What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 117 added, 89 removed, 440 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

1 unchanged sentence

Short-term marketable securities

Accounts receivable, net

Prepaid expenses and other current assets

Accounts receivable, prepaid expenses and other current assets

Total current assets

14 unchanged sentences

Preferred stock, $ 0.00001 par value;

10,000,000 shares authorized and no shares issued or outstanding at June 30, 2025 and December 31, 2024

10,000,000 shares authorized and no shares issued or outstanding at September 30, 2025 and December 31, 2024

Common stock, $ 0.00001 par value;

400,000,000 and 200,000,000 shares authorized at June 30, 2025 and December 31, 2024, respectively;

108,328,794 and 107,850,124 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

400,000,000 and 200,000,000 shares authorized at September 30, 2025 and December 31, 2024, respectively;

108,342,592 and 107,850,124 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid‑in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Contract research

14 unchanged sentences

Other comprehensive income:

Unrealized gain (loss) on marketable securities, net of tax of $ 0

Total other comprehensive income (loss)

Unrealized gain on marketable securities, net of tax of $ 0

Total other comprehensive income

Comprehensive loss

15 unchanged sentences

Balance at June 30, 2025

Issuance of common stock in connection with vesting of restricted stock units

Unrealized gain on marketable securities

Stock-based compensation expense

Balance at September 30, 2025

Comprehensive

9 unchanged sentences

Balance at June 30, 2024

Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units

Unrealized gain on marketable securities

Stock-based compensation expense

Balance at September 30, 2024

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities :

4 unchanged sentences

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other assets

Accounts receivable, prepaid expenses and other assets

Accounts payable

3 unchanged sentences

Cash flows from investing activities:

Purchases of property and equipment

Purchases of property and equipment, net

Purchases of marketable securities

3 unchanged sentences

Cash flows from financing activities:

Payment of deferred transaction consideration for in-licensed assets

Payments of employee withholding taxes related to restricted stock unit award vesting

Proceeds from exercise of employee stock options and the issuance of stock

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of non-cash investing and financing activities:

Additions to property and equipment included in accounts payable

The accompanying notes are an integral part of these condensed consolidated financial statements.

11 unchanged sentences

The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business.

As of June 30, 2025, the Company had cash, cash equivalents and marketable securities of $ 180.9 million and an accumulated deficit of $ 933.4 million.

As of September 30, 2025, the Company had cash, cash equivalents and marketable securities of $ 167.2 million and an accumulated deficit of $ 948.0 million.

Since inception, the Company has incurred net losses and negative cash flows from its operations.

4 unchanged sentences

Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy.

The Company's ability to raise additional capital may be adversely impacted by potentially worsening global economic conditions caused by a variety of factors including geopolitical tensions, inflationary pressures and tariff policies.

federal government.

If the Company is unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of its product candidates, it may need to substantially curtail planned operations.

5 unchanged sentences

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of June 30, 2025, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2025 and 2024, the condensed consolidated statement of stockholders’ equity for the three and six months ended June 30, 2025 and 2024, and the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 27, 2025 (“Annual Report”) and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2025, the results of its operations and comprehensive loss for the three and six months ended June 30, 2025 and 2024, its changes in stockholders’ equity for the three and six months ended June 30, 2025 and 2024 and its cash flows for the six months ended June 30, 2025 and 2024.

The accompanying condensed consolidated balance sheet as of September 30, 2025, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2025 and 2024, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2025 and 2024, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 27, 2025 (“Annual Report”) and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2025, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2025 and 2024, its changes in stockholders’ equity for the three and nine months ended September 30, 2025 and 2024 and its cash flows for the nine months ended September 30, 2025 and 2024.

The condensed consolidated balance sheet data as of December 31, 2024 was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”).

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2025 and 2024 are unaudited.

The results for the three and six months ended June 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2025 and 2024 are unaudited.

The results for the three and nine months ended September 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The unaudited interim financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the SEC.

