||||||||
At June 30, 2026, unrecognized total compensation
cost related to unvested awards under the Citius Pharma stock plans of $
18
NoveCite Stock Plan - Under the
NoveCite 2020 Stock Plan, we reserved
As of June 30, 2026, NoveCite has options outstanding
to purchase
Citius Oncology Stock Plan - Under
the Citius Oncology 2023 Omnibus Stock Incentive Plan, we reserved
The fair value of each stock option award is estimated
on the date of grant using the Black-Scholes option pricing model. Volatility is estimated using the trading activity of Citius Pharma
common stock, until such time as Citius Oncology has sufficient history. The risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted to employees
and directors, all of which qualify as “plain vanilla,” is based on the average of the contractual term (generally
A summary of option activity under the Citius Oncology stock plans is presented below:
| Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||
| Outstanding at September 30, 2025 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Forfeited | ||||||||||||||
| Outstanding at June 30, 2026 | $ | $ | ||||||||||||
| Exercisable at June 30, 2026 | $ | $ | ||||||||||||
At June 30, 2026, unrecognized total compensation
cost related to unvested awards under the Citius Oncology stock plans of $
Citius Oncology Restricted Stock Units
On September 19, 2025, Citius Oncology granted
restricted stock units of
19
At June 30, 2026, unrecognized total compensation
cost related to unvested restricted stock units under the stock plans of $
Stock-based Compensation Expense
Stock-based compensation expense under all plans
for the three months ended June 30, 2026 and 2025 was $
Stock-based compensation expense under all plans
for the nine months ended June 30, 2026 and 2025 was $
Citius Pharma Warrants
We have reserved
| Exercise Price | Shares | Expiration Dates | ||||||||
| August 2018 Offering Investors | $ | | ||||||||
| August 2018 Offering Agent | $ | | ||||||||
| September 2019 Offering Investors | $ | | ||||||||
| September 2019 Offering Underwriter | $ | | ||||||||
| January 2021 Offering Investors | $ | | ||||||||
| January 2021 Offering Agent | $ | | ||||||||
| May 2023 Offering Investors | $ | | ||||||||
| May 2023 Offering Agent | $ | | ||||||||
| April 2024 Offering Investors | $ | | ||||||||
| April 2024 Offering Agent | $ | | ||||||||
| November 2024 Offering Investors | $ | | ||||||||
| November 2024 Offering Agent | $ | | ||||||||
| January 2025 Offering Investors | $ | | ||||||||
| January 2025 Offering Agent | $ | | ||||||||
| April 2025 Offering Agent | $ | | ||||||||
| June 2025 Offering Investor | $ | | ||||||||
| June 2025 Offering Agent | $ | | ||||||||
| October 2025 Offering Investor | $ | | ||||||||
| October 2025 Placement Agent | $ | | ||||||||
| December 2025 Note Payable Extension | $ | | ||||||||
| April 2026 Offering Investors | $ | |||||||||
| April 2026 Offering Agent | $ | |||||||||
At June 30, 2026, the weighted average remaining
life of the outstanding warrants is
20
Citius Oncology Warrants
Citius Oncology has reserved
| Exercise Price | Number | Expiration Dates | ||||||||
| July 2025 Offering Agent | $ | |||||||||
| July 2025 Prior Offering Agent | $ | |||||||||
| September 2025 Offering Agent | $ | |||||||||
| September 2025 Prior Offering Agent | $ | |||||||||
| December 2025 Offering Investors | $ | |||||||||
| December 2025 Offering Investors | $ | |||||||||
| December 2025 Placement Offering Agent | $ | |||||||||
| December 2025 Prior Offering Agent | $ | |||||||||
| May 2026 Investor | $ | |||||||||
| May 2026 Offering Agent | $ | |||||||||
| May 2026 Prior Offering Agent | $ | |||||||||
| May 2026 Lenders | $ | |||||||||
At June 30, 2026, the weighted average remaining
life of the outstanding warrants was estimated at
Citius Pharma Common Stock Reserved
A summary of common stock reserved for future issuances by Citius Pharma excluding all subsidiaries as of June 30, 2026 is as follows:
| Stock plan options outstanding | ||||
| Stock plan shares available for future grants | ||||
| Warrants outstanding | ||||
| Total |
Citius Oncology Common Stock Reserved
A summary of common stock reserved for future issuances by Citius Oncology as of June 30, 2026 is as follows:
| Stock plan options outstanding | ||||
| Restricted stock units | ||||
| Stock plan shares available for future grants | ||||
| Warrants outstanding | ||||
| Total |
21
10. COMMITMENTS AND CONTINGENCIES
Operating Lease
Effective July 1, 2019, we entered into a 76-month
lease for office space in Cranford, NJ. On February 28, 2025, we extended the lease until February 28, 2030. A right-of-use asset of $
We identified and assessed the following significant assumptions in recognizing our right-of-use assets and corresponding lease liabilities:
| ● | As the Cranford lease does not provide an implicit rate, we estimated the incremental borrowing rate in calculating the present value of the lease payments based on the remaining term as of the amendment date. |
| ● | Since we elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component. |
| ● | The expected lease terms include noncancelable lease periods. |
The elements of lease expense are as follows:
| Lease cost | Nine Months Ended June 30, 2026 | Nine Months Ended June 30, 2025 | ||||||
| Operating lease cost | $ | $ | ||||||
| Variable lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
| Other information | ||||||||
| Weighted-average remaining lease term - operating leases | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
Maturities of lease liabilities due under the Company’s non-cancellable leases are as follows:
| Year Ending September 30, | ||||
| 2026 (excluding the 9 months ended June 30, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| Leases | Classification | June 30, 2026 | September 30, 2025 | |||||||
| Assets | ||||||||||
| Lease asset | Operating | $ | $ | |||||||
| Total lease assets | $ | $ | ||||||||
| Liabilities | ||||||||||
| Current | Operating | $ | $ | |||||||
| Non-current | Operating | |||||||||
| Total lease liabilities | $ | $ | ||||||||
Interest expense on the lease liability was $
22
Commercial Manufacturing Contracts
Citius Oncology had previously entered into an
agreement with a contract manufacturing organization (“CMO”) for the manufacture and supply of bulk drug substance (“BDS”)
with the agreement continuing through calendar year 2026. The agreement was terminated effective February 2026 by the CMO due to the breach
of payment obligations by Citius Oncology. Termination fees associated with this are approximately $
In June 2026, Citius Oncology entered into a letter of intent with a new CMO for the purposes of supplying BDS and expects to enter into a master services agreement. At this time, based on stock on hand and availability of alternate suppliers, we anticipate no interruption in commercial supply for the foreseeable future.
