Septerna, Inc.: Form 10-Q for the period ended Sep 30, 2025

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed financial statements and related notes included elsewhere in this Quarterly Report and audited financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2025. This discussion and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors including, but not limited to, those set forth under the section titled “Risk Factors” and elsewhere in this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and you should carefully read the section titled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Overview

We are a clinical-stage biotechnology company with a world-class team of G protein-coupled receptor (“GPCR”) experts and drug developers advancing cutting-edge science to unlock the full potential of GPCR therapies for patients with significant unmet needs. Our proprietary Native Complex Platform™ is designed to enable new approaches to GPCR drug discovery and has led to the development of a diverse pipeline of novel oral small molecule drug candidates.

Our proprietary Native Complex Platform™ replicates the natural structure, function, and dynamics of GPCRs outside of cells at an industrial scale for, as we believe it, the first time. Our foundational technologies enable us to isolate, purify, and reconstitute full-length, properly folded GPCR proteins within ternary complexes with ligands and transducer proteins in a lipid bilayer that mimics the cell membrane. We then apply state-of-the-art discovery tools and technologies to these defined and tunable protein complexes to structurally design, screen for, and optimize potential product candidates. Leveraging our platform, we conduct GPCR oral small molecule drug discovery using an industrialized and iterative structure-based drug design approach for a diverse collection of GPCR targets. Our Native Complex Platform™ is designed to enable us to target specific GPCRs, uncover novel binding pockets for validated receptors, and pursue a wide spectrum of pharmacologies, including agonists (which activate GPCR signaling), antagonists (which inhibit GPCR signaling), and allosteric modulators (which either increase or decrease the degree of GPCR activation by endogenous ligands), to affect GPCR signaling in different ways to achieve desired therapeutic effects.

We are advancing a deep portfolio of oral small molecule GPCR-targeted programs with novel mechanistic approaches to treat diseases across multiple therapeutic areas for patients with significant unmet needs. Our wholly-owned pipeline is summarized in the figure below.

Recent Developments

• SEP-479 PTH1R Agonist Program:
• In September 2025, we provided an update on SEP-479, our oral small molecule parathyroid hormone 1 receptor (“PTH1R”) agonist program for hypoparathyroidism. In February 2025, we discontinued the Phase 1 clinical trial for SEP-786 as a result of observations of hyperbilirubinemia. The findings from our post-discontinuation investigation found that SEP-786 is a potent UGT1A1 inhibitor, which is a mechanism known to be associated with increases in unconjugated bilirubin. In a follow-up cynomolgus monkey study of SEP-786, conducted after clinical discontinuation, we also observed elevated unconjugated bilirubin levels.
• We announced in September 2025 that we had selected a new PTH1R development candidate, SEP-479. We presented preclinical data for SEP-479 from a translational rat thyroparathyroidectomy model demonstrating that SEP-479 achieved sustained normalization of serum calcium and phosphate levels over a 28-day dosing period. We also conducted a seven-day pharmacokinetic (“PK”) / pharmacodynamic (“PD”) study of SEP-479 in healthy cynomolgus monkeys, which showed robust, dose-dependent increases in serum calcium and decreases in endogenous parathyroid hormone levels across multiple dose levels of SEP-479.
• We observed no significant inhibition of UGT1A1 or other transporters for SEP-479 and no hyperbilirubinemia in any of the non-clinical studies to date for SEP-479, including the 7-day cynomolgus monkey study at supratherapeutic doses. SEP-479 was generally well-tolerated in the completed 28-day GLP toxicology studies in rats and dogs. Prior to the planned Phase 1 clinical trial initiation for SEP-479, we are also completing a 28-day GLP toxicology study in cynomolgus monkeys as an additional safety species. We plan to initiate a Phase 1 clinical trial for SEP-479 in the first half of 2026, pending the successful completion of all remaining preclinical studies, drug product manufacturing, and regulatory submissions.
• SEP-631 MRGPRX2 NAM Program:
• In August 2025, we announced the dosing of the first participants in our Phase 1 clinical trial of SEP-631, a selective oral small molecule Mas-related G protein-coupled receptor X2 (“MRGPRX2”) negative allosteric modulator being developed for the treatment of chronic spontaneous urticaria and other mast cell-driven diseases. The Phase 1 single-ascending dose (“SAD”) and multiple-ascending dose (“MAD”) clinical trial will evaluate the safety, tolerability, PK and PD of SEP-631 in healthy adult volunteers. The randomized, placebo-controlled Phase 1 SAD / MAD clinical trial is expected to enroll up to approximately 150 healthy adult volunteers. The SAD portion of the trial will evaluate the safety and tolerability of SEP-631 at escalating oral doses. The MAD portion of the trial will evaluate the safety and tolerability of oral doses of SEP-631 over the treatment period, and PD will be assessed through an icatibant skin challenge. We anticipate initial SAD/MAD data to be announced in the first half of 2026.
• TSHR NAM Program:
• We continue to make progress on our TSHR NAM program, advancing several lead compounds closer to development candidate selection with the goal of delivering a potential disease-modifying oral treatment for Graves’ disease and thyroid eye disease.
• Discovery Programs:
• We continue to advance discovery-stage programs utilizing our Native Complex Platform™ across multiple therapeutic areas.