25 unchanged sentences

Significant assumptions used in the Company’s estimates include the probability of achieving regulatory milestones and commencing commercialization (collectively referred to as “probability of success”), which are based on an asset’s current stage of development and a review of existing clinical data.

Probability of success assumptions ranged between 21 % and 40 % at June 30, 2025.

Probability of success assumptions ranged between 21 % and 40 % at September 30, 2025.

Additionally, estimated future sales levels and the risk-adjusted discount rate applied to the potential payments are also significant assumptions used in calculating the fair value.

As of June 30, 2025, the discount rate ranged between 6.3 % and 7.9 % depending on the year of each potential payment.

As of September 30, 2025, the discount rate ranged between 6.8 % and 8.4 % depending on the year of each potential payment.

Revenue Recognition

21 unchanged sentences

Discontinued Operations

As of June 30, 2025 and December 31, 2024, the Company had $ 2.2 million in discontinued operations reported as other current liabilities in the Company’s condensed consolidated balance sheet, related to discontinued commercial products.

As of September 30, 2025 and December 31, 2024, the Company had $ 2.2 million in discontinued operations reported as other current liabilities in the Company’s condensed consolidated balance sheet, related to discontinued commercial products.

Recently Issued Accounting Pronouncements

8 unchanged sentences

This ASU becomes effective for annual periods beginning after December 15, 2024.

The Company is currently assessing the impact of this ASU.

The Company is assessing the impact of this ASU and, upon adoption, expects that any impact would be limited to additional income tax disclosures in the footnotes to the Company’s consolidated financial statements.

Fair Value of Financial Assets and Liabilities

The following tables present information about the fair value measurements of the Company’s financial assets and liabilities which are measured at fair value on a recurring and non-recurring basis, and indicate the level of the fair value hierarchy utilized to determine such fair values:

June 30, 2025

September 30, 2025

(In thousands)

9 unchanged sentences

Total liabilities

As of June 30, 2025 and December 31, 2024, the Company’s cash equivalents consisted of money market funds, which were valued based upon Level 1 inputs.

The Company’s marketable securities as of June 30, 2025 consisted of commercial paper, corporate debt securities, and U.S.

As of September 30, 2025 and December 31, 2024, the Company’s cash equivalents consisted of money market funds, which were valued based upon Level 1 inputs.

The Company’s marketable securities as of September 30, 2025 consisted of corporate debt securities and U.S.

government debt securities, which were all valued based upon Level 2 inputs.

3 unchanged sentences

These quoted prices are obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities.

During the three and six months ended June 30, 2025 and 2024, there were no transfers into or out of Level 3.

The overall $ 1.8 million increase in the fair value of the contingent consideration liability during the six months ended June 30, 2025 was primarily due to changes to the probability of success for certain product candidates and lower discount rates resulting from changes in credit spreads being applied to potential payments.

As of June 30, 2025 and December 31, 2024, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows:

June 30, 2025

During the three and nine months ended September 30, 2025 and 2024, there were no transfers into or out of Level 3.

The overall $ 1.9 million increase in the fair value of the contingent consideration liability during the nine months ended September 30, 2025 was primarily due to changes to the probability of success for certain product candidates and the passage of time.

As of September 30, 2025 and December 31, 2024, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows:

September 30, 2025

(In thousands)

1 unchanged sentence

Corporate debt securities (1)

Commercial paper

government debt securities (2)

16 unchanged sentences

Property and equipment, net consisted of the following:

September 30,

(In thousands)

6 unchanged sentences

Property and equipment, net

Depreciation expense was $ 0.1 million and $ 0.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0.2 million and $ 0.4 million for the six months ended June 30, 2025 and 2024, respectively.

Depreciation expense was $ 0.1 million and $ 0.2 million for the three months ended September 30, 2025 and 2024, respectively, and $ 0.3 million and $ 0.6 million for the nine months ended September 30, 2025 and 2024, respectively.

