Rezolute, Inc. (RZLT) FY 2026 MD&A

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the Cautionary Statement Regarding Forward-Looking Statements on page ii, the “Risk Factors” set forth in Item 1A, and elsewhere in this Annual Report. We assume no obligation to update forward-looking statements or the risk factors. You should read the following discussion in conjunction with our consolidated financial statements and related notes included in Item 8 of this Annual Report.

Certain figures, such as interest rates and other percentages included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.

Executive Summary

Our priorities going into the second half of 2026 and first half of 2027 are to: (i) achieve alignment with the FDA on the path forward in congenital HI following the completion of the sunRIZE study, (ii) complete enrollment and announce topline data for the registrational Phase 3 upLIFT study in tumor HI, and (iii) assuming supportive data, submit a Biologics License Application to the FDA for ersodetug in mid-2027.

Clinical Development

Our focus as a Company is advancing ersodetug as a potential treatment for refractory hypoglycemia caused by all forms of HI, specifically in two Phase 3 clinical studies for congenital HI and tumor HI. In December 2025, we announced topline results from the Phase 3 sunRIZE study of ersodetug in patients with congenital HI, in which the study did not meet its primary endpoint or key secondary endpoint, despite a favorable safety profile and substantial evidence of clinical activity from the broader clinical development program. Following the topline results, we engaged with the FDA to review the totality of available data from sunRIZE, including continuous glucose monitoring (CGM) and longer-term treatment data. In subsequent interactions, the FDA has continued to acknowledge the challenges associated with conducting randomized, placebo-controlled studies in this rare pediatric patient population, including the potential impact of intensive monitoring and caregiver intervention on measures of hypoglycemia. As of September 2026, the FDA continues to review the substantial body of data generated from the sunRIZE program to determine whether there is a potential regulatory path

-21-

-

Table of Contents

forward for ersodetug in congenital HI, and no specific timeline has been established for completion of this review. See Item 1A of this Annual Report for the related risks.

​

The upLIFT study in tumor HI is currently enrolling in the U.S. and Europe. At a meeting held with FDA on August 19, 2025, the Agency agreed to modifications to the design of the study including removing the need to conduct a double-blind randomized placebo-controlled trial. The truncated study will include as few as 16 participants and will be limited to the single-arm open-label portion of the upLIFT study. On June 2, 2026, we provided an interim update on the program. Of the initial eight participants enrolled six had already met the responder criterion for the study’s primary endpoint and a seventh participant met the responder criterion following the June interim update. Topline results from the study are anticipated to be available before the end of 2026. See Item 1A of this Annual Report for the related risks.

Factors Impacting our Results of Operations

We have not generated any meaningful revenues since our inception in March 2010. Over the last several years, we have conducted private placements and public offerings to raise additional capital, conducted pre-clinical and clinical trials, and conducted other research and development activities on our product candidates.

Due to the time required to conduct clinical trials and obtain regulatory approval for our product candidates, we anticipate it will be some time before we generate substantial revenues, if ever. We expect to generate operating losses for the foreseeable future; therefore, we expect to continue efforts to raise additional capital to maintain our current operating plans over the next several years. We cannot assure you that we will secure such financing or that it will be adequate for the long-term execution of our business strategy. Even if we obtain additional financing, it may be costly and may require us to agree to covenants or other provisions that will favor new investors over our existing shareholders.

Key Components of Consolidated Statements of Operations

Research and development expenses. Research and development (“R&D”) expenses consist primarily of cash and share-based compensation and employee benefits related to personnel engaged in R&D activities, clinical trial costs, licensing costs, and consulting and outside services engaged in the design and development of our product candidates and other scientific research projects. Our R&D costs also include an allocable portion of our facilities and overhead costs based on personnel and other resources devoted to R&D activities.

General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of cash and share-based compensation and employee benefits related to personnel engaged in our administrative, finance, accounting and executive functions. Our G&A expenses also include professional fees for business development, commercial planning, legal, auditing, consulting, investor relations, other costs primarily related to our status as a public company, and an allocable portion of our facilities and overhead costs based on personnel and other resources devoted to G&A activities.

Interest and other income. Interest and other income consist primarily of interest income earned on marketable debt securities and temporary cash investments, amortization of investment premiums and accretion of investment discounts.

Critical Accounting Policies and Significant Judgments and Estimates

Overview

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses during the reporting periods. These items are monitored and analyzed for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the

-22-

-

Table of Contents

period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.

With respect to our significant accounting policies that are described in Note 1 to our consolidated financial statements included in Item 8 of this Annual Report, we believe that the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.

Research and Development

Research and development costs are expensed as incurred. Intangible assets related to in-licensing costs under license agreements with third parties are charged to expense unless we are able to determine that the licensing rights have an alternative future use in other research and development projects or otherwise.

Clinical Trial Accruals

Clinical trial costs are a component of research and development expenses. We accrue and recognize expenses for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with clinical research organizations and clinical trial sites. We determine our estimates through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

Share-Based Compensation Expense

We measure the fair value of services received in exchange for grants of share-based awards based on the fair value of the award as of the grant date. We compute the fair value of equity awards with time-based vesting using the Black-Scholes Merton (“BSM”) option-pricing model and recognize the cost of the equity awards over the period that services are provided to earn the award. For stock option awards that contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized on a straight-line basis over the requisite service period as if the award was, in substance, a single award. Fair value of RSUs is based on the closing market price on the date of grant whereby compensation costs is recognized on a straight-line basis over the vesting period of the RSUs.

We recognize the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for share-based compensation.

Results of Operations

Our results of operations for the fiscal years ended June 30, 2026 and 2025 reflect net losses of approximately $77.6 million and $74.4 million, respectively. Our consolidated statements of operations for the fiscal years ended June 30, 2026 and 2025, along with the changes between fiscal years, are summarized below (in thousands, except percentages):

​

Presented below is a discussion of the key factors that resulted in changes in our results of operations for the fiscal years ended June 30, 2026 and 2025.

-23-

-

Table of Contents

Revenue. As a clinical stage company, we did not generate any revenue for the fiscal years ended June 30, 2026 and 2025. We are at a late stage of clinical development and do not currently have any commercial products. Our existing product candidates will require extensive additional clinical evaluation, regulatory review, significant marketing efforts and substantial investment before they generate any revenue. We do not expect to be able to market any of our product candidates for several years.

Research and Development Expenses. R&D expenses for the fiscal years ended June 30, 2026 and 2025 were as follows (in thousands, except percentages):

The decrease in R&D expenses of $7.7 million for the fiscal year ended June 30, 2026 was primarily attributable to (i) a decrease of $7.6 million related to ersodetug clinical and manufacturing costs and (ii) a decrease of $4.1 million in other R&D costs. These decreases amount to $11.7 million and were partially offset by a $3.4 million increase in R&D employee compensation and benefits and an increase of $0.6 million for severance expense.

The decrease in ersodetug program costs of $7.6 million primarily was driven by a decrease of $9.3 million due to lower spending on drug substance and drug product manufacturing, including decreases in activity for process performance qualification (“PPQ”) comparative to prior years PPQ activities to supply the sunRIZE OLE, upLIFT study and expanded access programs. This decrease of $9.3 million was partially offset by (i) an increase of $1.1 million in clinical costs due to startup activities, such as site activations, patient screenings and patient enrollment costs, for the Phase 3 upLIFT study, and (ii) an increase of $0.6 million in clinical trial costs for our congenital HI Phase 3 clinical study, which completed enrollment in May 2025, but still had 56 participants continuing on the OLE as of June 30, 2026. For the fiscal year ended June 30, 2025, we had lower clinical costs incurred for the Phase 3 upLIFT study as startup costs did not commence until January 2025. In addition, clinical costs for the sunRIZE study were lower due to fewer patients that were actively on study protocol or OLE for the fiscal year ended June 30, 2025.

Other R&D costs decreased by $4.1 million primarily due to a $5.0 million decrease in milestone payments under our ersodetug license agreement. The most recent milestone payment of $5.0 million became due in May 2025 upon dosing of the last patient in the Company’s Phase 3 sunRIZE clinical trial for ersodetug. This decrease was partially offset by an increase of $0.9 million in other R&D costs related to quality and patient affairs costs incurred to support the Phase 3 clinical studies.

For the year ended June 30, 2026, we had an average of 45 R&D employees compared to 48 R&D employees for the year ended June 30, 2025. The $3.4 million increase in R&D compensation and benefits was attributable to an increase of $3.0 million in share-based compensation and an increase of $0.4 million in cash-based compensation and benefits. There was $0.9 million of severance expense related for 21 R&D employees that were terminated on December 15, 2025 in connection with a management implemented workforce reduction, compared to $0.3 million of severance expense recognized for the fiscal year ended June 30, 2025.

General and Administrative Expenses. G&A expenses for the fiscal years ended June 30, 2026 and 2025 were as follows (in thousands, except percentages):

The increase in G&A expenses of $10.8 million for the fiscal year ended June 30, 2026 was attributable to an increase of $5.7 million in G&A compensation and benefits, an increase of $4.6 million in other G&A costs related to business development and market research and planning activities in preparation for future ersodetug commercial activities, and an increase in severance expense of $0.5 million.

The $5.7 million increase in G&A compensation and benefits was attributable to an increase of $4.4 million in share-based compensation and an increase of $1.3 million in cash-based compensation and benefits. The increase of $1.3 million in

-24-

-

Table of Contents

cash-based compensation was due to an increase in the average number of G&A employees from 18 for the fiscal year ended June 30, 2025 to 21 employees for the fiscal year ended June 30, 2026. There was $0.6 million of severance expense for eight G&A employees that were terminated on December 15, 2025 in connection with a management implemented workforce reduction, compared to $0.1 million of severance expense recognized in the fiscal year ended June 30, 2025.

Interest and other income. For the fiscal year ended June 30, 2026, we recognized $5.4 million of interest income compared to $5.5 million of interest income for the fiscal year ended June 30, 2025. This decrease of $0.1 million was primarily due to lower yields in fiscal year 2026 as the weighted average yield on interest-earning assets held by us decreased from 4.35% on June 30, 2025 to 3.78% on June 30, 2026. The impact of lower yields was partially offset by a higher average monthly balance of investments in marketable debt securities throughout the fiscal year ended June 30, 2026 compared to the fiscal year ended June 30, 2025.

Income Taxes. For the fiscal years ended June 30, 2026 and 2025, we did not recognize any income tax benefit due to our net losses and our determination that a full valuation allowance was required for our deferred income tax assets.

Liquidity and Capital Resources

Short-term Liquidity Requirements

As of June 30, 2026, we had cash and cash equivalents of $10.6 million and investments in marketable debt securities $97.2 million for total capital resources of $107.8 million. Working capital amounted to approximately $99.1 million as of June 30, 2026. We have incurred cumulative net losses of $481.4 million since our inception and as a clinical stage company we have not generated any meaningful revenue to date.

Our primary source of liquidity has historically been from the completion of private placements and public offerings of our equity securities. The completion of equity financings between June 2024 and June 2025 is the primary source of total cash and cash equivalents and investments in marketable debt securities of $107.8 million as of June 30, 2026.

Expected cash payments related to our existing contractual obligations for the fiscal year ending June 30, 2027 include approximately $0.8 million under our operating lease agreements.

Based on our cash, cash equivalents and marketable debt security investments totaling $107.8 million as of June 30, 2026, we believe we have adequate capital resources to meet our contractual obligations and carry out ongoing clinical trials and other planned activities for at least 12 months from the issuance date of the consolidated financial statements for the year ended June 30, 2026.

Long-term Liquidity Requirements

Our most significant long-term contractual obligations consist of $25.0 million payable upon regulatory approval for ersodetug by any regulatory authority under the Ersodetug Licensing Agreement (as defined below), and additional clinical and regulatory milestone payments up to $25.0 million payable to ActiveSite. Due to uncertainties in the timing associated with clinical trial activities and regulatory approvals, there is even greater uncertainty in forecasting the timing of our long-term future clinical and regulatory milestone payments.

In addition to the clinical and regulatory milestone payments discussed above, upon the future commercialization of ersodetug and compounds from our PKI Portfolio (as defined below) we will be obligated to pay additional milestone payments and alternative indication regulatory approval payments for an aggregate up to $202.5 million and royalties based on the net sales of the related products. These future milestones include $185.0 million in potential payments under the Ersodetug License Agreement and $17.5 million to ActiveSite for various sales-based milestones and alternative indication regulatory approvals. No assurance can be provided that commercialization will ever be achieved for ersodetug or compounds from our PKI Portfolio, in which case none of these future payments may ever be required.

In addition to our licensing obligations, we also have approximately $0.2 million of long-term contractual obligations under existing operating lease agreements that expire by October 2027. Based on our current forecast, we expect that our existing capital resources will be sufficient to fund our short-term liquidity requirements. However, we will need to obtain additional equity or debt financing in order to fund all of our long-term liquidity requirements.

-25-

-

Table of Contents

Presented below is additional discussion about the ongoing requirements pursuant to our license agreements, along with additional information about our ongoing financing activities that impacted our liquidity and capital resources for the fiscal year ended June 30, 2026.

Ersodetug License Agreement

In December 2017, we entered into a license agreement (the “Ersodetug License Agreement”) with XOMA through its wholly-owned subsidiary, XOMA (U.S.) LLC, pursuant to which XOMA granted an exclusive global license to develop and commercialize ersodetug for all indications. On July 14, 2026, XOMA was acquired by Ligand Pharmaceuticals Incorporated (“Ligand”).

To date we have paid a total of $12.0 million in milestone payments pursuant to the Ersodetug License Agreement. The most recent milestone payment of $5.0 million became due in May 2025 upon dosing of the last patient in our Phase 3 clinical trial for ersodetug and was paid in June 2025. The next milestone payment of $25.0 million will be due upon regulatory approval for ersodetug by any regulatory authority. We record a liability for milestone payments in our financial statements on the date that we achieve the milestone event. Additionally, upon the future commercialization of ersodetug, we will be required to pay royalties to Ligand based on the net sales of the related products, and milestone payments up to an additional $185.0 million if future net sales related to ersodetug exceed annual targets ranging from $100.0 million to $1.0 billion. Through June 30, 2026, no events have occurred that would result in a requirement to make additional milestone payments, and no royalties have been incurred to date.

ActiveSite License Agreement

In August 2017, we entered into a Development and License Agreement (the “ActiveSite License Agreement”) with ActiveSite Pharmaceuticals, Inc. (“ActiveSite”) pursuant to which we acquired the rights to ActiveSite’s Plasma Kallikrein Inhibitor program (“PKI Portfolio”). We initially focused on the development of RZ402 as a therapy for diabetic macular edema (“DME”). Following the completion of a Phase 2 clinical study for RZ402, we decided to pause the program to focus our resources on ersodetug. We are currently exploring the use of the PKI Portfolio to develop therapies for different indications. To date we have paid a total of $4.0 million in milestone payments to ActiveSite. The most recent milestone payment of $3.0 million was in February 2023 after dosing the first patient in a Phase 2 clinical trial for RZ402. The next milestone payment of $5.0 million will be due upon dosing of the first patient in a Phase 3 clinical trial. Remaining milestone payments under the ActiveSite License Agreement for various clinical and regulatory milestones amount to $25.0 million and milestones after commercial success or alternative indication approvals amount to $17.5 million. We will also be required to pay royalties equal to 2.0% of any net sales of products that use the PKI Portfolio. Through June 30, 2026, no events have occurred that would result in the requirement to make additional milestone payments, and no royalties have been incurred to date.

Cash Flows Summary

Presented below is a summary of our operating, investing and financing cash flows for the fiscal years ended June 30, 2026 and 2025 (in thousands):

​

-26-

-

Table of Contents

Cash Flows Used in Operating Activities

For the fiscal years ended June 30, 2026 and 2025, cash flows used in operating activities amounted to $64.6 million and $69.1 million, respectively. The key components in the calculation of our cash used in operating activities are as follows (in thousands):

​

For the fiscal year ended June 30, 2026, our net loss was $77.6 million compared to $74.4 million for the fiscal year ended June 30, 2025. For further discussion about changes in our operating results for the fiscal years ended June 30, 2026 and 2025, please refer to Results of Operations above.

For the fiscal year ended June 30, 2026, our non-cash expenses of $15.1 million primarily consisted of share-based compensation expense of $14.5 million and non-cash lease expense of $0.6 million. For the fiscal year ended June 30, 2025, our non-cash expenses of $7.7 million primarily consisted of share-based compensation expense of $7.1 million and non-cash lease expense of $0.5 million.

For each of the fiscal years ended June 30, 2026 and 2025, non-cash gains consisted of the net impact of accreting discounts and amortizing premiums on investments in marketable debt securities of $2.4 million.

For the fiscal year ended June 30, 2026, net changes in operating assets and liabilities increased operating cash flow by $0.3 million, primarily driven by a decrease in prepaid expenses and other assets of $1.5 million associated with prepayments for clinical trials and manufacturing activities, partially offset by a decrease in accounts payable and other accrued liabilities of $1.2 million. For the fiscal year ended June 30, 2025, net changes in operating assets and liabilities offset for a minimal increase in operating cash flow, primarily driven by an increase accounts payable and other accrued liabilities of $2.1 million, partially offset by an increase in prepaid expenses and other assets of $2.1 million associated with prepayments for clinical trials and manufacturing activities.

Cash Flows Provided by (Used in) Investing Activities

For the fiscal year ended June 30, 2026, net cash used in investing activities amounted to $21.1 million, primarily related to cash outflows used to purchase marketable debt securities of $178.2 million, partially offset by the proceeds from maturities of marketable debt securities of $157.1 million. For the fiscal year ended June 30, 2025, net cash used in investing activities amounted to $14.5 million, primarily related to cash outflows used to purchase marketable debt securities of $128.1 million, partially offset by the proceeds from maturities of marketable debt securities of $113.6 million.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities of $2.3 million for the fiscal year ended June 30, 2026 was primarily attributable to cash receipts from the exercise of employee stock options.

Net cash provided by financing activities for the fiscal year ended June 30, 2025 amounted to $107.3 million. This amount consisted of (i) proceeds of $97.3 million from the 2025 Underwritten Offering, (ii) proceeds of $6.0 million from the 2024 Private Placement, and (iii) proceeds of $4.2 million from the 2025 Private Placement. For the fiscal year ended June 30, 2025, we also received proceeds of $0.9 million from the exercise of employee stock options and paid $1.1 million for offering costs.

-27-

-

Table of Contents

Off-Balance Sheet Arrangements

During the fiscal years ended June 30, 2026 and 2025, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

See Note 1 to our consolidated financial statements included in Item 8 of this Annual Report regarding the impact of certain recently issued accounting pronouncements on our consolidated financial statements.