NEXGEL, INC. Material Event - What Happened

Hey there! Let's break down what's going on with NEXGEL, INC. in a way that makes sense, without all the confusing finance talk. Think of this as me explaining the news to you over coffee.

---

1. What happened? (The actual event, in plain English)

Okay, so here's the big news from NEXGEL: NEXGEL is spinning off a portion of its drug delivery program into a brand new, separate company called NexGelRx, Inc.

Basically, they're taking a specific part of their business – the one focused on how medicines are delivered, likely using their gel technology – and creating an entirely new, independent company out of it. It's like a parent company giving birth to a new, separate child company.

Here are the key details of the separation:

• NEXGEL shareholders will receive a non-dilutive 19.99% equity interest in NexGelRx. This means if you own NEXGEL shares, you'll get a piece of the new company without your existing shares being watered down, at least for the first $8 million of capital NexGelRx raises.
• NEXGEL itself will receive a 5% global royalty, in perpetuity, on any products NexGelRx sells using NEXGEL's drug delivery technology. So, NEXGEL will get a cut of future sales from the new company.
• NEXGEL will also be the exclusive manufacturer of the hydrogel for NexGelRx. This secures a manufacturing contract for the original company.
• NexGelRx has already closed an initial round of funding from outside investors, meaning it has capital to hit the ground running.

2. When did it happen?

This all went down on Thursday, December 11, 2025. So, it's pretty fresh news, and the market is likely still reacting to it.

3. Why did it happen? (Context and background)

So, why did this happen? While the filing doesn't give all the details, companies usually do a "spin-off" for a few key reasons, and NEXGEL's CEO, Adam Levy, shed some light on it:

• Focus: As CEO Adam Levy explained, this move allows both the original NEXGEL and the new NexGelRx to focus intensely on their specific areas without being distracted by the other. NEXGEL can now concentrate on its core business of contract manufacturing and consumer branded products in health and beauty, while NexGelRx can fully dedicate itself to developing and commercializing high-value prescription (Rx) drug delivery technologies.
• Unlock Value & Attract Investment: Sometimes, a part of a company is more valuable on its own than when it's bundled with the rest. By separating, investors might better appreciate the potential of the drug delivery program, potentially leading to a higher combined value for both companies. Levy noted this provides "potential return on investment for our shareholders" and allows NEXGEL to pursue a "potentially large opportunity without NEXGEL itself having to fund its development."
• Specialized Expertise: Dr. Jerome Zeldis, a director for both companies, highlighted the potential of the hydrogel technology for "new topical and systemic therapies." Creating a dedicated company like NexGelRx ensures a team focused solely on turning this promising technology into "a platform for a family of useful and transformative therapies."

Think of it as a strategic move to streamline their operations, allow each part of the business to thrive independently, and potentially boost the value of both parts of the business.

4. Why does this matter? (Impact and significance)

Alright, so why should you care about this? This isn't just some small detail; it could have a real impact.

• Two Companies, Not One, with Clearer Missions: Instead of one company with diverse interests, there will now be two focused entities. NEXGEL will be all about its existing healthcare, beauty, and OTC products, plus its contract manufacturing. NexGelRx will be solely focused on developing prescription drug delivery solutions. This could lead to more efficient operations and faster innovation for both.
• Financial Benefits for NEXGEL: The original NEXGEL isn't just letting go; it's securing a 5% royalty on future sales from NexGelRx and an exclusive manufacturing contract for the hydrogel. This means NEXGEL will continue to benefit financially from the drug delivery segment's success without having to bear all the development costs and risks.
• Potential for Growth: By allowing the drug delivery program to operate independently with its own funding, it might be able to grow faster and pursue opportunities that were harder to tackle under the larger NEXGEL umbrella.
• Investor Implications: If you're an investor, this means you will now likely end up owning shares in two companies instead of one, as NEXGEL shareholders are set to receive a 19.99% equity interest in the new NexGelRx. The value of your original NEXGEL shares will adjust to reflect the part of the business that has been spun off, but you'll also have a stake in the new, specialized company.

It could really change how the company operates, how much money it makes, and how investors view its future.

5. Who is affected? (Employees, customers, investors, etc.)

Who's feeling the ripples from this news? Pretty much anyone connected to NEXGEL:

• NEXGEL Employees: Employees working on the drug delivery program will likely transition to NexGelRx, Inc. This could mean new opportunities or changes in their day-to-day work. Other NEXGEL employees will remain with the original company, which will now be more focused on contract manufacturing and consumer brands.
• Customers: Customers who use NEXGEL's drug delivery products will likely now be dealing with NexGelRx, Inc. NEXGEL's other customers (for its remaining products like SilverSeal, Hexagels, Kenkoderm, etc.) will continue as usual with a more focused NEXGEL.
• Investors (that's you!): This is a big one. You will receive a non-dilutive 19.99% equity interest in the new NexGelRx company. This means you'll now need to evaluate two separate companies, each with its own prospects and risks.
• Competitors: Competitors in the drug delivery space will now face a new, potentially more agile, competitor in NexGelRx. Competitors to NEXGEL's other businesses will see a more focused NEXGEL.

6. What happens next? (Immediate and future implications)

So, what's on the horizon after this big news?

• Immediately: The spin-off has already occurred, and NexGelRx has secured initial funding. The stock market will likely continue to react, possibly with some volatility as investors digest the news and the implications of owning shares in two distinct entities.
• In the coming weeks/months: The process of formally separating the two companies will continue, involving legal, financial, and operational steps to ensure NexGelRx can operate independently. Investors will need to understand how their NexGelRx shares will be distributed.
• Longer term: This event could set the stage for both NEXGEL and NexGelRx to pursue their respective strategies more aggressively, potentially boosting growth and market position for both. NEXGEL will benefit from the royalty stream and manufacturing contract, while NexGelRx will aim to develop its promising drug delivery technology.

It's definitely something to keep a close eye on as the situation develops.

7. What should investors/traders know? (Practical takeaways)

Alright, for those of you watching your portfolios or thinking about making a move with NEXGEL stock:

• Understand the Spin-Off Mechanics: If you own NEXGEL shares, you are set to receive a non-dilutive 19.99% equity interest in NexGelRx. Research how these shares will be distributed to you. This is crucial for understanding your new investment landscape.
• Evaluate Both Companies: You'll essentially be investing in two companies now. You'll need to understand the business, prospects, and risks of both the "new" NEXGEL (focused on contract manufacturing and consumer brands, benefiting from royalties and manufacturing for NexGelRx) and NexGelRx, Inc. (focused on prescription drug delivery).
• Don't panic (or get overly excited) immediately: Big news, especially unexpected news like a spin-off, can cause big swings in a stock's price. It's often smart to let the initial dust settle a bit before making any rash decisions.
• Do your homework: Read the official company announcement, check out what reputable financial analysts are saying, and try to understand the full picture. Don't just rely on headlines or social media chatter.
• Consider your own goals: Does this news align with why you invested in NEXGEL in the first place? Does it change your long-term outlook for the company? If you're a short-term trader, how does this impact your strategy?
• Risk vs. Reward: Every big event comes with new risks and new opportunities. Think about how this changes that balance for NEXGEL (and now NexGelRx) and your investment.
• Stay informed: Keep an eye on NEXGEL's news feed, especially any follow-up announcements, investor calls, or upcoming earnings reports. These will provide more clarity.

Remember: This isn't financial advice, but rather a reminder to be thoughtful and informed in your decisions. Good luck out there!