Accrued Expenses

Accrued expenses consisted of the following:

September 30,

(In thousands)

8 unchanged sentences

Preferred Stock

As of June 30, 2025 and December 31, 2024, the Company’s amended and restated certificate of incorporation (the “Charter”) authorized the Company to issue 10,000,000 shares of undesignated preferred stock.

There were no shares of preferred stock outstanding as of June 30, 2025 or December 31, 2024.

As of September 30, 2025 and December 31, 2024, the Company’s amended and restated certificate of incorporation (the “Charter”) authorized the Company to issue 10,000,000 shares of undesignated preferred stock.

There were no shares of preferred stock outstanding as of September 30, 2025 or December 31, 2024.

On June 5, 2025, at the 2025 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment to the Charter to increase the authorized number of shares of common stock from 200,000,000 shares to 400,000,000 shares.

On June 5, 2025, the Company filed a Certificate of Amendment to the Charter with the Secretary of State of the State of Delaware, which became effective upon filing.

As of June 30, 2025 and December 31, 2024, the Company’s Charter authorized the Company to issue 400,000,000 and 200,000,000 shares of $ 0.00001 par value common stock, respectively.

There were 108,328,794 and 107,850,124 shares of common stock issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the Company’s Charter authorized the Company to issue 400,000,000 and 200,000,000 shares of $ 0.00001 par value common stock, respectively.

There were 108,342,592 and 107,850,124 shares of common stock issued and outstanding as of September 30, 2025 and December 31, 2024, respectively.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding.

No dividends have been declared through June 30, 2025.

No dividends have been declared through September 30, 2025.

In November 2024, the Company issued warrants to Biosion, Inc.

6 unchanged sentences

The Company assigned an estimated fair value of $ 44.8 million to the Warrants, which was based on the fair value of the Company’s common stock on the date of issuance less the nominal exercise price of $ 0.00001 per share.

As of September 30, 2025, all of the Warrants were unexercised.

Stock-Based Awards

2 unchanged sentences

Upon the 2025 Plan becoming effective, no further grants can be made under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”).

The 2025 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, cash-based awards, and other stock-based awards.

The 2025 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, cash-based awards, and other stock-based awards.

The number of shares initially reserved for issuance under the 2025 Plan was 25,532,993 shares of common stock, which includes (i) 9,000,000 new shares of common stock, (ii) 3,957,232 shares of common stock that remained available for future grant under the 2015 Plan upon adoption of the 2025 Plan and (iii) up to 12,575,761 shares of common stock underlying outstanding awards under the 2015 Plan and the 2012 Equity Compensation Plan (as amended and restated, the “2012 Plan”), which may become available for issuance under the 2025 Plan if and as such awards expire, are otherwise terminated, settled in cash, or repurchased by the Company.

The shares of common stock underlying any awards that expire, or are otherwise terminated, settled in cash or repurchased by the Company under the 2025 Plan will be added back to the shares of common stock available for issuance under the 2025 Plan.

As of June 30, 2025, 12,701,995 shares remained available for grant under the 2025 Plan.

The Company had 254,100 stock options and 69,480 RSUs outstanding as of June 30, 2025 under the 2025 Plan.

As of September 30, 2025, 12,279,431 shares remained available for grant under the 2025 Plan.

The Company had 794,760 stock options and 241,840 RSUs outstanding as of September 30, 2025 under the 2025 Plan.

2024 Inducement Plan

2 unchanged sentences

The only employees eligible to receive grants of awards under the 2024 Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq rules, generally including individuals who were not previously an employee or director of the Company.

Under the terms of the 2024 Inducement Plan, the Company may grant up to 2,000,000 shares of common stock pursuant to nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, and other stock awards.

The shares of common stock underlying any awards that expire, or are otherwise terminated, settled in cash or repurchased by the Company under the 2024 Inducement Plan will be added back to the shares of common stock available for issuance under the 2024 Inducement Plan.

As of June 30, 2025, 283,500 shares remained available for grant under the 2024 Inducement Plan.

The Company had 1,335,000 stock options and 381,500 RSUs outstanding as of June 30, 2025 under the 2024 Inducement Plan.

As of September 30, 2025, 493,500 shares remained available for grant under the 2024 Inducement Plan.

The Company had 1,172,000 stock options and 334,500 RSUs outstanding as of September 30, 2025 under the 2024 Inducement Plan.

2017 Inducement Plan

In July 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”).

The 2017 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules.

The Company had 343,500 stock options outstanding as of September 30, 2025 under the 2017 Inducement Plan.

All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired.

2015 Equity Incentive Plan

3 unchanged sentences

Upon the 2025 Plan becoming effective, no further grants can be made under the 2015 Plan.

The Company had 9,193,958 stock options and 3,134,641 RSUs outstanding as of June 30, 2025 under the 2015 Plan.

2017 Inducement Plan

In July 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”).

The 2017 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules.

The Company had 343,500 stock options outstanding as of June 30, 2025 under the 2017 Inducement Plan.

The Company had 9,144,258 stock options and 3,098,491 RSUs outstanding as of September 30, 2025 under the 2015 Plan.

2012 Equity Compensation Plan

1 unchanged sentence

Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan.

The Company had 218,404 stock options outstanding as of June 30, 2025 under the 2012 Plan.

The Company had no equity awards outstanding as of September 30, 2025 under the 2012 Plan.

Stock Option Valuation

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the six months ended June 30, 2025 and 2024 were as follows:

Six Months Ended

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the nine months ended September 30, 2025 and 2024 were as follows:

Nine Months Ended

September 30,

Risk-free interest rate

5 unchanged sentences

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2025:

The following table summarizes stock option activity for the nine months ended September 30, 2025:

(In thousands, except share and per share data and years)

1 unchanged sentence

Forfeited and cancelled

Outstanding as of June 30, 2025

Options vested and expected to vest as of June 30, 2025

Options exercisable as of June 30, 2025

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2025 was $ 1.65 per share.

Outstanding as of September 30, 2025

Options vested and expected to vest as of September 30, 2025

Options exercisable as of September 30, 2025

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2025 was $ 1.60 per share.

Restricted Stock Units

The following table summarizes RSU activity for the six months ended June 30, 2025:

The following table summarizes RSU activity for the nine months ended September 30, 2025:

(In thousands, except share and per share data)

1 unchanged sentence

Forfeited and cancelled

Outstanding as of June 30, 2025

Outstanding as of September 30, 2025

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Total stock-based compensation expense

As of June 30, 2025, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 14.0 million and $ 8.6 million, respectively, which is expected to be recognized over weighted average periods of 2.7 years and 2.4 years, respectively.

As of September 30, 2025, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 12.4 million and $ 7.3 million, respectively, which is expected to be recognized over weighted average periods of 2.6 years and 2.3 years, respectively.

Net Loss per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except for share and per share data)

3 unchanged sentences

Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same.

For the three and six months ended June 30, 2025, the basic and diluted weighted-average shares outstanding included the shares of common stock issuable upon exercise of the Warrants, as there were no outstanding contingencies associated with the vesting or exercisability of the Warrants.

The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the six months ended June 30, 2025 and 2024.

All share amounts presented in the table below represent the total number outstanding as of June 30, 2025 and 2024.

Six Months Ended

For the three and nine months ended September 30, 2025, the basic and diluted weighted-average shares outstanding included the shares of common stock issuable upon exercise of the Warrants, as there were no outstanding contingencies associated with the vesting or exercisability of the Warrants.

The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the nine months ended September 30, 2025 and 2024.

All share amounts presented in the table below represent the total number outstanding as of September 30, 2025 and 2024.

Nine Months Ended

September 30,

Options to purchase common stock

11 unchanged sentences

Supplemental balance sheet information related to operating leases is as follows:

September 30,

(In thousands)

4 unchanged sentences

Total operating lease liabilities

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $ 0.1 million for each of the three months ended June 30, 2025 and 2024, and $ 0.3 million for each of the six months ended June 30, 2025 and 2024.

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $ 0.1 million for each of the three months ended September 30, 2025 and 2024, and $ 0.4 million for each of the nine months ended September 30, 2025 and 2024.

Agreements Related to Intellectual Property

10 unchanged sentences

The patents relate to the use of deuruxolitinib, Sun Pharma’s Janus kinase (“JAK”) inhibitor, or other isotopic forms of ruxolitinib, to treat alopecia areata or androgenetic alopecia.

Under the license agreement, Sun Pharma has paid the Company upfront and regulatory payments, and has agreed to pay the Company other regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a mid single-digit tiered royalty calculated as a percentage of Sun Pharma’s net sales.

Under the license agreement, Sun Pharma has paid the Company upfront, regulatory and commercial milestone payments, and has agreed to pay the Company other regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a mid single-digit tiered royalty calculated as a percentage of Sun Pharma’s net sales.

The Company has separate contractual obligations under which the Company has agreed to pay to third parties a portion of the consideration it may receive under the license agreement.

The Company recognized $ 1.5 million of licensing revenue during the three and nine months ended September 30, 2025, a portion of which was payable to third parties.

License Agreement – Pediatrix Therapeutics, Inc.

11 unchanged sentences

In July 2024, the Company entered into a royalty purchase agreement with OCM IP Healthcare Portfolio LP, an investment vehicle for Ontario Municipal Employees Retirement System (“OMERS”), pursuant to which the Company sold to OMERS a portion of the Company’s future royalty payments and the remaining anniversary payments associated with the license to Lilly (see Note 11).

The Company recognized $ 1.3 million and $ 2.3 million of licensing revenue during the three and six months ended June 30, 2025, respectively, all of which was payable to third parties.

The Company recognized $ 2.1 million and $ 3.9 million of licensing revenue during the three and six months ended June 30, 2024, respectively, a portion of which was payable to third parties.

The Company recognized $ 1.3 million and $ 3.6 million of licensing revenue during the three and nine months ended September 30, 2025, respectively, all of which was payable to third parties.

The Company recognized $ 0.7 million and $ 4.6 million of licensing revenue during the three and nine months ended September 30, 2024, respectively, a portion of which was payable to third parties.

Asset Purchase Agreement – EPI Health, LLC

In October 2019, the Company sold RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”) to EPI Health, LLC (“EPI Health”) pursuant to an asset purchase agreement.

In July 2023, EPI Health filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

In July 2023, EPI Health filed a voluntary

petition for relief under Chapter 11 of the United States Bankruptcy Code.

Through the bankruptcy process, EPI Health and its parent company, Novan, Inc., sold the RHOFADE assets to a third party, which excluded the Company’s asset purchase agreement with EPI Health and the outstanding amounts due.

The sale was approved by the bankruptcy court in

September 2023.

As a result of the bankruptcy proceedings, all amounts that are due and outstanding by EPI Health have been fully reserved.

The sale was approved by the bankruptcy court in September 2023.

As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health had been fully reserved.

During the three months ended September 30, 2025, the Company sold all of its right, title and interest in its bankruptcy claims against EPI Health and wrote off the remaining reserved balance as it was deemed uncollectible.

Agreement and Plan of Merger – Confluence

3 unchanged sentences

In addition to the payments described above, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, the Company will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances.

As of June 30, 2025 and December 31, 2024, the balance of the Company’s contingent consideration liability was $ 10.5 million and $ 8.7 million, respectively (see Note 3).

As of September 30, 2025 and December 31, 2024, the balance of the Company’s contingent consideration liability was $ 10.6 million and $ 8.7 million, respectively (see Note 3).

