NEXGEL — Second Quarter 2026 Earnings Summary

Financial Performance

• Q2 2026 revenue totaled $3.69 million.
• Net loss for the quarter was $2.87 million.
• Reported loss included $756,554 in BioNX intangible asset amortization.
• One-time transaction-related expenses amounted to $273,710.
• Costs associated with the strategic recall of SilverSeel inventory from Amazon were $144,495.
• As of June 30, 2026, the company held approximately $710,000 in restricted cash related to a prior transaction with ATW Partners; these funds were released and returned to the company after quarter-end.
• BioNX Surgical backlog was approximately $795,000.

Guidance and Future Outlook

• Management expects opportunities to enter the second half of the year despite slower-than-anticipated integration and revenue ramp.
• The company intends to resolicit shareholder approval for an increase in authorized shares and reverse split authority as standalone proposals, targeting completion in late September 2026.
• An investor update call is scheduled for or around September 15, 2026, to discuss operational progress and expectations for the remainder of 2026.
• Management anticipates the hospital channel will drive increased sales volume and generate higher gross margins compared to current distribution channels.

Business Segments and Product Lines

• The company formed the BioNX Surgical division following the April transaction with Celularity, Inc., focusing on integrating sales representatives, customer relationships, and branding.
• Manufacturing technology and future production capabilities are being transferred to Sequence Life Science's facility in San Antonio, Texas, to address supply chain constraints.
• SilverSeel inventory was strategically recalled from Amazon to support a hospital market launch beginning in August; the product holds established reimbursement A-codes for surgical and wound care applications.
• A new commercial initiative, BioNX Regenerative Eye Health & Aesthetics, was launched to target ocular and aesthetic applications using exclusively licensed products from Sequence.
• The company has established brands including Silverseal, Hexagels, Turfguard, Kenkoderm, and Silly George.

Market and Competitive Landscape

• The company is expanding into the hospital market, including physician offices, ambulatory surgery centers (ASCs), and hospital settings.
• The company is targeting high-growth regenerative medicine markets through its new eye health and aesthetics platform.
• The company maintains strategic contract manufacturing relationships with leading consumer healthcare companies.

Risks and Challenges

• Rollout initiatives and expansion into the surgical channel have progressed at a slower pace than originally anticipated.
• Supply chain challenges have continued to impact product availability.
• The previously announced proxy solicitation did not receive sufficient shareholder support for the proposed increase in authorized shares and reverse stock split authority, primarily due to a high level of broker non-votes linked to the redomicile proposal.
• Forward-looking statements involve known and unknown risks, uncertainties, and factors that could cause actual results to differ materially from anticipated results.

Management Commentary and Tone

• Management described the second quarter as a period of significant transformation and preparation.
• While acknowledging slower progress, management stated they remain encouraged by opportunities entering the second half of the year.
• Management believes the resolicited proposals for authorized shares and reverse split authority are well-positioned for approval due to the expected reduction in broker non-votes.
• The new BioNX Regenerative Eye Health & Aesthetics initiative is led by Shaun Mullen, an industry veteran with over 20 years of experience launching ophthalmic companies.

Other Key Points

• The company completed a transaction with Celularity, Inc. in mid-April 2026.
• Sequence deployed tissue processing specialists to Celularity's New Jersey facility on August 4 to facilitate the transfer of manufacturing technology.
• The business relationship with ATW Partners has been concluded following the release of restricted funds.
• The company has engaged Alliance Advisors as a proxy solicitor to assist in the resolicitation of shareholder proposals.