As of June 30, 2026, the Company also has commercial
supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments under
these two agreements amount to approximately $
11. GAIN ON SALE OF NEW JERSEY NET OPERATING LOSSES
We recognized a gain of $
12. NASDAQ LISTING
On February 9, 2026, we received a notification letter from the Nasdaq
Stock Market LLC (“Nasdaq”) indicating that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid
Price Rule”) because the minimum bid price of our common stock on the Nasdaq Capital Market closed below $
On April 22, 2026, Citius Oncology received a
notification letter from Nasdaq indicating that it was not in compliance with the Bid Price Rule because the minimum bid price of its
common stock on the Nasdaq Capital Market closed below $
13. SUBSEQUENT EVENTS
On July 1, 2026, the Company initiated a voluntary stock option surrender and cancellation program for outstanding and unexercised stock options previously issued to its employees, directors and consultants under Citius Pharma’s stock plans for the years 2014, 2018, 2020, 2021 and 2023. Shares underlying any cancelled stock options are returned to the Company’s 2023 Stock Plan and the holder receives no consideration for the cancellation. The program remains open as of mid-August 2026.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations for the three and nine months ended June 30, 2026 and 2025 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Pharmaceuticals, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended on January 28, 2026. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report.
Business
We are a biopharmaceutical company dedicated to the development and commercialization of first-in-class critical care products. On September 12, 2014, we acquired Citius Pharmaceuticals, LLC as a wholly-owned subsidiary. Citius Pharmaceuticals, LLC was dissolved on December 29, 2023.
On March 30, 2016, we acquired all of the outstanding stock of Leonard-Meron Biosciences, Inc. by issuing shares of our common stock. We acquired identifiable intangible assets of $19,400,000 related to in-process research and development and recorded goodwill of $9,346,796 for the excess of the purchase consideration over the net assets acquired.
On September 11, 2020, we formed NoveCite, Inc., of which we own 75% of the issued and outstanding capital stock.
On August 23, 2021, we formed Citius Acquisition Corp., or SpinCo, as a wholly-owned subsidiary in conjunction with the acquisition of LYMPHIR, but Citius Acquisition did not begin operations until April 2022, when Citius Pharma transferred to it the assets related to LYMPHIR, including the related license agreement with Eisai and the related asset purchase agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s. At this time, Citius Acquisition changed its name to Citius Oncology, Inc. In August 2024, as part of the merger, the new publicly-traded company and majority-owned subsidiary was named Citius Oncology, Inc.
In-process research and development of $19,400,000 represents the value of LMB’s leading drug candidate (Mino-Lok), which is an antibiotic solution used to treat catheter-related bloodstream infections and is expected to be amortized on a straight-line basis over a period of eight years commencing upon revenue generation. Goodwill of $9,346,796 represents the value of LMB’s industry relationships and its assembled workforce. Goodwill will not be amortized but will be tested at least annually for impairment. In-process research and development of $73,400,000 represents the value of our exclusive license for LYMPHIR (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma and is being amortized on a straight-line basis over the remaining period of market exclusivity commencing upon revenue generation in December 2025.
Through June 30, 2026, we have devoted substantially all of our efforts to product development, raising capital, building infrastructure through strategic alliances and coordinating activities relating to our proprietary products. We have realized limited revenues from the sale of LYMPHIR, which commenced in December 2025.
Reverse Stock Split
Effective November 25, 2024, we executed a reverse stock split of our common stock, at a ratio of 1-for-25. All share amounts have been retroactively adjusted to reflect the split.
24
Patent and Technology License Agreements
Mino-Lok® - LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok on an exclusive, worldwide sub-licensable basis, as amended. Since May 2014, LMB has paid an annual maintenance fee, which began at $30,000 and has increased over five years to $90,000, where it will remain until the commencement of commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with a low double-digit royalty rate (within a range of 10% to 15%). In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low to mid-single digits (within the range of 2% to 7%). After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $100,000 in the first commercial year which is prorated for a less-than-12-month period, increasing $25,000 per year to a maximum of $150,000 annually. LMB must also pay NAT up to $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub-licensees.
