What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-07 compared with 2025-11-06 · 120 added, 233 removed, 324 unchanged (52% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

18 unchanged sentences

Preferred stock, $ 0.00001 par value;

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

10,000,000 shares authorized and no shares issued or outstanding at March 31, 2026 and December 31, 2025

Common stock, $ 0.00001 par value;

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

400,000,000 shares authorized at March 31, 2026 and December 31, 2025;

139,652,849 and 120,499,433 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Additional paid‑in capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Contract research

13 unchanged sentences

Weighted average common shares outstanding, basic and diluted

Other comprehensive income:

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

Total other comprehensive income

Other comprehensive (loss) income:

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

Total other comprehensive (loss) income

Comprehensive loss

6 unchanged sentences

Stockholders’

Income (Loss)

Balance at December 31, 2025

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

Unrealized gain on marketable securities

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

Issuance of common stock under at-the-market sales agreement, net of offering costs of $ 1,884

Unrealized loss on marketable securities

Stock-based compensation expense

Balance at March 31, 2026

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

Unrealized gain on marketable securities

Stock-based compensation expense

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

Stockholders’

Income (Loss)

Balance at December 31, 2024

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

Unrealized loss on marketable securities

Stock-based compensation expense

Balance at March 31, 2024

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

Unrealized loss on marketable securities

Stock-based compensation expense

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

Balance at March 31, 2025

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

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities :

10 unchanged sentences

Cash flows from investing activities:

Purchases of property and equipment, net

Purchases of property and equipment

Purchases of marketable securities

Proceeds from sales and maturities of marketable securities

Payment of deferred transaction consideration for in-licensed assets

Net cash provided by investing activities

Payments of deferred transaction consideration for in-licensed assets

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Payment of deferred transaction consideration for in-licensed assets

Proceeds from issuance of common stock under the at-the-market sales agreement, net of issuance costs

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 cash provided by (used in) financing activities

Net increase in cash and cash equivalents

1 unchanged sentence

Cash and cash equivalents at end of period

Supplemental disclosure of non-cash investing and financing activities:

Supplemental disclosure of non-cash investing activities:

Additions to property and equipment included in accounts payable

8 unchanged sentences

The Company is a clinical-stage biopharmaceutical company focused on developing novel small and large molecule product candidates for immuno-inflammatory diseases.

The Company’s proprietary KINect drug discovery platform combined with its preclinical development capabilities allows the Company to identify and advance potential product candidates that it may develop independently or in collaboration with third parties.

In addition to identifying and developing its novel product candidates, the Company is pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize its novel product candidates.

The Company also provides contract research services to third parties enabled by its early-stage research and development expertise.

The Company’s proprietary KINect drug discovery platform coupled with its integrated discovery approach to small and large molecules enables the Company to identify and advance product candidates designed to have superior target affinity, specificity and potency.

The Company is seeking to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize its novel product candidates.

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

As of March 31, 2026, the Company had cash, cash equivalents and marketable securities of $ 190.8 million and an accumulated deficit of $ 987.6 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, tariff policies, and the current shutdown of the U.S.

federal government.

The Company's ability to raise additional capital may be adversely impacted by a variety of factors including changes in investor sentiment, geopolitical tensions, tariff policies, and inflationary pressures.

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 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 accompanying condensed consolidated balance sheet as of March 31, 2026, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026 and 2025, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2026 and 2025, and the condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025 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 26, 2026 (“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 March 31, 2026, the results of its operations and comprehensive loss for the three months ended March 31, 2026 and 2025, its changes in stockholders’ equity for the three months ended March 31, 2026 and 2025 and its cash flows for the three months ended March 31, 2026 and 2025.

The condensed consolidated balance sheet data as of December 31, 2025 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 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 financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are unaudited.

The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, 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.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report.

Basis of Presentation

11 unchanged sentences

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2024 included in the Company’s Annual Report.

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2025 included in the Annual Report.

There have been no changes to the Company’s existing significant accounting policies from those disclosed in the Annual Report.

2 unchanged sentences

(now known as Aclaris Life Sciences, Inc.) (“Confluence”) based upon significant unobservable inputs including the achievement of regulatory and commercial milestones, as well as estimated future sales levels and the discount rates applied to calculate the present value of the potential payments.

Significant judgement is involved in determining the appropriateness of these assumptions.

Significant judgment is involved in determining the appropriateness of these assumptions.

These assumptions are considered Level 3 inputs.

3 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 September 30, 2025.

Probability of success assumptions ranged between 21 % and 40 % at March 31, 2026.

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

As of March 31, 2026, the discount rate ranged between 7.5 % and 9.3 % depending on the year of each potential payment.

Revenue Recognition

6 unchanged sentences

The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable.

Contract Research Revenue

The Company earns contract research revenue from the provision of laboratory services.

Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered.

Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts.

Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue and as such, recognizes revenue in the amount which it has the right to invoice.

ASC Topic 606 also provides an optional exemption, which the Company has elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient.

Licensing Revenue

7 unchanged sentences

Discontinued Operations

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.

As of March 31, 2026 and December 31, 2025, 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

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2025-12, “Interim Reporting (Topic 270):

Narrow-Scope Improvements.” This standard clarifies interim disclosure requirements and the applicability of Topic 270.

The ASU becomes effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

The Company is currently assessing the impact of this ASU.

In November 2024, the FASB issued ASU No.

2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

2 unchanged sentences

The Company is currently assessing the impact of this ASU.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” This standard enhances disclosures related to income taxes, including the rate reconciliation and information on income taxes paid.

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

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:

September 30, 2025

March 31, 2026

(In thousands)

9 unchanged sentences

Total liabilities

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.

As of March 31, 2026, the Company’s cash equivalents consisted of money market funds, which were valued based upon Level 1 inputs, and treasury bills, which were valued based on Level 2 inputs.

As of December 31, 2025, 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 March 31, 2026 consisted of corporate debt securities, commercial paper, treasury bills, and U.S.

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

The Company’s marketable securities as of December 31, 2024 consisted of commercial paper, corporate debt securities, foreign government agency debt securities, and U.S.

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

The Company’s marketable securities as of December 31, 2025 consisted of corporate debt securities and U.S.

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

In determining the fair value of its Level 2 investments, the Company relies on quoted prices for identical securities in markets that are not active.

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 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

During the three months ended March 31, 2026 and 2025, there were no transfers into or out of Level 3.

There was no change in the fair value of the contingent consideration liability during the three months ended March 31, 2026 due to offsetting impacts of the passage of time and changes in market rates.

As of March 31, 2026 and December 31, 2025, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows:

March 31, 2026

(In thousands)

1 unchanged sentence

Corporate debt securities (1)

Commercial paper

Treasury bills

government debt securities (2)

7 unchanged sentences

Corporate debt securities (1)

Commercial paper

Foreign government agency debt securities

government and government agency debt securities (2)

government debt securities (2)

Total marketable securities

1 unchanged sentence

(2) Included in U.S.

government and government agency debt securities is $ 30.5 million with maturity dates between one and three years .

Property and Equipment, Net

Property and equipment, net consisted of the following:

September 30,

(In thousands)

Computer equipment

Lab equipment

Furniture and fixtures

Leasehold improvements

Property and equipment, gross

Accumulated depreciation

Property and equipment, net

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.

government debt securities is $ 15.2 million with maturity dates between one and three years .

Accrued Expenses

Accrued expenses consisted of the following:

September 30,

(In thousands)

1 unchanged sentence

Research and development expenses

Deferred transaction consideration

Licensing expenses

Restructuring expenses (Note 13)

Other expenses

2 unchanged sentences

Preferred Stock

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 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.

As of March 31, 2026 and December 31, 2025, 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 March 31, 2026 or December 31, 2025.

As of March 31, 2026 and December 31, 2025, the Company’s Charter authorized the Company to issue 400,000,000 shares of $ 0.00001 par value common stock.

There were 139,652,849 and 120,499,433 shares of common stock issued and outstanding as of March 31, 2026 and December 31, 2025, 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 September 30, 2025.

No dividends have been declared through March 31, 2026.

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

4 unchanged sentences

The Warrants will terminate when exercised in full.

The Company classified the Warrants within equity because they are indexed to the Company’s own stock.

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.

As of March 31, 2026, 3,000,000 Warrants were unexercised.

Sales of Common Stock Pursuant to At-The-Market Facility

In March 2026, the Company sold an aggregate of 18.4 million shares of its common stock for gross proceeds of $ 59.8 million, pursuant to an amended and restated sales agreement with Leerink Partners LLC and Cantor Fitzgerald & Co., as sales agents, dated February 27, 2025.

The Company paid selling commissions and other fees of $ 1.8 million in connection with the sales.

Stock-Based Awards

3 unchanged sentences

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 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 former 2012 Equity Compensation 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 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.

As of March 31, 2026, 6,674,876 shares remained available for grant under the 2025 Plan.

The Company had 5,326,410 stock options and 1,852,140 RSUs outstanding as of March 31, 2026 under the 2025 Plan.

2024 Inducement Plan

4 unchanged sentences

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 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.

As of March 31, 2026, 493,500 shares remained available for grant under the 2024 Inducement Plan.

The Company had 1,172,000 stock options and 287,250 RSUs outstanding as of March 31, 2026 under the 2024 Inducement Plan.

2017 Inducement Plan

1 unchanged sentence

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.

The Company had 323,500 stock options outstanding as of March 31, 2026 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.

3 unchanged sentences

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

In August 2012, the Company’s board of directors adopted the 2012 Plan and the Company’s stockholders approved the 2012 Plan.

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

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

The Company had 8,674,464 stock options and 1,458,796 RSUs outstanding as of March 31, 2026 under the 2015 Plan.

Stock Option Valuation

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,

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended

Risk-free interest rate

5 unchanged sentences

Stock Options

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)

The following table summarizes stock option activity for the three months ended March 31, 2026:

(in thousands)

Outstanding as of December 31, 2025

Forfeited and cancelled

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.

Outstanding as of March 31, 2026

Options vested and expected to vest as of March 31, 2026

Options exercisable as of March 31, 2026

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2026 was $ 2.45 per share.

Restricted Stock Units

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

(In thousands, except share and per share data)

The following table summarizes RSU activity for the three months ended March 31, 2026:

(in thousands)

Outstanding as of December 31, 2025

Forfeited and cancelled

Outstanding as of September 30, 2025

Outstanding as of March 31, 2026

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Total stock-based compensation expense

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.

As of March 31, 2026, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 19.7 million and $ 10.4 million, respectively, which is each expected to be recognized over a weighted average period of 3.1 years.

Net Loss per Share

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

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

1 unchanged sentence

Net loss per share, basic and diluted

The Company’s potentially dilutive securities, which included stock options and RSUs, have been excluded from the computation of diluted net loss per share since the effect would be to reduce the net loss per share.

The Company’s potentially dilutive securities, which included stock options and RSUs, have been excluded from the computation of diluted net loss per share because including them would have an anti-dilutive effect.

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 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,

For the three months ended March 31, 2026 and 2025, the basic and diluted weighted average shares outstanding included the shares of common stock issuable upon exercise of the outstanding 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 three months ended March 31, 2026 and 2025.

All share amounts presented in the table below represent the total number outstanding as of March 31, 2026 and 2025.

Three Months Ended

Options to purchase common stock

8 unchanged sentences

The lease commenced in June 2019 and has a term that runs through May 2029.

In January 2023, the Company amended the sublease agreement to add an additional 6,261 square feet of office and laboratory space effective February 2023.

The Company exercised its option to terminate the leasing of the additional space effective as of June 30, 2024.

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 September 30, 2025 and 2024, and $ 0.4 million for each of the nine months ended September 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 March 31, 2026 and 2025.

Agreements Related to Intellectual Property

1 unchanged sentence

In November 2024, the Company entered into an exclusive license agreement (the “Biosion Agreement”) with Biosion, pursuant to which it received the exclusive rights to develop, manufacture and commercialize bosakitug (ATI-045) and ATI-052 worldwide, excluding Mainland China, Macau, Hong Kong and Taiwan (“Greater China”).

In connection with the Biosion Agreement, the Company also entered into a collaboration agreement (the “CTTQ Agreement”) with Biosion and CTTQ, a licensee of bosakitug in Greater China.

As partial consideration for the rights and licenses under the Biosion Agreement and CTTQ Agreement, the Company, agreed to, in the aggregate, (i) pay $ 30.0 million in upfront cash consideration, plus $ 4.5 million for the reimbursement of certain development costs, (ii) issue the Warrants, and (iii) pay $ 6.2 million for the reimbursement of certain development costs and drug product material as set forth in the Biosion Agreement.

In connection with the Biosion Agreement, the Company also entered into a collaboration agreement (together with the Biosion Agreement, the “Biosion Agreements”) with Biosion and CTTQ, a licensee of bosakitug in Greater China.

As partial consideration for the rights and licenses under the Biosion Agreements, the Company, in the aggregate, (i) paid $ 30.0 million in upfront cash consideration, plus $ 4.5 million for the reimbursement of certain development costs, (ii) issued the Warrants, and (iii) paid $ 6.2 million for the reimbursement of certain development costs and drug product material.

In addition, the Company agreed to pay, in the aggregate, (i) up to $ 125 million upon the achievement of specified regulatory milestones commencing with product approval, (ii) up to $ 795 million upon the achievement of specified sales milestones, (iii) a tiered low-to-mid single digit royalty based upon a percentage of annual net sales, subject to specified reductions as set forth in the Biosion Agreement, and (iv) a portion of any sublicense consideration received from the grant of any sublicense or similar rights under any of the rights or licenses granted to the Company under the Biosion Agreement.

7 unchanged sentences

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.

The Company recognized $ 0.2 million of licensing revenue during the three months ended March 31, 2026, a portion of which was payable to third parties.

License Agreement – Pediatrix Therapeutics, Inc.

10 unchanged sentences

The Company has separate contractual obligations under which the Company has agreed to pay to third parties an amount equal to any regulatory and commercial milestone payments it receives under the Lilly license agreement, as well as a portion of the upfront consideration and a portion of the royalties it may receive under the license agreement.

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 $ 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.

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 milestone payments associated with the license to Lilly (see Note 10).

The Company recognized $ 1.3 million and $ 1.0 million of licensing revenue during the three months ended March 31, 2026 and 2025, respectively, all 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 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.

As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health

had been fully reserved.

In September 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

In August 2017, the Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”).

In 2017, the Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”).

Under the Confluence Agreement, the Company agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $ 75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement.

1 unchanged sentence

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 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).

As of each of March 31, 2026 and December 31, 2025, the balance of the Company’s contingent consideration liability was $ 11.0 million (see Note 3).

Sale of Future Royalties

In July 2024, the Company entered into a royalty purchase agreement with OMERS.

Under the royalty purchase agreement, the Company sold to OMERS a portion of the Company’s future royalty payments and the remaining anniversary payments associated with the Company’s existing license to Lilly relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata.

Under the royalty purchase agreement, the Company sold to OMERS a portion of the Company’s future royalty payments and the remaining anniversary milestone payments associated with the Company’s existing license to Lilly relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata.

Under the terms of the royalty purchase agreement, the Company received an upfront payment of $ 26.5 million.

2 unchanged sentences

In particular, the Company does not have significant continuing involvement in the generation of the cash flows due to OMERS and there are no guaranteed rates of return to OMERS.

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 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.

For the three months ended March 31, 2026 and 2025, the Company recognized $ 0.9 million and $ 0.8 million of non-cash royalty income, respectively.

As of March 31, 2026, the current and non-current portions of the remaining deferred income recognized under the units-of-revenue method were $ 4.0 million and $ 15.3 million, respectively.

As of December 31, 2025, the current and non-current portions of the remaining deferred income recognized under the units-of-revenue method were $ 3.9 million and $ 16.2 million, respectively.

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.

The Company currently does not expect the OBBB Act to have a material impact on the consolidated financial statements.

Restructuring Charges

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 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.

The Company did no t record a federal or state income tax benefit for losses incurred during the three months ended March 31, 2026 and 2025.

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.

Segment Information

The Company has two reportable segments, therapeutics and contract research.

The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases and earns revenue through licensing of the Company’s intellectual property.

The contract research segment earns revenue from the provision of laboratory services.

All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations and comprehensive loss.

All customers and revenue pertaining to the Company’s segments are based in the United States and all assets are held in the United States.

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 $ 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 nine months ended September 30, 2025 and 2024 is as follows:

(In thousands)

Three Months Ended September 30, 2025

Revenue from external customers

Intercompany revenue

Cost of revenue

Research and development:

Total Research and development project expenses

Other research and development expense (1)

Total research and development

General and administrative

Revaluation of contingent consideration

Segment operating loss

Non-segment general and administrative

Loss before income taxes

(In thousands)

Three Months Ended September 30, 2024

Revenue from external customers

Intercompany revenue

Cost of revenue

Research and development:

Total Research and development project expenses

Other research and development expense (1)

Total research and development

General and administrative

Revaluation of contingent consideration

Segment operating loss

Non-segment general and administrative

Loss before income taxes

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

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

(In thousands)

Nine Months Ended September 30, 2025

Revenue from external customers

Intercompany revenue

Cost of revenue

Research and development:

Total Research and development project expenses

Other research and development expense (1)

Total research and development

General and administrative

Revaluation of contingent consideration

Segment operating loss

Non-segment general and administrative

Loss before income taxes

The Company operates and reports as one reportable segment, which focuses on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases.

The segment earns revenue through the licensing of the Company’s intellectual property and the provision of laboratory services.

All customers and revenue pertaining to the reportable segment are based in the United States.

When evaluating the Company’s financial performance, the chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, regularly reviews consolidated segment loss, total expense, and direct expenses by project.

The CODM allocates resources based on the Company’s available cash resources and forecasted expenditures on a consolidated basis.

Segment asset information regularly provided to the CODM is consistent with that reported on the consolidated balance sheet with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents and marketable securities balances.

The following table presents the significant segment expenses and other segment items regularly reviewed by the CODM for the three months ended March 31, 2026 and 2025:

Three Months Ended

(In thousands)

Nine Months Ended September 30, 2024

Revenue from external customers

Intercompany revenue

Contract research

Licensing revenue

Total revenue

Cost of revenue

Research and development:

Total Research and development project expenses

Other research and development expense (1)

Total research and development project expense (1)

Other research and development (2)

Total research and development

2 unchanged sentences

Segment operating loss

Non-segment general and administrative

Loss before income taxes

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

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

Segment loss before income taxes

(1) Research and development expenses primarily consist of direct costs incurred to specific programs, including costs to conduct clinical trials and to manufacture clinical drug supply.

(2) Other research and development expenses primarily consist of indirect costs incurred in support of overall research and development activities and non-specific programs, including activities that benefit multiple programs, as well as stock-based compensation.

(3) General and administrative expenses consist principally of salaries and related costs, including stock-based compensation, for personnel in executive, administrative, finance and legal functions, as well as facility-related costs, professional fees, business development costs, insurance costs, and travel expenses.

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