Debt

3 Months Ended

Mar. 31, 2026

Avenue Capital Loan Agreement

On March 23, 2026 (the “Closing Date”), we entered into a Loan and Security Agreement (the “Loan and Security Agreement”) and a Supplement to the Loan and Security Agreement (together with the Loan and Security Agreement, the “Loan Agreement”), with Avenue Venture Opportunities Fund II, L.P., as administrative agent and collateral agent (the “Agent”) and Avenue Venture Opportunities Fund II, L.P., as lender (the “Lender”, together with Agent, “Avenue Capital”).

The Loan Agreement makes available to us term loans in an aggregate principal amount of up to $25.0 million with (i) $7.0 million funded on March 24, 2026 (“Tranche 1”), (ii) up to $8.0 million to be made available to us between September 1, 2026 and March 31, 2027, subject to, (i) dosing of first patients in a phase 3 trial of Onychomycosis, (ii) raising $10.0 million via equity financing and (iii) positive data in our ongoing phase 2 clinical study of GX-03 for moderate-severe atopic dermatitis (“Tranche 2”). The Lender may make additional term loans of up to an additional $10.0 million (the “Discretionary Tranche 3” and collectively with Tranche 1, and Tranche 2, the “Loans”), to be funded between January 1, 2027 and June 30, 2028, subject to, among other things, (i) that we have drawn the full amount of Tranche 2, (ii) our achievement of a certain clinical milestone and (iii) the mutual written agreement between us and the Lender (upon the Lender’s investment committee approval).

The Loans bear interest at an annual rate equal to the greater of (x) the sum of 5.50% plus the prime rate as reported in The Wall Street Journal and (y) 12.25%. The Loans are secured by a lien upon and security interest in all of our assets, including intellectual property, subject to agreed exceptions. The loan matures on 42 month anniversary from the Closing Date (the “Maturity Date”). The Loan Agreement does not contain any minimum cash requirement or other financial covenants.

We will make interest-only payments on the Loans until the 15-month anniversary of the Closing Date, subject to (i) a 9-month extension, so long as Tranche 2 has been funded and (ii) an additional 6-month extension if we achieve the Discretionary Tranche 3 milestone. The Loan principal is repayable in equal monthly installments from the end of interest-only period to the Maturity Date.

We may, at our option at any time, prepay the Loans in their entirety by paying the then-outstanding principal balance and all accrued and unpaid interest on the Loans, subject to a prepayment fee equal to (i) 3.0% of the principal amount outstanding if the prepayment occurs on or prior to the first anniversary following the Closing Date, (ii) 2.0% of the principal amount outstanding if the prepayment occurs after the first anniversary following the Closing Date, but on or prior to the second anniversary following the Closing Date, and (iii) 1.0% of the principal amount outstanding if the prepayment occurs after the second anniversary following the Closing Date. We will pay a final payment of 3.75% (“Final Payment Fee”) of the amount funded and outstanding on the earlier of (x) the Maturity Date and (y) the date that we prepay all of the outstanding principal amount of the Loans in full.

On the Closing Date, we paid the Lender a commitment fee of $0.15 million. On the Closing Date, we also issued 342,857 shares of our common stock at no cost to the lender which represent 8.00% of the Tranche 1 and Tranche 2 amounts. The price per share was determined using the 5 days volume weighted-average price calculated on the day prior to closing date. If we draw the Discretionary Tranche 3, we will issue further shares to the lender at no cost which shall equal to 8.00% of the $10.0 million (amount of the Discretionary Tranche 3) at 5 days volume weighted-average price calculated on the day prior to funding of Discretionary Tranche 3. The fair value of the equity issued on the Closing Date was determined to be $1,050,967 calculated on the relative fair value basis.

The Loan Agreement contains customary representations, warranties and covenants, including covenants by us limiting, among other things, additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. The Loan Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy and the occurrence of a material adverse effect on the Company. After the occurrence of an event of default, the Agent may (i) accelerate payment of all obligations, impose an increased rate of interest, and terminate the Lender’s commitments under the Loan Agreement and (ii) exercise any other right or remedy provided by contract or applicable law including a foreclosure on our assets.

Pursuant to the Loan Agreement, the Lender will have the right to convert initially up to $2.0 million of the outstanding principal of the Loans (the “Conversion Option”) at a price per share equal to 80% of the trading price on the date of conversion, subject to certain terms and conditions, including beneficial ownership limitations. Upon draw-down of Tranche 2, the Conversion Option will be increased by $1.0 million. All Conversion Option shall terminate on the loan payoff.

In addition, subject to applicable law, the Lender may participate in certain equity financing transactions in an aggregate amount of up to $1.0 million on the same terms, conditions and pricing offered by us to other investors participating in such financing transaction (such right, the “Participation Right”). The Participation Right terminates upon the earlier of the Maturity Date and the repayment in full of all of the obligations under the Loan Agreement.

As of the closing date, we recorded the following discounts:

	Amount
Equity grant of 342,857 shares of common stock – pro-rated for Tranche 1	$	490,451
Commitment fee @ 1.00% of Tranche 1		70,000
Debt issuance costs – pro-rated for Tranche 1		66,412
Fair value of Conversion Option		436,622
Present value of Final Payment Fee		174,571
Total discounts recorded at inception of Avenue Capital Loan Agreement	$	1,238,056

We amortize debt discount as interest expense using the effective interest method through the maturity date. We accrete the Final Payment Fee as interest expense using the interest method through the maturity date. No amortization was recognized for the three months period ended March 31, 2026.

Discounts allocated to Tranche 2 amounting to $0.72 million have been capitalized as deferred offering cost asset on the consolidated balance sheets and shall be recorded as a debt discount when Tranche 2 is drawn or expensed if Tranche 2 is not drawn.

As of March 31, 2026, the long-term debt, without giving consideration to the extendable interest-only period consists of the following:

	Amount
Gross Principal Amount	$	7,000,000
Add: gross Final Payment Fee		262,500
Less: unamortized debt discount		(1,238,056	)
Less: present value discount on Final Payment Fee		(87,930	)
Long-term debt	$	5,936,514

As of March 31, 2026, without giving consideration to the extendable interest-only period, principal payments of long-term debt are as follows:

	Amount
2026	$	—
2027		1,296,296
2028		3,111,111
2029		2,855,093
Total	$	7,262,500

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

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