Sale of Future Royalties

6 unchanged sentences

The Company recognizes non-cash royalty income under the “units-of-revenue” method in the condensed consolidated statements of operations and comprehensive loss.

For the three and six months ended June 30, 2025, the Company recognized $ 1.0 million and $ 1.8 million of non-cash royalty income, respectively.

As of June 30, 2025, the current and non-current portions of the remaining deferred income recognized under the units-of revenue method were $ 3.9 million and $ 18.2 million, respectively.

For the three and nine months ended September 30, 2025, the Company recognized $ 0.7 million and $ 2.5 million of non-cash royalty income, respectively.

For each of the three and nine months ended September 30, 2024, the Company recognized $ 0.9 million of non-cash royalty income.

As of September 30, 2025, the current and non-current portions of the remaining deferred income recognized under the units-of revenue method were $ 3.9 million and $ 17.5 million, respectively.

As of December 31, 2024, the current and non-current portions of the remaining deferred income recognized under the units-of revenue method were $ 3.9 million and $ 20.0 million, respectively.

The Company did no t record a federal or state income tax benefit for losses incurred during the three and six months ended June 30, 2025 and 2024.

The Company concluded that it is more likely than not that its deferred tax assets will not be realized which resulted in recording a full valuation allowance during those periods.

The Company did no t record a federal or state income tax benefit for losses incurred during the three and nine months ended September 30, 2025 and 2024.

The Company concluded that it is more likely than not that its deferred tax

assets will not be realized which resulted in recording a full valuation allowance during those periods.

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of tax reform provisions, was signed into law in the United States and the Company continues to assess its impact.

2 unchanged sentences

In December 2023, the Company’s board of directors approved a reduction of the Company’s workforce by approximately 46 %, which was completed as of December 31, 2024.

During the six months ended June 30, 2025, the Company made cash severance payments of $ 0.2 million to impacted employees.

During the three and six months ended June 30, 2024, the Company recognized severance expense of $ 0.1 million and $ 2.6 million, respectively, and made cash severance payments of $ 4.5 million to impacted employees during the six months ended June 30, 2024.

During the nine months ended September 30, 2025, the Company made cash severance payments of $ 0.2 million to impacted employees.

During the three and nine months ended September 30, 2024, the Company recognized severance expense of $ 26 thousand and $ 2.6 million, respectively, and made cash severance payments of $ 5.2 million to impacted employees during the nine months ended September 30, 2024.

Segment Information

5 unchanged sentences

The Company does not report asset information by segment because it is not regularly provided to the Company’s chief executive officer, who is the Company’s chief operating decision maker (“CODM”).

Since inception, the Company has incurred net losses and has an accumulated deficit of $ 933.4 million as of June 30, 2025.

Since inception, the Company has incurred net losses and has an accumulated deficit of $ 948.0 million as of September 30, 2025.

As such, the CODM uses segment loss from operations for each segment in assessing segment performance by comparing the results of each segment to forecast.

All intercompany activity is eliminated in the intersegment elimination column in the tables below.

A reconciliation of operating loss to total consolidated loss before income taxes for the three and six months ended June 30, 2025 and 2024 is as follows:

A reconciliation of operating loss to total consolidated loss before income taxes for the three and nine months ended September 30, 2025 and 2024 is as follows:

(In thousands)

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Revenue from external customers

11 unchanged sentences

(In thousands)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Revenue from external customers

11 unchanged sentences

(1) Other segment items for the Therapeutics segment consist primarily of the following research and development expenses:

stock-based compensation, depreciation and amortization, and regulatory.

former development assets, stock-based compensation, depreciation and amortization, and regulatory.

(In thousands)

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Revenue from external customers

11 unchanged sentences

(In thousands)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Revenue from external customers

11 unchanged sentences

(1) Other segment items for the Therapeutics segment consist primarily of the following research and development expenses:

stock-based compensation, depreciation and amortization, and regulatory.

former development assets, stock-based compensation, depreciation and amortization, and regulatory.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements