Cash and Restricted Cash

As of June 30, 2026, and December 31, 2025, the Company held all its cash in banks in the United States of America. The Company considers investments in highly liquid instruments with a maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2026, and December 31, 2025. Restricted cash consists of certificates of deposits held at banks as collateral for various purposes.

Fair Value of Financial Instruments

The carrying value of cash, accounts payable and accrued expense approximate their fair values based on the short-term maturity of these instruments. As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

The Company did not have any Level 1 or Level 2 assets or liabilities at June 30, 2026 and December 31, 2025.

Change in Fair Value of Equity Securities of GMP Bio

On March 31, 2022, the Company entered into the JV with Dragon, contributing a license agreement for rights to OT-101for the territory within the United States of America with Sapu Holdings, LLC, a wholly owned subsidiary of GMP Bio and a license agreement for rights to OT-101 for the rest of the world with GMP Bio. For more information on the JV and the related agreements, refer to our 2022 Annual Report on Form 10-K/A filed with the SEC on April 19, 2023. As of the effective date of the formation of the JV, the Company received a 45% ownership interest in the JV. The combined enterprise value of GMP Bio, on the date of the formation of the JV, was approximately $50.4 million, comprising of the fair value of the Company’s investment in GMP Bio of approximately $22.7 million and the total original capital contributions by Dragon Overseas of approximately $27.7 million. As of December 31, 2024, the carrying value of the Company’s investment in GMP Bio was approximately $22.7 million, which was included in Investment in GMP Bio at fair value on the unaudited condensed consolidated balance sheets.

The investment in GMP Bio has been accounted for under the fair value method of accounting. Similarly, during the year ended December 31, 2025, the Company determined that a remeasurement of its investment to fair value was appropriate. All the factors described below allowed the Company to form a basis for a triggering event of significant development for the JV and justified the JV, and consequently the Company, to reassess the fair value of the JV.

The JV’s principal activities centered on the commercialization of OT-101 for certain oncology indications in the US and looking at other territories as well. In March 2025, the JV successfully completed a Phase 1 clinical trial evaluating OT-101, in combination with IL-2 for advanced or metastatic solid tumors. These results set the stage for new studies that combine OT-101, an antisense therapeutic targeting Transforming Growth Factor Beta 2 (TGFβ2), with checkpoint inhibitors (“CKIs”) and recombinant IL-2 (aldesleukin) (“IL-2”). The Phase 1 trial (ClinicalTrials.gov ID: NCT04862767) investigated the safety and tolerability of OT-101 in combination with recombinant IL-2 in patients with advanced or metastatic solid tumors. The combination showed a tolerable safety profile at the planned dosing schedule, with no unexpected safety signals identified. Based on the favorable safety data, the JV plans to advance OT-101 plus IL-2 into further clinical studies, exploring synergies with CKIs such as PD-1 blockers. The JV is also sponsoring investigator-initiated studies for OT-101 for other oncology indications including lung cancer (non-small cell lung cancer- NSCLC- and Mesothelioma.- MPM) and has started clinical development for OT-101 for pancreatic cancer. Over ten patent families have been filed exploiting the central role of TGFB2 as prognostic indicator for cancer survival and one patent family for the intracranial delivery device of brain cancer with issued patent in China and Germany.

In addition to OT-101, the JV has developed a nanoparticle platform (“Nano Platform”) that entails the formulation of products in new nanoparticle sizes. The JV anticipates that the Nano Platform may offer superior platform for the absorption of water insoluble drugs across a broad spectrum of cancers. The JV is working on improved formulations for OT-101 with new nanoparticle sizes. In addition, the JV has identified five additional compounds as product candidates on the Nano Platform, including the following:

The DeciparticleTM platform has proven robust and is being expand to other drug candidates through partnering. The platform is protected by more than 15 patent families covering chemical composition, manufacturing, and method of use.

The JV built a GMP manufacturing facility in San Diego, California (the “San Diego Facility”). In late 2024, the San Diego Facility was issued a Drug Manufacturing License by the State of California Department of Public Health and Food and Drug Branch. A significant portion of the manufacturing for the Nano Platform, including the development of Phase I clinical trial materials, is conducted at the San Diego Facility. Evaluation of larger commercial scale manufacturing is ongoing.

In early 2025, the Company entered into a strategic partnership with Shanghai Medicilon, Inc. (“Medicilon”) to access its industry-leading rapid IND development platform to support up to 20 IND projects, including INDs developed by the JV. All six of the compounds that the JV is developing are planned to be initiated under these INDs, and are focused on next-generation anticancer agents.

During the year ended December 31, 2025, GMP Bio completed an independent third-party valuation by an offshore independent valuation firm, which preliminarily estimated the potential value of the drug pipeline under development at approximately $2.3 billion. This valuation was a non-binding, forward-looking, and based upon a number of assumptions including the successful achievement of clinical, regulatory, and commercial milestones. That valuation was interpreted not to be a current measure of fair value under U.S. GAAP. Although no assurances can be given, GMP Bio currently intends to conduct an initial public offering of the JV, at a future date, on either the Hong Kong Exchange or other stock exchange. For more information on the JV, refer to Note 6 of the unaudited Notes to the unaudited Condensed Consolidated Financial Statements.

The Company then conducted its own independent assessment of the valuation of the JV. The basis for the valuation was reliance on the valuation report of the third party offshore valuation firm, including the financial projection, risks and parameters of assessment as done by the offshore independent valuation firm, and then applying additional independent parameters, like discounts for lack of marketability and lack of control, and other standard discounts, required to adhere to the ASC-compliant standards as generally used in the United States. The Company hired the services of an independent, ASC-compliant valuation firm to review, perform and validate the assumptions considered by the Company and provide an ASC-compliant valuation of the JV under U.S. GAAP standards. The valuation conducted by the independent ASC-compliant valuation firm of the JV was based on various methods compliant with ASC and U. S. GAAP to derive the fair value. The Company then utilized the fair value of GMP Bio, as assessed by the ASC-compliant valuation firm, attributed the ownership percentage of the Company in GMP Bio, to ascertain the Company’s interest in GMP Bio and recorded the resulting gain to the investment in GMP Bio at fair value. As the circumstances related to the JV have not materially changed since December 31, 2025, the Company assessed and determined that no additional fair value adjustment was required during the six months ended June 30, 2026, and hence, the Company has not recorded a change in value of the Company’s interest in the JV. The Company will appropriately adjust the fair value of the interest of the Company’s interest in the JV at the end of future reporting periods and when key value inflection points are met.

As many of the inputs considered for the purpose of the valuation are unobservable inputs including, but not limited to, the potential revenue projections, the probability of success, the conduct of the clinical trials under accelerated timelines of approvals by the territorial regulatory bodies similar to the 505(b)(2) pathway under the US FDA regulations, the timing of completion of the clinical trials and approvals of the products, timing of product launches, estimates for working capital, additional research and development and general and administrative expenses, estimated tax rates, interest rates of potential debt and many others. The fair value of the Company’s investment was determined in accordance with ASC 820 Fair Value Measurement and is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. The valuation was performed with the assistance of an independent third-party valuation specialist and utilized an income approach (discounted cash flow method) and market-based approach (guideline public company multiples) and recent transactions, where available, to corroborate the results of the income approach. The final value was then arrived at by calculating the average of the values under the two approaches. The income approach of valuation incorporates assumptions that market participants would use in pricing the asset, including estimates of future financial performance and the selection of an appropriate discount rate. As the circumstances related to the JV have not materially changed since December 31, 2025, and June 30, 2026, the Company assessed and determined that no additional fair value adjustment was required and hence, the Company has not recorded a change in value of the Company’s interest in the JV.

Fair Value Hierarchy – GMP Bio

The Company’s investment in the JV is classified within Level 3 of the fair value hierarchy under ASC 820 Fair Value Measurement due to the use of significant unobservable inputs, including projected cash flows and discount rates.

The fair value measurement was determined on a recurring basis as of June 30, 2026, and December 31, 2025. There were no transfers between Levels 1, 2, or 3 during the period.

The following table presented the fair value of the Company’s investment in the JV by level within the fair value hierarchy as June 30, 2026:

SCHEDULE OF FAIR VALUE OF INVESTMENT HIERARCHY

Quantitative Information about significant unobservable inputs (Level 3):

SCHEDULE OF QUANTITATIVE INFORMATION ABOUT SIGNIFICANT UNOBSERVABLE INPUTS

The projected revenue growth rates reflected an initial period of accelerated growth associated with the commercialization and market adoption of one product followed by additional products, subsequently followed by a gradual decline as the business matures and reaches a more stable and then stagnant growth phase as generics enter the market. The pharmaceutical industry often exhibits a financial profile characterized by initially negative EBIT margins, transitioning to high or blockbuster EBIT margins over financial projections. This J-curve trajectory is driven by extreme R&D costs, long development timelines and regulatory protection for a successful drug. The discount rate of 21.4% reflects management’s estimate of the JV’s weighted-average cost of capital, considering its early-stage nature, which to a great extent is mitigated by the expedited regulatory pathway to approval that the Company is planning under the 505(b)(2), for all the market risk, and company-specific risk factors. The significant unobservable inputs used in the fair value measurement are inherently uncertain and reflect management’s judgment about the assumptions market participants would use in pricing the asset. The terminal growth rate reflects long-term expectations for the business beyond the projection period. Increases (decreases) in revenue growth rates, EBIT margins, or terminal growth rates could result in a higher (lower) fair value, while increases (decreases) in the discount rate would result in a lower (higher) fair value.

Sensitivity and Measurement Uncertainty

The fair value of the Company’s investment in the JV is based on significant unobservable inputs and, as a result, is subject to substantial measurement uncertainty. Changes in key assumptions could result in a materially different fair value. For example, a 100 basis point increase in the discount rate could result in a decrease in the estimated fair value of approximately $120 million. The valuation is derived from projected future cash flows, which are inherently uncertain and subject to change due to, among other factors:

Given the early-stage nature of the JV and the absence of an active market for its equity interests, the fair value measurement is particularly sensitive to changes in key assumptions, including projected revenue growth rates, profitability, and the discount rate. Accordingly, actual results could differ materially from those reflected in the valuation, and such differences could have a material impact on the Company’s financial position and results of operations in future periods. The valuation does not represent a guaranteed realizable value and may differ significantly from amounts that could be realized in an actual transaction.

Restrictions on Transfer

The Company’s ownership interest in the Joint Venture is subject to certain contractual restrictions on transfer under the JV Agreement. In accordance with ASU 2022-03 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, such restrictions were considered in the determination of fair value.

Concentration of Credit Risk

The Company does not believe that it is exposed to significant concentrations of credit risk related to its investment in the Joint Venture.

Additional Considerations

The fair value of the Company’s investment reflects its 45% ownership interest and may differ from a pro rata share of the JV’s enterprise value due to factors such as lack of control and marketability. Discounts for lack of control and marketability were applied because the valuation was performed on a non-controlling, non-marketable basis, consistent with ASC 820 fair value. ASC 820 reflects a market participant perspective at the enterprise level. While the applied methods (discounted cash flow and Guideline Public Company) already incorporate risk and marketability assumptions, the Company conservatively applied the control and marketability discounts to the valuation. The valuation does not represent a guaranteed realizable value and may differ significantly from amounts that could be realized in an actual transaction.

Fair Value Hierarchy – Lunai

The Company’s equity investment in Lunai is classified within Level 3 of the fair value hierarchy under ASC 820 Fair Value Measurement due to the use of significant unobservable inputs, including lack of marketability and liquidity conditions and contractual limitation conditions. The fair value of the investment is determined using a market approach that considers the quoted market price of Lunai’s publicly traded common stock, adjusted to reflect the specific rights, preferences, and restrictions associated with the Series B preferred stock. Because significant unobservable inputs are used in determining fair value, the investment is classified as a Level 3 asset within the fair value hierarchy. The Company received convertible preferred stock of Lunai, with a stated value of $12.5 million. For financial reporting, the fair value of these shares was determined using a market approach based on the market capitalization value of the underlying common stock on an as-converted basis. This baseline value was then adjusted downward to reflect significant unobservable inputs, specifically a discount for lack of marketability and discounts for contractual restrictions.

The fair value measurement was determined as of June 30, 2026 only, as no similar transactions were recorded during the year ended December 31, 2025. There were no transfers between Levels 1, 2, or 3 during the period.

Quantitative Information about significant unobservable inputs (Level 3)

The Company first attributed a portion of the value of the market capitalization of Lunai common stock, based on a fully diluted basis including the preferred shares and common shares. The market capitalization of Lunai was the only observable input available and used in the fair market value of the Company’s investment in preferred shares of Lunai Bioworks.

The Company then considered the below factors that impacted the liquidity and marketability of the underlying equity interest along with existing contractual restrictions associated with the Lunai Preferred Stock on the date of the closing of the Lunai transaction and then on June 30, 2026.

Sensitivity and Measurement Uncertainty

The fair value of the Company’s investment in Lunai is based on significant unobservable inputs and, as a result, is subject to substantial measurement uncertainty. Changes in key assumptions could result in a different fair value. For example, a 10 percent increase in the discount rate could result in a decrease in the estimated fair value of approximately $0.1 million.

Lack of liquidity and marketability

The Company’s ownership of the convertible preferred shares of Lunai, even if converted into common shares of Lunai, is faced with liquidity and marketability limitations. The common stock of Lunai is fairly thinly traded. Further the preferred shares have Rule 144 restrictions and are restricted in book entry form, have no DTC eligibility, require shareholders’ approval prior to conversion amongst other conditions. The Company attributed a 35% discount due to all these factors.

Contractual Risks

The Company believes that it is exposed to certain concentrations of credit risk related to its investment in the Lunai preferred shares, such as beneficial ownership limitation, suspended conversion, cancellation of the shares if there were an IP clawback, cancellation of shares in the event of indemnification claims among other conditions. The Company attributed a 10% discount for these limitations

Based on the above limitations, the Company recorded an initial fair value of $1.1 million for the investment in Lunai on the date of the Lunai merger transaction and further recorded a gain in the value of $0.3 million in the three and six months ended June 30, 2026, based on changes to the fair value inputs. The Company will continue to record the fair value of its investment in future periods on a similar basis and report the change a in fair value through the unaudited condensed consolidated statement of operations.

For more information on Lunai, refer to Note 9 – Lunai Bioworks Transactions to these Notes to the unaudited Condensed Consolidated Financial Statements below.

Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of Common Stock equivalents (notes convertible into Common Stock, stock options and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. For the three months ended June 30, 2026, we included 20,527,660 of Common Stock Equivalents related to the convertible notes, to the weighted average Common Stock, as we reported a gain of approximately $0.4 million during such period. For the three months ended June 30, 2025, we included 44,516,338 of Common Stock Equivalents, related to the convertible notes, to the weighted average Common Stock, as we reported a gain of approximately $0.3 million during such period.

For the six months ended June 30, 2026 and 2025, respectively, no equivalent shares of the Common Stock were included as the Company incurred losses during the said periods, because addition of such stock equivalents in the computation would have been anti-dilutive.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and six months ended June 30, 2026 and 2025, there were no impairment losses recognized for long-lived assets.

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

The goodwill impairment test may be initiated by performing an optional qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates that it is not more likely than not that the fair value is less than the carrying amount, further quantitative testing is not required. Otherwise, a quantitative impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. For the three and six months ended June 30, 2026, and 2025, no impairment was recognized toward goodwill. For more information on goodwill and impairment, refer to Note 3 to these Notes to the unaudited Condensed Consolidated Financial Statements.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging” (“ASC 815”).

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts (“OID”) under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event occurs that is not within the entity’s control could or would require net cash settlement, then the contract shall be classified as an asset or a liability.

Investments - Equity Method

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the unaudited condensed consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares shall be included in the result from other income. Refer to Note 6 to these Notes to the unaudited Condensed Consolidated Financial Statements.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

Under ASC 606, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step process: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

While the Company entered into the transactions with Lunai and recorded service revenue of approximately $0.3 million, the Company does not anticipate generating revenues from rendering services to other third party customers for the development of certain drug products and/or in connection with certain out-licensing agreements, as least in the near future. In the case of services rendered for development of the drugs, revenue is recognized upon the achievement of the performance obligations or over time on a straight-line basis over the extended service period. In the case of out-licensing contracts, the Company records revenues either (i) upon achievement of certain pre-defined milestones when there is no obligation of the Company achieve any performance obligations in connection with the said pre-defined milestones, or (ii) upon achievement of the performance obligations if the milestones require the Company to provide the performance obligations.

The Company occasionally collects advance payments from customers toward commitments to provide services or performance obligations, in which case the advance payment is recorded as a liability until the obligations are fulfilled and revenue is recognized.

Recent Accounting Pronouncements

Recently Adopted

In December 2023, the FASB issued ASU 2023-09, “Improvements to Tax Disclosures” (Topic 740). The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and the income taxes paid information disclosed. The ASU is effective prospectively for fiscal years beginning after December 15, 2024, with retrospective application and early adoption permitted. The Company adopted this ASU on a prospective basis as of December 31, 2025

Not Yet Adopted

In November 2024 and January 2025, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” (Subtopic 220-40) “Disaggregation of Income Statement Expenses” and ASU 2025-01 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” (Subtopic 220-40): Clarifying the Effective Date”. The new guidance is intended to enhance transparency and disclosures by requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for the first annual reporting periods after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is in the process of evaluating the impact that the adoption of this ASU will have on its financial statements and related disclosures.

All other newly issued, but not yet effective, accounting pronouncements have been deemed to be not applicable or immaterial to the Company.