Financial Overview

We were incorporated in Delaware in December 2019 under the name GPCR NewCo, Inc. In June 2021, we changed our name to Septerna, Inc. We are headquartered in South San Francisco, California.

We have incurred significant operating losses since our inception, except for the year ended December 31, 2023, when we recorded net income of $4.2 million, resulting from the gain on sale of non-financial asset of $47.6 million for the sale of an in-progress research and development (“IPR&D”) asset related to a GPCR program and the three months ended September 30, 2025 when we recorded net income of $8.2 million, resulting from the $21.5 million of revenue and $12.5 million of gain on sale of a non-financial asset. Our revenue to date has been generated solely from research services and the recognition of the one-time, non-refundable upfront payment of $195.0 million from our collaboration agreement. Since our founding, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, developing our proprietary and structure-based drug discovery platform, identifying and discovering our product candidates, establishing our intellectual property portfolio, conducting research and preclinical studies, including investigational new drug (“IND”)-enabling studies, initiating and conducting clinical trials, establishing arrangements with third parties for the manufacture of our product candidates and related raw materials, and providing general and administrative support for these operations. We have not had any products approved for sale and have not generated any revenue from product sales. Further, we do not expect to generate revenue from commercial product sales until such time, if ever, that we are able to successfully complete the development and obtain marketing approval for one or more of our product candidates. Our ability to generate product revenue will depend on the successful development and eventual commercialization of one or more of our product candidates.

We expect to continue to incur significant and increasing expenditures for the next several years as we:

• continue to advance our product candidates through preclinical studies and into clinical trials;
• attract, hire and retain additional personnel;
• continue to operate as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of any national securities exchange on which our securities are traded, legal, auditing, insurance expenses, investor relations activities, and other administrative and professional services;
• continue our research and development efforts and expand our pipeline of product candidates;
• acquire, discover, validate, and develop additional product candidates;
• manufacture supplies for our preclinical studies and clinical trials;
• obtain, maintain, expand, and protect our intellectual property portfolio;
• implement operational, financial and information management systems;
• make royalty, milestone or other payments under any future, license or collaboration agreements;
• potentially seek to identify, assess, acquire, or in-license or develop new technologies or additional product candidates;
• potentially experience any delays, challenges, or other issues associated with the clinical development of our product candidates, including with respect to our regulatory strategies;
• pursue regulatory approval of product candidates that successfully complete clinical trials; and
• establish a sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval and related commercial manufacturing build-out.

Our net losses may fluctuate significantly from period to period, depending upon the timing of our expenditures on research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses and other current liabilities, which includes accrued research and development, in the statements of cash flows in our audited and unaudited interim condensed financial statements included elsewhere in the Quarterly Report. Our net loss was $38.1 million and $51.1 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $156.5 million.

As a result, we will require substantial additional funding to further develop our product candidates and support our continuing operations. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. See the section titled “Liquidity and Capital Resources - Future Funding Requirements” below for additional information.

We have historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and, most recently, through an initial public offering (“IPO”). In October 2024, we completed our IPO, pursuant to which we issued and sold an aggregate of 18.4 million shares of our common stock (inclusive of an additional 2.4 million shares of our common stock issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full). The aggregate net proceeds received by us from the IPO was $302.8 million, net of total offering costs of $28.4 million.

We use contract research and development organizations to conduct our preclinical work and clinical trials. Additionally, we utilize third-party contract manufacturing organizations (“CMOs”), to manufacture and supply our preclinical and clinical materials during the development of our product candidates. We expect to use similar contract resources for the commercialization of our products, at least until our resources and operations are at a scale that justifies investment in internal manufacturing capabilities.

We conduct research and manufacturing work outside of the U.S., including China, that may be affected by tariffs, including tariffs that have been or may in the future be imposed by the U.S. or other countries through reciprocal tariffs. While we do not currently believe tariffs will have a material impact on our business or results of operations, we will continue to carefully monitor the situation. Additionally, we continue to actively monitor macroeconomic conditions and market volatility resulting from global and national economic developments, political unrest, high inflation, disruptions in capital markets, changes in international trade relationships, changes in or the disruptions of U.S. governmental agencies, whether from a continued U.S. federal government shutdown or reduced resources, new laws and regulations or amendments to existing laws and regulations in the U.S. and foreign countries, and military conflicts. While we believe such factors have had no significant impact on our business or financial results during the periods presented, future developments and potential impacts on our business are uncertain and cannot be predicted with confidence.

Collaboration, Research Service, and Asset Purchase Agreements

Novo Collaboration Agreement

In May 2025, we entered into a global Collaboration and License Agreement with Novo Nordisk A/S (“Novo”) (the “Novo Collaboration Agreement”). Under the Novo Collaboration Agreement, we and Novo are exclusively collaborating to leverage our proprietary Native Complex Platform™ to discover, develop and commercialize multiple potential oral small molecule therapies for metabolic-related diseases based on certain specified molecular targets. The collaboration objective is to discover and develop several novel mono-, dual-, or triple-acting oral small molecule drug candidates directed across five GPCRs, including the GLP-1, GIP, and glucagon receptors (the “Collaboration Targets”). The collaboration includes our most advanced preclinical metabolic program focused on developing an oral small molecule agonist to the GIP receptor. We and Novo have initially commenced four simultaneous research and development programs (each an “R&D Program”) with each pursuing one or more Collaboration Targets from discovery through development candidate selection.