NoveCite - On October 6, 2020, our subsidiary NoveCite entered into a license agreement with Novellus Therapeutics Limited, whereby NoveCite acquired an exclusive, worldwide license, with the right to sublicense, to develop and commercialize a stem cell therapy based on Novellus’s patented technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. Upon execution of the license agreement, NoveCite paid $5,000,000 to Novellus and issued Novellus shares of Novecite’s common stock representing 25% of NoveCite’s outstanding equity. We own the other 75% of NoveCite’s outstanding equity.
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics and the NoveCite license was assumed by Brooklyn with all original terms and conditions. In October 2021, Brooklyn changed its name to Eterna Therapeutics Inc. (“Eterna”).
As part of the Novellus and Brooklyn merger transaction, the 25% non-dilutive position per the subscription agreement between Novellus and NoveCite was removed.
Under the license agreement, NoveCite is obligated to pay Eterna up to an aggregate of $51,000,000 in regulatory and developmental milestone payments. NoveCite also must pay a royalty equal to a mid-teens percentage of net sales, commencing upon the first commercial sale of a licensed product. This royalty is subject to downward adjustment on a product-by-product and country-by-country basis to a mid-single digit percentage (within a range of 4% to 8%) of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) date on which a biosimilar product is first marketed, sold, or distributed by Eterna or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Eterna an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the event that Eterna receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit to NoveCite 50% of such revenue.
LYMPHIR - In September 2021, the Company entered into an asset purchase agreement with Dr. Reddy’s and a license agreement with Eisai to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. Citius Pharma assigned these agreements to Citius Acquisition Corp. effective April 1, 2022. We renamed E7777 as I/ONTAK and also obtained the trade name LYMPHIRTM for the product. Denileukin diftitox is referred to in this report as E7777, I/ONTAK or LYMPHIR, depending on the period of time and context that is being discussed.
Under the terms of these agreements, Citius Pharma acquired Dr. Reddy’s exclusive license of E7777 from Eisai and other related assets owned by Dr. Reddy’s (which are now owned by Citius Oncology). The exclusive license, through Citius Oncology, includes rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India, Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma paid Dr. Reddy’s a $40 million upfront payment which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%), and up to $300 million for commercial sales milestones. Citius Oncology also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10% to 15%). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. Citius Oncology will also pay Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of Citius Oncology’s payment obligations under these agreements.
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At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $15.65 million remains due as of June 30, 2026. Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.
Under the license agreement, Eisai was due a $5.9 million milestone payment, upon FDA approval, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22 million related to the achievement of net product sales thresholds. We were also required to reimburse Eisai for up to $2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and CMC activities through the filing of the BLA for LYMPHIR with the FDA. We are responsible for development costs associated with potential additional indications.
On March 28, 2025, Citius Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. We agreed to pay Eisai $2,535,318 on July 15, 2025, $2,350,000 on the 15th of each of the subsequent four months, and make a final payment of $2,197,892 on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of payment at the rate of 2% per annum. During the nine months ended June 30, 2026, we recorded $112,270 in interest expense under the agreement. The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or related to our failure to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. On December 15, 2025, we paid Eisai the balance of the outstanding milestone approval fee and accumulated interest on the license fee. At June 30, 2026, we owe Eisai approximately $6.3 million for certain other unpaid invoices.
The term of the license agreement will continue until the 10-year anniversary of the first commercial sale on a country-by-country basis. The first commercial sale in the United States occurred in December 2025. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.
Under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) to complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction; though approved in August 2024, Dr. Reddy’s waived the six-month requirement and the launch of LYMPHIR in December 2025 satisfied this requirement in the U.S.
Recent Events
Commercial Launch Activities
On March 31, 2026, Citius Oncology provided an update on the U.S. commercial launch of LYMPHIR, highlighting continued adoption across leading oncology centers, broad payer coverage progress, and advancing investigator-led clinical studies. Citius Oncology expects continued expansion in prescribing activity, together with further clinical validation through ongoing investigator-led studies. These trends support LYMPHIR’s potential not only for continued integration in the CTCL treatment landscape, but also its potential as a part of a combination immunotherapy regimen in other cancers.
Key Early Launch Metrics:
| ● | Growth in orders from target institutions since launch, with initial accounts placing repeat orders; |
| ● | Strong institutional uptake, with 83% of target accounts having added or actively progressing LYMPHIR through formulary review; |
| ● | Broad and expanding market access with 135 health plans representing 80% of covered lives, secured and reimbursement systems established; |
| ● | No reported reimbursement denials or prior authorization barriers; |
| ● | Increasing demand for product education; |
| ● | Initial penetration into community infusion centers underway with patients beginning to transition from larger cancer centers; |
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| ● | Commercial buildout proceeding, with field team onboarding and expansion in progress with our contracted sales organization; and |
| ● | Commercial supply remains well positioned to support anticipated U.S. demand, and international expansion. |
On April 29, 2026, Citius Oncology announced the initial shipment of LYMPHIR to Europe through a regional distribution partner, marking an important milestone in expanding access to the therapy for patients outside the US. LYMPHIR will be made available to eligible patients through Named Patient Programs in accordance with local regulations in each country. The initiation of European distribution represents a strategic step in Citius Oncology’s effort to extend access to LYMPHIR.
On July 21, 2026, Citius Oncology announced the expansion of its commercial organization to include 21 additional commercial field-based professionals and the addition of eight medical science liaisons dedicated to supporting complex clinical practitioner engagement and patient care. All personnel were expected to be fully onboarded and deployed nationwide by August 2026, which target date was met. The expansion of the commercial and medical teams was facilitated by the May 2026 financing and implemented by EVERSANA, Citius Oncology’s exclusive commercialization partner. EVERSANA also provides Citius Oncology with an integrated suite of operations services including medical information, pharmacovigilance, revenue cycle management, program management, data and analytics, channel management, and patient assistance.
On August 14, 2026, Citius Oncology provided an update on the U.S. commercial launch of LYMPHIR highlighting increased institutional availability for LYMPHIR, accelerating institutional vial orders and the expansion to a full commercial field organization.
Mid-Year Launch Metrics:
| ● | 44 institutions have ordered LYMPHIR since its launch including; academic oncology centers, leading National Comprehensive Cancer Network (NCCN) institutions, and community infusion centers; |
| ● | Increased the number of new ordering institutions by 80% in the quarter ended June 30, 2026 compared to the quarter ended March 31, 2026; |
| ● | Grew the number of vials ordered by institutions from wholesalers by 31% in the quarter ended June 30, 2026, compared to the quarter ended March 31, 2026, 926 vs. 708 vials respectively; |
| ● | 383 institutional vial orders of LYMPHIR were placed in July, an increase of 25% vs. the prior quarters average;1 |
| ● | Expanded the commercial organization by 21 additional field-based professionals and added eight medical science liaisons, executed by the Company’s exclusive commercialization partner, EVERSANA; |
| ● | Engaged U.S. and international CTCL key opinion leaders at the Sixth World Congress of Cutaneous Lymphomas in Montreal through scientific exchange and educational initiatives; and |
| ● | Continued to near-universal payer coverage, with no reimbursement denials or prior authorization barriers reported to date. |
| 1 | Institutional vial orders are vials of LYMPHIR ordered by prescribing institutions from wholesalers. Citius Oncology recognizes revenue when LYMPHIR vails are ordered from Citius Oncology by wholesalers. |
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US Distribution Agreements
In 2025, Citius Oncology executed three service agreements with U.S. pharmaceutical specialty distributors who are the customers and who distribute LYMPHIR to healthcare organizations, which include academic centers, community oncology practices, as well as infusion centers. The transaction price for gross product revenues under these customer specialty distributor agreements are based on the contractually stated wholesale acquisition cost. The transaction price is reduced for variable considerations, including product returns, chargebacks, co-payment assistance, and other gross-to-net adjustments, which are reasonably estimated by Citius Oncology and constrained to amounts that are probable not to result in a significant revenue reversal. As LYMPHIR is a newly launched product, any reasonable estimates made by Citius Oncology regarding certain gross-to-net adjustments will result from certain information, such as inventory held by distributors, market data or comparable products, until sufficient historical data becomes available.
International Distribution Agreements
On October 7, 2025, Citius Oncology entered into an exclusive distribution agreement with Integris Pharma S.A., headquartered in Athens, Greece to make LYMPHIR available to eligible patients through country-specific Named Patient Programs (“NPPs”). The partnership covers Greece, Cyprus, Malta, Bulgaria, Romania, Croatia, Serbia, Albania, Bosnia Herzegovina, Kosovo, Montenegro and North Macedonia. NPPs are formally recognized pathways designed to give patients earlier access to promising new medicines in advance of full marketing authorization and commercial availability in markets outside the U.S. Under these programs, a treating physician may request a therapy for an individual patient when no adequate approved alternatives exist. In doing so, NPPs bridge a critical gap between the completion of clinical trials in each region and broad market introduction, ensuring that patients with serious illnesses are not left waiting for life-extending innovations. These programs provide access, where permitted by local law, and do not constitute commercial approval of LYMPHIR outside the U.S.
On December 4, 2025, Citius Oncology announced an exclusive distribution agreement with Er-Kim İlaç Sanayi ve Ticaret A.Ş. (“Er-Kim”), a leading pharmaceutical distributor based in Turkey, for LYMPHIR. Under the agreement, Er-Kim will be the exclusive distributor of LYMPHIR in Turkey and key Gulf Cooperation Council (GCC) countries, including Bahrain, Qatar, Oman, Kuwait, Saudi Arabia, and the United Arab Emirates.
On February 11, 2026, Citius Oncology announced an exclusive distribution agreement with Uniphar (“Uniphar”), a leading international healthcare services company, to support access to LYMPHIR. Under the agreement, Uniphar will serve as Citius Oncology’s exclusive distribution partner in designated international territories in Western and Eastern Europe. Citius Oncology will supply finished product and provide ongoing support in accordance with the agreement. LYMPHIR is not approved for commercial use outside the U.S. and will be provided solely through country-specific managed access programs, which do not constitute marketing authorization or a commercial launch.
Investigator Initiated Trials
On March 4, 2026, Citius Oncology announced positive topline safety and efficacy results from an investigator-initiated Phase 1 trial evaluating LYMPHIR administered prior to commercial CD19 directed CAR T therapy in patients with high risk relapsed or refractory diffuse large B cell lymphoma (DLBCL).
On March 10, 2026, Citius Oncology announced positive topline results from a completed investigator-initiated Phase 1 clinical trial conducted by University of Pittsburgh investigators. This study evaluated the direct T-regulatory (Treg) cell depletion activity of LYMPHIR in combination with the PD-1 immune checkpoint inhibitor pembrolizumab (KEYTRUDA®) in patients with recurrent or refractory gynecologic cancers, including ovarian and endometrial malignancies.
Discussions are ongoing regarding next-stage development with respect to both investigator-initiated trials.
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RESULTS OF OPERATIONS
Three months ended June 30, 2026 compared with the Three months ended June 30, 2025
| Three Months Ended June 30, 2026 |
Three Months Ended June 30, 2025 |
|||||||
| Revenue | $ | 1,493,788 | — | |||||
| Cost of revenues | (491,843 | ) | — | |||||
| Gross profit | 1,001,945 | — | ||||||
| Operating expenses: | ||||||||
| Research and development | 1,053,869 | 1,621,325 | ||||||
| Amortization of in-process research and development | 1,720,312 | — | ||||||
| General and administrative | 6,149,173 | 4,447,008 | ||||||
| Stock-based compensation – general and administrative | 3,810,665 | 2,719,674 | ||||||
| Total operating expenses | 12,734,019 | 8,788,007 | ||||||
| Operating loss | (11,732,074 | ) | (8,788,007 | ) | ||||
| Interest income | 116,691 | 20,637 | ||||||
| Amortization of deferred financing costs | (179,492 | ) | — | |||||
| Interest expense | (231,732 | ) | (172,262 | ) | ||||
| Loss before income taxes | (12,026,607 | ) | (8,939,632 | ) | ||||
| Income tax expense (benefit) | (107,347 | ) | 264,240 | |||||
| Net loss | $ | (11,919,260 | ) | $ | (9,203,872 | ) | ||
Revenues
Product revenues for the three months ended June 30, 2026 were $1,493,788, as Citius Oncology began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the three months ended June 30, 2026 was approximately 67%.
We believe that revenues will increase in the future as LYMPHIR gains market acceptance and have already seen initial accounts placing repeat orders, and on April 29, 2026, Citius Oncology announced its initial shipment to Europe.
Research and Development Expenses
For the three months ended June 30, 2026, research and development expenses were $1,053,869, as compared to $1,621,325 during the three months ended June 30, 2025, a decrease of $567,456.
Research and development costs for Mino-Lok decreased by $9,701 to $152,030 for the three months ended June 30, 2026, as compared to $161,731 for the three months ended June 30, 2025.
Research and development costs for Halo-Lido were $2,027 for the three months ended June 30, 2026, as compared to $3,994 for the three months ended June 30, 2025. The Phase 2 study was completed in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.
Research and development costs for LYMPHIR decreased by $561,779 to $893,821 during the three months ended June 30, 2026, as compared to $1,455,600 for the three months ended June 30, 2025. The decrease was primarily related to a refund of FDA PDUFA fees for LYMPHIR.
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Amortization of in-process research and development
Amortization of in-process research and development commenced upon revenue generation in December 2025. For the three months ended June 30, 2026, amortization was $1,720,312. In-process research and development is being amortized on a straight-line basis over the remaining FDA product exclusivity period, which ends in August 2036.
General and Administrative Expenses
For the three months ended June 30, 2026, general and administrative expenses were $6,149,173, as compared to $4,447,008 during the three months ended June 30, 2025. General and administrative expenses increased by $1,702,165 in comparison with the prior period. The increase was primarily related to the expansion of Citius Oncology’s commercial organization. General and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.
Stock-based Compensation Expense
For the three months ended June 30, 2026, stock-based compensation was $3,810,665 as compared to $2,719,674 for the three months ended June 30, 2025. Stock-based compensation increased by $1,090,991 primarily due to the Citius Oncology restricted stock units granted in September 2025.
Other Income (Expense)
For the three months ended June 30, 2026, interest income was $116,691, as compared to interest income of $20,637 for the three months ended June 30, 2025. We have invested the remaining proceeds of our equity offerings in money market accounts.
For the three months ended June 30, 2026, amortization of deferred financing costs related to Citius Oncology’s May 2026 term loan agreement was $179,492. Deferred financing costs are being amortized on a straight-line basis over the 42-month life of the loan agreement.
For the three months ended June 30, 2026, interest expense was $231,732, as compared to $172,262 for the three months ended June 30, 2025 primarily related to Citius Oncology’s new loan agreement.
Income Taxes
The Company recorded a deferred income tax benefit of $107,347 in the three months ended June 30, 2026 and a deferred income tax expense of $264,240 in the three months ended June 30, 2025. Deferred income tax expense or benefit is related to the difference in amortization for taxable purposes of Citius Oncology’s in-process research and development asset and the financial statement amortization.
Net Loss
For the three months ended June 30, 2026, we incurred a net loss of $11,919,260, as compared to a net loss of $9,203,872 for the three months ended June 30, 2025. The increase of $2,715,388 in the net loss was primarily due to the increase of $3,946,012 in operating expenses offset by the increase in gross profit of $1,001,945.
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Nine months ended June 30, 2026 compared with the nine months ended June 30, 2025
| Nine Months Ended June 30, 2026 |
Nine Months Ended June 30, 2025 |
|||||||
| Revenue | $ | 7,105,197 | — | |||||
| Cost of revenues | (1,609,929 | ) | — | |||||
| Gross profit | 5,495,268 | — | ||||||
| Operating expenses: | ||||||||
| Research and development | 4,287,106 | 7,514,888 | ||||||
| Amortization of in-process research and development | 4,014,062 | — | ||||||
| General and administrative | 38,261,001 | 14,626,882 | ||||||
| Stock-based compensation – general and administrative | 11,879,167 | 7,946,529 | ||||||
| Total operating expenses | 58,441,336 | 30,088,299 | ||||||
| Operating loss | (52,946,068 | ) | (30,088,299 | ) | ||||
| Interest income | 215,372 | 56,658 | ||||||
| Gain on sale of New Jersey net operating losses | 3,833,277 | — | ||||||
| Amortization of deferred financing costs | (179,492 | ) | — | |||||
| Interest expense | (420,301 | ) | (172,262 | ) | ||||
| Loss before income taxes | (49,497,212 | ) | (30,203,903 | ) | ||||
| Income tax expense (benefit) | (74,317 | ) | 792,720 | |||||
| Net loss | $ | (49,422,895 | ) | $ | (30,996,623 | ) | ||
Revenues
Product revenues for the nine months ended June 30, 2026 were $7,105,197, as Citius Oncology began commercial distribution of LYMPHIR in December 2025. Gross profit on product revenues for the nine months ended June 30, 2026 was approximately 77%.
We believe that revenues will increase in the future as LYMPHIR gains market acceptance as Citius Oncology has already seen initial accounts placing repeat orders, and on April 29, 2026, Citius Oncology announced our initial shipment to Europe.
Research and Development Expenses
For the nine months ended June 30, 2026, research and development expenses were $4,287,106, as compared to $7,514,888 during the nine months ended June 30, 2025, a decrease of $3,227,782.
Research and development costs for LYMPHIR decreased by $2,865,388 to $3,959,231 during the nine months ended June 30, 2026, as compared to $6,824,619 for the nine months ended June 30, 2025, which decrease was primarily related to expense recognized in the nine months ended June 30, 2025 for a pre-license inspection batch LYMPHIR previously manufactured as well as a refund of FDA PDUFA fees associated with LYMPHIR.
Research and development costs for Mino-Lok decreased by $369,979 to $299,338 for the nine months ended June 30, 2026, as compared to $669,317 for the nine months ended June 30, 2025, due primarily to decreased costs for Mino-Lok clinical and non-clinical studies, as well as decreased manufacturing development costs. In November 2024, the Company held a Type C meeting with the FDA to discuss the results of the Phase 3 study and to obtain the FDA’s view on development plans for Mino-Lok. The FDA provided clear, constructive, and actionable guidance during the discussion, underscoring a pathway to support a future New Drug Application (NDA) submission for Mino-Lok.
Research and development costs for Halo-Lido decreased by $8,594 to $6,096 for the nine months ended June 30, 2026, as compared to $14,690 for the nine months ended June 30, 2025. The Phase 2 study was completed in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.
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Amortization of in-process research and development
Amortization of in-process research and development commenced upon revenue generation by LYMPHIR in December 2025. For the nine months ended June 30, 2026 amortization was $4,014,062. In-process research and development is being amortized on a straight-line basis over the remaining FDA product exclusivity period which ends in August 2036.
General and Administrative Expenses
For the nine months ended June 30, 2026, general and administrative expenses were $38,261,001, as compared to $14,626,882 during the nine months ended June 30, 2025. General and administrative expenses increased by $23,634,119 in comparison with the prior period. The increase of $23,634,119 was primarily related to a notice of termination from a contract manufacturing organization received in February 2026. In March 2026, we recorded a contract cancellation fee of $19,733,307 as well as increased expense in the commercial organization related to the launch of LYMPHIR. Other general and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.
Stock-based Compensation Expense
Stock-based compensation expense under all plans for the nine months ended June 30, 2026 and 2025 was $11,879,167 (including $835,616 for Citius Pharma options, $5,968,921 for Citius Oncology options and $5,074,630 for Citius Oncology restricted stock units) and $7,946,529 (including $1,924,242 for Citius Pharma options and $6,022,287 for Citius Oncology options), respectively.
Stock-based compensation expense for the nine months ended June 30, 2026 increased by $3,932,638 in comparison to the prior period primarily due to the Citius Oncology restricted stock units granted in September 2025.
Other Income (Expense)
For the nine months ended June 30, 2026, interest income was $215,372, as compared to interest income of $56,658 for the nine months ended June 30, 2025. We have invested the remaining proceeds of our equity offerings in money market accounts.
We recognized a gain of $3,833,277 for the nine months ended June 30, 2026, in connection with the sale of certain New Jersey income tax net operating losses to a third party under the New Jersey Technology Business Tax Certificate Transfer Program.
For the nine months ended June 30, 2026, amortization of deferred financing costs related to Citius Oncology’s May 2026 term loan agreement was $179,492. Deferred financing costs are being amortized on a straight-line basis over the 42-month life of the loan agreement.
For the nine months ended June 30, 2026, interest expense was $420,301, as compared to $172,262 for the nine months ended June 30, 2025. For the nine months ended June 30, 2026, interest expense was $198,333 for the new loan agreement, $112,270 for the March 28, 2025 letter agreement with Eisai and 109,697 for the note payable, including the fair value of the warrant issued to the lender. Interest expense for the nine months ended June 30, 2025 was $160,755 for the March 28, 2025 letter agreement with Eisai and $11,507 for the note payable.
Income Taxes
The Company recorded a deferred income tax benefit of $74,317 for the nine months ended June 30, 2026 and a deferred income tax expense of $792,720 for the nine months ended June 30, 2025. Deferred income tax expense is related to the amortization for taxable purposes of our in-process research and development asset offset by the financial statement amortization of our in-process research and development asset.
Net Loss
For the nine months ended June 30, 2026, we incurred a net loss of $49,422,895, as compared to a net loss of $30,996,623 for the nine months ended June 30, 2025. The increase of $18,426,272 in the net loss was due to the increase of $28,353,037 in operating expenses offset by the increase in gross profit of $5,495,268, the increase in other income of $3,564,460 and the decrease in income tax expense of $867,037.
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LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Working Capital
We have incurred operating losses since inception and incurred a net loss of approximately $49.4 million for the nine months ended June 30, 2026. At June 30, 2026, we had an accumulated deficit of approximately $277.1 million. At June 30, 2026, we had approximately $17.0 million in cash and a negative working capital of approximately $8.3 million. Our net cash used in operations during the nine months ended June 30, 2026 was approximately $23.0 million. Our primary source of cash flow since inception has been from financing activities. We have had limited revenue from sales of LYMPHIR, which commenced in December 2025.
On April 24, 2026, Citius Pharma closed a registered direct offering for the sale of 4,730,457 shares of common stock at $0.985 per share and 345,686 pre-funded warrants at $0.9849 per warrant. Net proceeds were $4,453,184, after deducting placement agent fees and expenses. The pre-funded warrants were exercisable at $0.0001 per warrant and were all exercised on April 24, 2026 for $34.
On May 5, 2026, Citius Oncology received net proceeds of approximately $9.7 million from the exercise of certain warrants.
On May 5, 2026, Citius Oncology entered into a term loan agreement with two lenders (the “Lenders”) for up to $25.0 million (the “Loan Agreement”), with $10.0 million funded on May 6, 2026, up to $7.0 million available between October 1 and December 31, 2026, if certain net revenue and liquidity milestones are achieved (“Tranche 2”), and up to $8.0 million available between January 1 and March 31, 2027, if certain additional net revenue milestones are achieved and a loan was drawn between October 1 and December 31, 2026 (“Tranche 3”). The loans bear interest at the greater of the prime rate plus 6% or 12.75%. The loans are secured by all of Citius Oncology’s assets, subject to agreed exceptions. The maturity date of the loans is November 1, 2029.
In order to satisfy our outstanding milestone payment obligations, as well as meet minimum purchase commitments under our agreements for the manufacture and supply of our drug product, in addition to generating income from the sale of LYMPHIR, we need to obtain substantial additional financing and cannot be sure that any additional funding will be available on terms favorable to us, or at all. As of June 30, 2026, our outstanding milestone payments and purchase commitments include:
| ● | On March 28, 2025, we entered into a letter agreement to pay Eisai $2,535,318 on or before July 15, 2025, and $2,350,000 thereafter on the 15th of each of the next four months, and make a final payment of $2,197,892 on or before December 15, 2025, in each case with interest on each obligation from its original due date at the rate of 2% per annum. As of June 30, 2026, we have paid the milestone in full and owe a balance of approximately $6.3 million to Eisai for certain other invoices. |
| ● | At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s of which a balance of $15.65 million remains due as of June 30, 2026. Dr. Reddy’s has agreed to a partial deferral without penalty of this milestone payment. |
| ● |
Citius Oncology had previously entered into an agreement with a contract manufacturing organization (“CMO”) for the manufacture and supply of bulk drug substance (“BDS”) with the agreement continuing through calendar year 2026. The agreement was terminated effective February 2026, by the CMO due to the breach of payment obligations by the Citius Oncology. Termination fees associated with this are approximately $20.1 million consisting of $17.1 million of charges associated with manufacturing which was previously committed in 2025 and 2026 but not produced, as well as $1.2 million of un-invoiced but incurred charges related to previous manufactured batches and $1.8 million of interest and other charges. These fees are included in General and Administrative Expense for the nine months ended June 30, 2026. Separately, in March 2026, the CMO gave notice that it made a decision to terminate all production at the current site related to microbial manufacturing and decommission the associated manufacturing lines. In March 2026 and in connection with the notice of termination from the CMO, we recorded a contract cancellation fee of $19,733,307 net of invoices already included in accounts payable.
Citius Oncology has been evaluating new BDS suppliers and entered into a letter of intent with a new CMO in June 2026 and expects to enter into master services agreement. At this time, based on stock on hand and availability of alternate suppliers, we anticipate no interruption in commercial supply for the foreseeable future. |
| ● | As of June 30, 2026, we also have commercial supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments under these two agreements are approximately $4.0 million consisting of purchase commitment obligations of $2.2 million in calendar years 2026 and $1.8 million in 2027. |
After giving effect to our April 24, 2026 registered direct offering and the Citius Oncology May 5, 2026 warrant exercise and Loan Agreement, we expect that we and Citius Oncology collectively will have sufficient funds to continue our operations through November 2026. We will need to raise additional capital in the future to support our operations beyond November 2026. There is no assurance, however, that we will be successful in raising needed capital or that the proceeds will be received in an amount or in a timely manner to support our operations.
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Investing Activities
During the nine months ended June 30, 2026, we paid the final $2,900,000 due to Eisai in connection with the LYMPHIR approval milestone and paid $4,100,000 in connection with the milestone payment due to Dr. Reddy’s. At June 30, 2026, we owe Dr. Reddy’s $15,650,000 representing the balance of the approval milestone.
Inflation
Our management believes that inflation has not had a material effect on our results of operations.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.
Our critical accounting policies and use of estimates as discussed in the footnotes to the condensed consolidated financial statements included within this Form 10-Q should also be read in conjunction with, the annual consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended January 28, 2026.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.
Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of June 30, 2026. In designing and evaluating disclosure controls and procedures, we recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of June 30, 2026, based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
Changes In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
There have been no material changes to the Company’s risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended January 28, 2026, except as set forth below.
Our majority-owned subsidiary, Citius Oncology, has substantial indebtedness and debt service obligations, which could adversely affect our financial condition.
Citius Oncology has incurred significant indebtedness under the Loan Agreement, which features a tiered tranche structure with a floating interest rate subject to a floor of 12.75% per annum. During the interest-only period, Citius Oncology will not reduce the outstanding principal balance of the loan, and upon expiration of such period, it will be required to make amortizing payments of principal and interest. In addition, Citius Oncology is obligated to make a final payment of $1,062,500 at maturity, which creates a balloon-type obligation that Citius Oncology may be unable to satisfy from available cash flows or other sources. There can be no assurance that its business will generate sufficient cash flow from operations or that future borrowings or other sources of capital will be available to it in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs. If Citius Oncology is unable to generate sufficient cash flow to service its debt and meet its other obligations, it may need to refinance or restructure its debt, sell assets, reduce or delay capital expenditures, or seek additional equity capital, any of which could have a material adverse effect on its business, financial condition, and results of operations which would directly impact Citius Pharma.
Additional funding tranches under the Loan Agreement are conditioned upon the achievement of specified milestones, and there can be no assurance that such milestones will be achieved.
The availability of Tranche 2 and Tranche 3 under the Loan Agreement is conditioned upon Citius Oncology’s achievement of specified net revenue and liquidity milestones. If it fails to achieve the required milestones within the applicable time periods, Tranche 2 and/or Tranche 3 will not become available to it, and Citius Oncology will not have access to the additional committed capital contemplated by the Loan Agreement.
Citius Oncology’s failure to access these additional tranches could significantly impair its ability to fund ongoing operations, pursue growth initiatives, or meet its working capital requirements. In such event, Citius Oncology may be required to seek alternative sources of financing, which may not be available on terms acceptable to it, or at all, or Citius Oncology may be required to curtail its operations or delay or abandon planned expenditures. Any of these outcomes could have a material adverse effect on its business, financial condition, results of operations, and prospects, which would directly impact Citius Pharma.
The Loan Agreement is secured by a lien on substantially all of Citius Oncology’s assets, including its intellectual property, and the Lenders could foreclose on such assets upon an event of default.
Citius Oncology’s obligations under the Loan Agreement are secured by a first-priority lien on substantially all of its assets, including its intellectual property, accounts receivable, inventory, equipment, and general intangibles. If an event of default occurs and is not cured within any applicable cure period, the Lenders would have the right to foreclose on the collateral securing Citius Oncology’s obligations.
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The foreclosure on, or loss of, substantially all of Citius Oncology’s assets, including its intellectual property, could result in a complete loss of its ability to operate its business and would likely render it unable to continue as a going concern. Citius Oncology’s intellectual property, including patents, trademarks, trade secrets, and proprietary technology, constitutes a critical component of its competitive position and revenue-generating capabilities. The loss of such assets to the Lenders in a foreclosure action would have a material adverse effect on its business and could result in a total loss of its stockholder value, which would directly impact Citius Pharma.
The conversion of loan principal into shares of Citius Oncology’s common stock and the exercise of Lender Warrants could result in significant dilution to its existing stockholders and may adversely affect the market price of its common stock.
Under the terms of the Loan Agreement, the Lenders have the right to convert up to $4.0 million of outstanding principal into shares of Citius Oncology’s common stock at a $1.08 per share conversion price. In addition, Citius Oncology has issued warrants to the Lenders equal to 10% of the portion of the loans actually funded that are exercisable at $0.90 per share. The conversion of loan principal and/or the exercise of these warrants would result in the issuance of additional shares of its common stock and would dilute the ownership interest of its existing stockholders, including Citius Pharma. Such anticipated dilution could depress the market price of its common stock, even before any actual conversion or exercise occurs. Furthermore, the Lenders may sell any shares acquired upon conversion or exercise into the market, which could create downward pressure on its stock price. Any or all of these factors could materially adversely affect the market price of its common stock and the value of an investment in its securities, including the shares held by Citius Pharma.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the quarter ended June 30, 2026, we did not issue or sell any unregistered securities not previously disclosed.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
| (a) | None. |
| (b) | None. |
| (c) | During the quarter ended June 30, 2026, none of our directors or officers |
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Item 6. Exhibits.
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CITIUS PHARMACEUTICALS, INC. | ||
| Date: August 14, 2026 | By: | /s/ Leonard Mazur |
| Leonard Mazur | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: August 14, 2026 | By: | /s/ Jaime Bartushak |
| Jaime Bartushak | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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