3. Discontinued Operations and TSA

On September 30, 2024, the Company completed the sale of its VOWST Business to SPN. The Company has determined the sale of the VOWST Business represents a strategic shift that will have a major effect on its business and therefore met the criteria for classification as discontinued operations on September 30, 2024. Accordingly, the VOWST Business is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The related assets and liabilities of the VOWST Business were classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets for the historical periods presented prior to the sale of the VOWST Business and the results of operations from the VOWST Business were classified as discontinued operations in the condensed consolidated statements of operations. Applicable amounts in prior years have been recast to

conform to this discontinued operations presentation. The Company recognized a gain on the sale of the VOWST Business upon closing.

The Company has also entered into a Transition Services Agreement with NESA, an affiliate of SPN, in connection with the Transaction, through which the Company will provide certain manufacturing services until December 31, 2025, and other transition services, for the duration specified in the schedule to the TSA for each service. For the three and six months ended June 30, 2025, the Company recognized $3,490 and $9,799, respectively, of TSA reimbursement income in other income in the Company’s condensed consolidated statements of operations and comprehensive income (loss). For the three and six months ended June 30, 2025, the Company has incurred $1,689 and $5,216, respectively, of expenses related to manufacturing services and $1,261 and $3,509, respectively, of TSA labor and passthrough expenses to support the transition services, including finance and accounting, information technology, human resources, operations, and other services.

For the three and six months ended June 30, 2025, $4,585 and $11,987, respectively, has been billed to NESA related to transition services performed by the Company, and the Company received $6,464 and $63,173 from NESA during the periods, respectively, including the first installment payment of $50,000 received in January 2025 that was conditioned on the Company’s material compliance with obligations under the TSA. The $50,000 installment payment was recognized in Gain on sale of VOWST Business within continuing operations in the Company’s condensed consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2025 as the gain was realizable. As of June 30, 2025, the Company has $882 in accounts receivable due from SPN - related party and $279 unbilled receivable included in prepaid expenses and other current asset in the Company’s condensed consolidated balance sheets.

The Company has estimated costs associated with certain accrued liabilities due to SPN - related party as a loss contingency in accordance with ASC 450, Contingencies. These contingent liabilities are presented as Accrued Liabilities due to SPN - related party from continuing operations on the condensed consolidated balance sheet as of June 30, 2025 and December 31, 2024 and consist of the following (in thousands):

The contingent liabilities accrued on the Company's condensed consolidated balance sheet are remeasured at each reporting period based on i) cash payments made by the Company to reduce the accrued liabilities due to SPN - related party and ii) revised estimates of the total remaining liabilities due to SPN - related party. For the three and six months ended June 30, 2025, the Company recognized a gain on sale of VOWST Business of $185 and $2,366, respectively, as a result of the change in accrued liabilities due to SPN - related party.

The Company has excluded from its condensed consolidated balance sheets the effects of i) future fixed installment payments to be received by the Company after it performs services and is determined by SPN to be in material compliance with the terms and conditions of the TSA and ii) certain milestone payments received by the Company after the Product has achieved net sales-based milestones. These contingent receivables will be recognized as a gain contingency, in accordance with ASC 450, Contingencies, in continuing operations in the period when the contingencies are resolved.

The cash flows related to discontinued operations have not been segregated and are included in the condensed consolidated statements of cash flows. There were no cash flows related to discontinued operations for the six months ended June 30, 2025. For the six months ended June 30, 2024, capital expenditures related to the VOWST Business were $59. Depreciation expense related to the VOWST Business for the same period was $656. Non-cash operating lease costs related to the VOWST Business for the six months ended June 30, 2024 were $959, while the share based compensation expense for the same period was $1,290. There were no other material operating or investing non-cash items related to the VOWST Business for either period presented in the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024.