In July 2025, the Novo Collaboration Agreement became effective and, subsequently, we received a one-time, non-refundable upfront payment of $195.0 million, which was recorded as deferred revenue in our condensed balance sheet. For each R&D Program, we are also eligible to receive up to approximately $498.0 million in research, development, regulatory, and commercial milestone payments. In addition, we are entitled to escalating, tiered royalties ranging from mid-to-high single-digits based on global product sales on a country-by-country and product-by-product basis with respect to a R&D Program until the later of ten years after the date of first commercial sale of the first product in such R&D Program in such country, expiration of specified patent rights covering such product in such country or the expiration of specified regulatory exclusivity for the first product in such R&D Program in such country. See Note 3 to the condensed financial statements included elsewhere in this Quarterly Report for additional information.

Vertex Asset Purchase and Research Service Agreement

Vertex Asset Purchase Agreement

In September 2023, we entered into an asset purchase agreement with Vertex Pharmaceuticals Incorporated (“Vertex”) under which Vertex acquired an IPR&D asset related to a GPCR program, including all intellectual property, materials, and compounds associated with the program (“Vertex Asset Purchase Agreement”). The Vertex Asset Purchase Agreement also provided for a potential milestone payment payable to us contingent upon the achievement of a milestone event.

In July 2025, this milestone event was determined to have been achieved and, as a result, we received a payment of $12.5 million in August 2025, which was recorded as a gain on sale of the non-financial asset within our total operating income (expenses) in our condensed statement of operations and comprehensive loss for the three and nine months ended September 30, 2025. We will not receive any other payments related to this IPR&D asset.

Vertex Research Service Agreement

In conjunction with the Vertex Asset Purchase Agreement in September 2023, we entered into a research service agreement with Vertex under which we agreed to perform certain exploratory research activities for Vertex (“Vertex Research Service Agreement”).

The Vertex Research Service Agreement was for a two-year term, which expired in September 2025. We recognized revenue associated with the Vertex Research Service Agreement over the performance period of the research services as the services were provided.

Components of Results of Operations

Revenue

We have not generated any revenue from product sales and do not expect to do so in the foreseeable future. Our ability to generate product revenue, if ever, will depend on the successful development and eventual commercialization of any product candidates that we identify. If we fail to complete the development of any future product candidates in a timely manner or to obtain regulatory approval for such product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected. Our revenues to date have been exclusively related to license and research and development ("R&D") services. Our license and research service revenue consists of amounts recognized from the portions of the non-refundable upfront payment and R&D services performed by us.

Operating Expenses

Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.

Research and Development

Research and development expenses account for the largest component of our total operating expenses. Research and development expenses consist primarily of direct and unallocated costs incurred for the research and development of our product candidates.

Our research and development expenses consist of:

• direct costs, including:
• preclinical and research program costs, which include external research and development costs related to (i) the production of preclinical materials, including fees and milestones paid to contract manufacturers and (ii) agreements with contract development organizations, consultants and other third-party contract organizations to conduct our preclinical studies and other research and development activities on our behalf, costs incurred in connection with laboratory operations, materials and supplies, and other preclinical studies;
• clinical program costs, which include external costs to conduct clinical trials, including costs paid to contract research organizations (“CROs”), the production of clinical materials and fees paid to contract manufacturers, costs incurred in connection with clinical laboratory operations, materials and supplies; and
• unallocated costs, including:
• payroll-related costs, including salaries, benefits and stock-based compensation for employees engaged in research and development activities;
• external research and development costs, including contract research and development and professional service fees for consulting and related services;
• facility-related and office costs, including lease/rent, building-related expenses, facility-related overhead, and depreciation expense; and
• other costs, including expenses related to our funded, sponsored research activities and technology licenses, laboratory operations, information technology (“IT”)-related expenses.

We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.

A significant portion of our research and development costs have been external costs, which we track by stage of development. However, we do not track our unallocated costs on a program specific basis because these costs are deployed across multiple projects and, as such, are not separately classified.

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We expect that our research and development expenses will increase substantially in absolute dollars for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, as our product candidates advance into later stages of development, as we begin to conduct clinical trials, as we seek regulatory approvals for any product candidates that successfully complete clinical trials, and as we incur expenses associated with hiring additional personnel to support our research and development efforts. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with developing product candidates, many of which are outside of our control, including the uncertainty of:

• the scope, timing and progress of preclinical and clinical development activities;
• the number and scope of preclinical and clinical programs we decide to pursue;
• our ability to maintain our current research and development programs and to establish new ones;
• establishing an appropriate safety profile with IND-enabling studies;
• the number of sites and patients included in the clinical trials;
• the countries in which the clinical trials are conducted;
• our ability to replicate positive results from a completed clinical study in a future clinical study;
• per patient trial costs;
• successful patient enrollment in, and the initiation of, clinical trials, as well as drop out or discontinuation rates;
• the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S. Food and Drug Administration (the "FDA"), European Medicines Agency (“EMA”), or any other comparable foreign regulatory authorities;
• delays or disruptions in review, approval, inspection, or other actions by the FDA or other applicable U.S. or foreign government regulatory authorities that could impact the timing, initiation, conduct, or completion of our clinical trials or marketing applications;
• the number of trials required for regulatory approval;
• the timing, receipt and terms of any regulatory approvals from applicable regulatory authorities;
• our ability to maintain existing collaborations and strategic relationships, to identify and establish any future collaboration arrangements on favorable terms, if at all, and to realize the intended and potential benefits of such agreements and collaborations;
• the performance of any current or future collaborators;
• establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
• significant and changing government regulation and regulatory guidance;
• the impact of any business interruptions to our operations or to those of the third parties with whom we work;
• obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
• launching commercial sales of our product candidates, if approved, whether alone or in collaboration with others; and
• maintaining a continued acceptable safety profile of the product candidates following regulatory approval.

Any changes in the outcome of any of these variables could mean a significant change in the costs and timing associated with the development of our product candidates. For example, if the FDA, EMA or any other comparable foreign regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development. We may never obtain regulatory approval for any of our product candidates.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs, costs related to maintenance and filing of intellectual property, legal fees related to corporate matters, professional fees paid for accounting, auditing, consulting, tax and investor relations services, insurance costs, general corporate expenses, and IT-related and facility-related costs not otherwise included in research and development expenses. Personnel-related costs include salaries, benefits, and stock-based compensation for our personnel in executive, legal, finance and accounting, human resources, and other administrative functions.

We expect that our general and administrative expenses will increase substantially in absolute dollars for the foreseeable future as we continue to increase our headcount to support our business growth and to advance our research and development programs.

Other Income, Net

Interest Income

Interest income consists of interest earned on our cash, cash equivalents and marketable securities during the period.

Other Expense, Net

Other expense, net consists primarily of changes in the fair value of our cash equivalents held in money market funds, loss on disposal of our fixed assets and foreign currency transaction gain or loss.

Income Taxes

We are subject to corporate U. S. federal and state income taxation. Our benefit for income taxes is recorded in accordance with Accounting Standard Codification 740, Accounting for Income Taxes, which provides for deferred taxes using an asset and liability approach. We establish a valuation allowance against all of our net deferred tax assets. We consider all available evidence, both positive and negative, including but not limited to our historical operating results, income or loss in recent periods, cumulative losses in recent years, forecasted earnings (losses), future taxable income (loss), and significant risk and uncertainty related to forecasts, and concluded the deferred tax assets are not more likely than not to be realized.

On July 4, 2025, the One Big Beautiful Bill Act (“H.R.1”) was signed into law, which introduced significant changes to the U.S. federal income tax code. Among other changes, H.R.1 makes permanent key elements of the Tax Cuts and Jobs Act, including restoring 100% bonus depreciation, eliminating the capitalization requirement for domestic research and development expenses, and modifying the business interest expense limitation, which now allows depreciation and amortization to be included in the limitation calculation. ASC 740 requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted in the third quarter of 2025. We are still in the process of evaluating H.R.1's impact on our condensed financial statements and an estimate of the financial impact cannot be made at this time. However, we do not expect the impact to be material to our condensed financial statements.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Our results of operations for each of the periods indicated are summarized in the table below (in thousands):

Revenue

Our revenue was generated from research activities performed for Novo in connection with the Novo Collaboration Agreement and Vertex in connection with the Vertex Research Service Agreement. We recorded revenue of $21.5 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively. We recorded revenue of $21.8 million and $0.9 million for the nine months ended September 30, 2025 and 2024, respectively.

$21.3 million of our total revenue for the three and nine months ended September 30, 2025 was generated from research activities performed for Novo in connection with the Novo Collaboration Agreement while the remainder was generated from research activities performed for Vertex in connection with the Vertex Research Service Agreement.

Operating Expenses

Research and Development

The following table summarizes our research and development expenses for the periods indicated by direct and unallocated costs (in thousands):

Research and development expenses were $24.3 million and $17.8 million for the three months ended September 30, 2025 and 2024, respectively. The increase was primarily due to (i) $6.6 million of higher direct costs associated with our clinical and preclinical and research programs, (ii) $3.6 million of higher employee-related costs as a result of increased headcount as we continue to grow our business, and (iii) $0.3 million of higher facility-related and office costs as we expanded our office space in July 2024 to accommodate higher occupancy and larger operational activities, partially offset by $4.1 million of lower expenses attributable to unallocated external research and development costs.

Research and development expenses were $65.7 million and $46.0 million for the nine months ended September 30, 2025 and 2024, respectively. The increase was primarily due to (i) $19.3 million of higher direct costs associated with our clinical and preclinical and research programs, including $2.3 million of higher clinical trial expenses, (ii) 7.4 million of higher employee-related costs as a result of increased headcount as we continue to grow our business, and (iii) $1.8 million of higher facility-related and office costs as we expanded our office space in July 2024 to accommodate higher occupancy and larger operational activities, partially offset by $8.1 million of lower expenses attributable to unallocated external research and development costs and $0.8 million of lower other research and development expense.

In February 2025, the SEP-786 clinical study was discontinued and, as a result, we do not anticipate incurring significant additional clinical trial costs associated with this study. In September 2025, we announced the selection of SEP-479 as our next-generation oral small molecule PTH1R agonist development candidate and are now advancing SEP-479 through the completion of the remaining preclinical studies, manufacturing of clinical drug supply, and preparation of regulatory submissions in support of our plan to initiate a Phase 1 clinical trial for SEP-479 in the first half of 2026. We expect to continue to incur increased research and development expenses as we advance the ongoing clinical trial for SEP-631 towards completion, progress SEP-479 towards clinical development, continue to advance our TSHR NAM preclinical program and multiple discovery-stage programs in our pipeline, and continue to invest in our Native Complex PlatformTM.

General and Administrative

General and administrative expenses were $7.1 million and $4.9 million for the three months ended September 30, 2025 and 2024, respectively. The increase was primarily due to (i) $1.5 million of higher employee-related costs as a result of increased headcount to support our growing operations, (ii) $0.5 million of higher IT-related expenses, (iii) $0.3 million of higher legal and consulting fees, and (iv) $0.2 million of higher facility-related and office costs as a result of increased operational activities and operating as a public company.

General and administrative expenses were $20.9 million and $10.9 million for the nine months ended September 30, 2025 and 2024, respectively. The increase was primarily due to (i) $4.4 million of higher employee-related costs as a result of increased headcount, (ii) $2.2 million of higher legal and consulting fees, (iii) $1.0 million of accounting and consulting fees, (iv) $1.3 million of higher

IT-related expenses, (v) $0.4 million of higher facility-related and office costs as a result of increased operational activities and operating as a public company and (vi) $0.6 million of other general and administrative expenses.

Gain on Sale of Non-Financial Asset

Gain on sale of non-financial asset of $12.5 million during the three and nine months ended September 30, 2025 was attributable to a milestone payment under the Vertex Asset Purchase Agreement during the year ended December 31, 2023. No gain on sale of non-financial asset was recorded during the three and nine months ended September 30, 2024.

Other Income, Net

Interest Income

Interest income was $5.6 million and $1.9 million for the three months ended September 30, 2025 and 2024, respectively. Interest income was $14.2 million and $4.7 million for the nine months ended September 30, 2025 and 2024, respectively. The increases in interest income for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively, were due to higher interest rates and higher balances of invested cash in cash equivalents and marketable securities.

Benefit for Income Taxes

We recognized $0.1 million and $0.3 million of benefit for income taxes for the three and nine months ended September 30, 2024, respectively. We did not record a benefit or provision for income taxes for the three and nine months ended September 30, 2025.

Liquidity and Capital Resources

Sources of Liquidity

Our net losses were $38.1 million and $51.1 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $156.5 million. Since our founding, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, developing our proprietary and structure-based drug discovery platform, identifying and discovering our product candidates, establishing our intellectual property portfolio, conducting research and preclinical studies, including IND-enabling studies, initiating and conducting clinical trials, establishing arrangements with third parties for the manufacture of our product candidates and related raw materials, and providing general and administrative support for these operations. We expect to continue to incur substantial expenditures for our research and development programs.

We have historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and most recently, through an IPO. In October 2024, we completed our IPO, pursuant to which we issued and sold an aggregate of 18.4 million shares of common stock (inclusive of 2.4 million shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares in full). The aggregate net proceeds received by us from the IPO was $302.8 million, net of total offering costs of $28.4 million.

In July 2025, upon the effectiveness of the Novo Collaboration Agreement, we received a one-time, non-refundable upfront payment of $195.0 million. In August 2025, we received a $12.5 million milestone payment from the Vertex Asset Purchase Agreement. We believe our cash, cash equivalents and marketable securities of $561.6 million as of September 30, 2025 will be sufficient to fund our operations and capital expenditure requirements at least into 2029.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

32

Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities was $125.2 million for the nine months ended September 30, 2025. The net cash provided by operating activities for the nine months ended September 30, 2025 was due to $169.8 million of net change in operating assets and liabilities, partially offset by $38.1 million of net loss, net non-cash charges of $6.5 million primarily attributable to gain on sale of non-financial asset and amortization of premiums (discounts), net.

Net cash used in operating activities was $46.5 million for the nine months ended September 30, 2024. The net cash used in operating activities for the nine months ended September 30, 2024 was due to our net loss of $51.1 million, partially offset by $1.7 million of net change in operating assets and liabilities, $2.9 million of non-cash charges for depreciation and amortization, stock-based compensation, non-cash operating lease expense, deferred income tax and accretion of discounts, net, on marketable securities.

Net Cash Used in Investing Activities

Net cash used in investing activities of $44.1 million for the nine months ended September 30, 2025 was attributable to $223.5 million of purchases of marketable securities and $0.5 million of purchases of property and equipment, partially offset by the maturity of $167.4 million of marketable securities and the receipt of the $12.5 million milestone payment related to the Vertex Asset Purchase Agreement.

Net cash used in investing activities of $27.4 million for the nine months ended September 30, 2024 was attributable to $65.8 million of purchases of available-for-sale marketable securities and $1.5 million of purchases of property and equipment, partially offset by the receipt of the remaining $22.6 million from the sale of non-financial asset during the year ended December 31, 2023 and the maturity of $17.3 million of available-for-sale marketable securities.

Net Cash Provided by Financing Activities

Net cash provided by financing activities of $0.7 million for the nine months ended September 30, 2025 was primarily attributable to the proceeds from the exercise of stock options.

Net cash provided by financing activities of $73.6 million for the nine months ended September 30, 2024 was primarily attributable to the net proceeds from the sale and issuance of our Series B convertible preferred stock.

Future Funding Requirements

Our primary use of cash is to fund our operations, primarily research and development expenditures. Cash used for operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

• the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates;
• our ability to successfully develop, obtain regulatory and marketing approvals of our product candidates for the expected indications and patient populations;
• the expenses of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;
• our ability to maintain existing collaborations or strategic relationships and the extent to which we identify and enter into future collaborations or other arrangements with additional third parties in order to further develop our product candidates, as well as our ability to realize the intended and potential benefits of such agreements and collaborations;
• regulatory or legal developments in the United States and other countries;
• the expenses of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
• the expenses and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;
• our ability to establish additional collaborations on favorable terms, if at all;
• the expenses required to scale up our clinical, regulatory and manufacturing capabilities;
• the expenses of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and
• revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

We will need additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of private and public equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. However, the trading prices for our common stock and for other biopharmaceutical companies have been highly volatile. As a result, we may face difficulties raising capital through sales of our common stock, and such sales may be on unfavorable terms. Similarly, adverse macroeconomic conditions and market volatility resulting from global and national economic developments, political unrest, high inflation, disruptions in capital markets, changes in international trade relationships, changes in or the disruptions of U.S. governmental agencies, whether from a continued U.S. federal government shutdown or reduced resources, global health crises, or other factors could materially and adversely affect our ability to consummate an equity or debt financing on favorable terms or at all. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We historically financed our operations primarily through the issuances of convertible promissory notes and convertible preferred stock, and most recently, through an IPO. In October 2024, we completed our IPO, which resulted in net proceeds of $302.8 million, net of total offering costs of $28.4 million. Since our inception, we have devoted substantially all of our resources to raising capital, organizing and staffing our company, business and scientific planning, conducting discovery and research and development activities, establishing, maintaining, and protecting our intellectual property portfolio, developing and progressing our product candidates and preparing for clinical trials, establishing arrangements with third parties for the manufacture of our product candidates and component materials, engaging in collaboration activities, and providing general and administrative support for these operations.

Critical Accounting Policies and Use of Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). The preparation of these condensed 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 condensed financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our 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. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

During the nine months ended September 30, 2025, there have been no material changes to our critical accounting policies and estimates as described in our Annual Report, except as described below.

Revenue Recognition

We account for revenue in accordance with ASC 606, “*Revenue from Contracts with Customers” (“*ASC 606”). Under ASC 606, we recognize revenue when the customer obtains control of the promised goods or services at an amount that reflects the consideration we expect to receive in exchange for those goods or services. See Note 1, Significant Accounting Policies, to our condensed financial statements included elsewhere in this Quarterly Report for additional information.

Recent Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 1 to our condensed financial statements included elsewhere in this Quarterly Report.

Emerging Growth Company and Smaller Reporting Company Status

We qualify as “emerging growth company” under the JOBS Act, which permits us to take advantage of an extended transition period to comply with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies. We have elected to use this extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We could be an emerging growth company until the earliest to occur: (i) the last day of the fiscal year in which we have more than $1.235 billion in annual gross revenue; (ii) the date we qualify as a “large accelerated filers” as defined in Rule 12b-2 under the Exchange Act, with at least $700.0 million of equity securities held by non-affiliates; (iii) the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; or (iv) the last day of the fiscal year ending after the fifth anniversary of our IPO. Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report.

Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that these disclosures controls were effective at a reasonable assurance level as of September 30, 2025.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Principal Executive Officer and Principal Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, the effectiveness of any internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Investing in our common stock involves a high degree of risk. For a detailed discussion of the risks and uncertainties related to our business, please refer to the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024, except as set forth below. You should carefully consider the risks and uncertainties described below and in our Annual Report on Form 10-K for the year ended December 31, 2024, together with all of the other information contained in or incorporated by reference into this Quarterly Report, including our condensed financial statements and the related notes appearing at the end of this Quarterly Report and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our common stock. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. This Quarterly Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See the section titled “Special Note Regarding Forward-Looking Statements.”

Disruptions at the FDA, the SEC and other U.S. government agencies caused by reduction in staffing, funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

Currently, federal agencies in the U.S. are operating under a federal government shutdown due to expiration of the continuing resolution on September 30, 2025 and the current U.S. administration is focused on reducing costs of the federal government generally, including significantly reducing the number of government employees. The duration of the current government shutdown is unknown. Without appropriation of additional funding to federal agencies, our business operations related to our product development activities for the U.S. market could be impacted. The ability of the FDA, EMA, and other comparable foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, availability of personnel and other resources, and statutory, regulatory, and policy changes, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. The current U.S. administration has issued executive orders seeking to greatly reduce the size of the federal workforce, including through layoffs and severance packages offered to employees of federal agencies within the executive branch and independent agencies, including the FDA, SEC and U.S. Patent and Trademark Office (“USPTO”). Any such reduction in personnel may result in longer review times by the FDA and other agencies.

Disruptions and personnel turnover, as a result of leadership changes, staff reductions or otherwise, at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. Changes and cuts in FDA staffing have been reported by some within the pharmaceutical industry as creating instances of delays in the FDA’s responsiveness or in its ability to review IND submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all. There is also substantial uncertainty as to how regulatory reform measures being implemented by the current U.S. administration, and other political developments, such as government shutdowns or work stoppages, would impact other U.S. regulatory agencies, such as the FDA, SEC and USPTO, on which our operations rely. For example, in March 2025, the Department of Health and Human Services announced a broad-scale restructuring effort designed to significantly reduce FDA headcount. In April 2025, FDA employees began to receive reduction in force notices. In addition, over the last several years, including beginning on October 1, 2025, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, furloughed critical employees and ceased critical activities. Specifically, on

October 1, 2025, the U.S. federal government entered a shutdown suspending services deemed non-essential as a result of the failure by Congress to enact regular appropriations for the 2026 fiscal year. If a prolonged government shutdown occurs or a widespread freeze on federal funding continues or occurs in the future, or if staffing changes prevent the FDA, USPTO or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, including formal and informal interactions with product developers, it could significantly impact the ability of such regulatory agencies to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, current and future government shutdowns and/or substantial leadership, personnel, and policy changes at the SEC could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Unfavorable macroeconomic conditions, political instability and geopolitical events could adversely affect our business, financial condition, stock price, and results of operations.

Our business could be adversely affected by unstable economic and political conditions within the U.S. and foreign jurisdictions, including as a result of an economic downturn and geopolitical events, such as the potential for significant changes in the U.S. federal policies or regulatory environment that affect the geopolitical landscape, changes in or the disruptions of U.S. governmental agencies, whether from a continued U.S. federal government shutdown or reduced resources, disruptions in capital markets, changes in international trade relationships and military conflicts. The global credit and financial markets have also generally experienced extreme volatility and disruptions (including as a result of actual or perceived changes in interest rates, inflation, international tariffs and macroeconomic uncertainties), which has included severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, high inflation, uncertainty about economic stability, global supply chain disruptions, and increases in unemployment rates. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. A severe or prolonged economic downturn could result in a variety of risks to our business, including a decrease in the demand for our product candidates and in our ability to raise additional capital when needed on acceptable terms, if at all.

The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflicts, such as the ongoing conflicts between Russia and Ukraine, Israel and Iran, and Israel and Hamas, terrorism, or other geopolitical events. Sanctions imposed by the U.S. and other countries in response to such conflicts, including the one in Ukraine, may also continue to adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. Additionally, changes to policy implemented by the U.S. Congress, the current U.S. administration or any new U.S. administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. For example, in 2018 and 2019, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico. Additionally, in early 2025, the U.S. imposed significant tariffs on imports from other countries, including a baseline tariff of 10% on imports into the U.S. and higher tariffs on multiple designated countries (including the EU Member States, China, Canada, and Mexico), such as "reciprocal" tariffs at varying rates. Such tariffs have prompted retaliatory measures from several countries, which may further escalate.

On April 9, 2025, the U.S. announced that the imposition of most "reciprocal" tariffs would be paused for 90 days pending negotiations with the relevant countries. On September 25, 2025, the current U.S. administration announced a 100% tariff on brand-name or patented drugs unless pharmaceutical companies expand their manufacturing operations in the U.S., and may impose more restrictions on goods. While pharmaceutical products are currently excluded from the baseline and "reciprocal" tariffs imposed by the U.S., such tariffs still apply to the raw materials and other products necessary for the manufacture and formulation of our product candidates. In addition, the current U.S. administration has expressed an intent to impose tariffs on pharmaceutical imports, with the stated policy objective of reshoring pharmaceutical manufacturing to the U.S. Among other means, such tariffs may be imposed by the U.S. under Section 232 of the Trade Expansion Act of 1962, as amended, pursuant to which the U.S. Department of Commerce recently initiated an investigation to determine the effects of importing pharmaceuticals and pharmaceutical ingredients on national security. While certain tariffs have subsequently been suspended, modified or temporarily reduced, we cannot predict the results of the U.S. government’s trade negotiations or the outcome of ongoing legal challenges to specific tariff policies. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. There has also been proposed U.S. legislation, such as the bill titled the BIOSECURE Act introduced in 2024, that may restrict the ability of U.S. pharmaceutical companies to purchase services or products from, or otherwise collaborate with, certain Chinese biotechnology companies of concern without losing the ability to contract with, or otherwise receive funding from, the U.S. government. Although the BIOSECURE Act was not passed, in October 2025, versions of the National Defense Authorization Act of 2026 passed each respective chamber of Congress and both included an amendment that will effectively implement federal government contracting, loan, and grant restrictions similar to the 2024 BIOSECURE Act. This 2025 version of the BIOSECURE Act does not identify any specific companies by name in the legislative text. If the BIOSECURE Act or similar legislation is passed in the future, we may not be able to engage a backup or alternative supplier or service provider in a timely manner or at all. We continue to assess the legislation as it develops to determine whether it could have an effect on our contractual relationships. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations. Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

Furthermore, any disruptions to our supply chain as a result of unfavorable global economic conditions, including due to geopolitical conflicts, could negatively impact the timely execution of our ongoing and future clinical trials. In addition, current inflationary trends in the global economy may impact salaries and wages, costs of goods and transportation expenses, among other things, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures may create market and economic instability. We cannot anticipate all of the ways in which the foregoing, and the current economic climate and financial market conditions generally, could adversely impact our business.

Healthcare legislative reform measures may have a negative impact on our business and results of operations.

In the U.S. and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval. For more information, see the section titled “Business-Government Regulation-Current and Future U.S. Healthcare Reform.”

Among policy makers and payors in the U.S. and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. In 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act was passed, which substantially changed the way healthcare is financed by both the government and private insurers, and significantly impacts the U.S. pharmaceutical industry.

The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

• the demand for any of our product candidates, if approved;
• the ability to set a price that we believe is fair for any of our product candidates, if approved;
• our ability to generate revenues and achieve or maintain profitability;
• the level of taxes that we are required to pay; and
• the availability of capital.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical and biologic products. In addition, there has been increasing legislative and enforcement interest in the U.S. with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

In August 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA includes several provisions that may impact our business, depending on how various aspects of the IRA are implemented. Provisions that may impact our business include a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, the imposition of new manufacturer financial liability on most drugs in Medicare Part D, permitting the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar competition, requiring companies to pay rebates to Medicare for drug prices that increase faster than inflation, and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited the fees that pharmacy benefit managers can charge. Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they have one orphan designation and for which the only approved indication is for that disease or condition. If a product receives multiple orphan designations or has multiple approved indications, it may not qualify for the orphan drug exemption. The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program. The effects of the IRA on our business and the healthcare industry in general is not yet known.

On April 15, 2025, the current U.S. administration published Executive Order 14273, “Lowering Drug Prices by Once Again Putting Americans First,” which generally directs the federal government to take measures to reduce drug prices, including eliminating the so-called “pill penalty” under the IRA that creates a distinction between small molecule and large molecule products for purposes of determining when a drug may be eligible for drug price negotiation. On May 12, 2025, the current U.S. administration published Executive Order 14297, “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” which generally, among other things, directs the federal government to establish and communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations. Further, the Executive Order directs the federal government to support regulatory paths to allow direct-to-patient sales for companies that meet these targets. It also states that the current U.S. administration will take additional aggressive action (for example, examining whether marketing approvals should be modified or rescinded or opening the door for individual drug importation waivers) should manufacturers fail to offer American consumers the most-favored-nation lowest price. It also directs the Secretary of Commerce and the U.S. Trade Representative to “take all necessary and appropriate action to ensure foreign countries are not engaged in any act, policy, or practice that may be unreasonable or discriminatory or that may impair U.S. national security. including by suppressing the price of pharmaceutical products below fair market value in foreign countries.” Notably, a similar “Most Favored Nation” pricing rule enacted in 2020 was subject to an injunction resulting from judicial challenges to the rule, which was formally rescinded in August 2021.

In addition, at the state level, legislatures have increasingly passed legislation and implemented regulations similar to those under consideration at the federal level, as well as laws designed to control pharmaceutical and biotherapeutic product pricing, including restrictions on pricing or reimbursement at the state government level, limitations on discounts to patients, marketing cost disclosure and transparency measures, restrictions or other limitations on patient assistance, and, in some cases, policies to encourage importation from other countries (subject to federal approval) and bulk purchasing. Certain states are also pursuing cost containment efforts through Prescription Drug Affordability Boards and similar entities.

We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

We cannot predict what healthcare reform initiatives may be adopted in the future. We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we receive for any approved drug. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our drugs.

The U.S. Congress, the current U.S. administration, or any new U.S. administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business

Since the start of the current U.S. administration in 2025, U.S. policy changes have been implemented at a rapid pace and additional changes are likely. For example, the U.S. government has adopted new approaches to trade policy and in some cases may renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. The U.S. government has also imposed substantial tariffs on most countries throughout the world and has further threatened to continue to broadly impose tariffs, which could lead to corresponding punitive actions by the countries with which the U.S. trades. Changes to U.S. policy implemented by the U.S. Congress, the current U.S. administration or any new U.S. administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business. Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

Legislation or other changes in U.S. tax law may have a material adverse effect on our business, cash flow, financial condition, or results of operations.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. For example, the One Big Beautiful Bill Act (“H.R.1”) was signed into law on July 4, 2025 and made significant changes to U.S. federal tax law. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. For example, under Section 174 of the Internal Revenue Code of 1986, as amended (the “IRC”), in taxable years beginning after December 31, 2021, expenses that are incurred for research and development performed outside the U.S. will be capitalized and amortized, which may have an adverse effect on our cash flow. H.R.1 provides that for taxable years beginning after December 31, 2024, expenses that are incurred for research and development performed in the U.S. may, at the taxpayer’s election, be immediately deducted or capitalized and amortized. In addition, H.R.1 provides that for taxable years beginning after December 31, 2021 and before January 1, 2025, certain eligible taxpayers generally may elect to retroactively deduct expenses for research and development performed in the U.S. in such taxable years by filing amended tax returns for such taxable years, and all other taxpayers that are not eligible to make such an election and that amortized expenses for research and development performed in the U.S. in such taxable years generally may elect to accelerate and deduct the remaining unamortized amounts of such research and development expenses (i) in the first taxable year beginning after December 31, 2024, or (ii) ratably over the two-taxable year period beginning with the first taxable year beginning after December 31, 2024. In recent years, many changes have been made to applicable tax laws and changes are likely to continue to occur in the future. For example, under Section 174 of the Code, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development in the U.S. will be capitalized and amortized, which may have an adverse effect on our cash flow. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations.

It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws may be enacted, or regulations and rulings may be enacted, promulgated or issued under existing or new tax laws, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law or in the interpretation thereof. We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock.