What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-25 compared with 2024-03-29 · 234 added, 259 removed, 682 unchanged (42% of the section changed)

2 unchanged sentences

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Form 10-K.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting

There were 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 three months ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were 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 year ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

None of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K.

During the fourth quarter of 2024, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K.

Disclosure Re garding Foreign Jurisdictions that Prevent Inspections.

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The information required by this item is incorporated by reference to the Proxy Statement to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2024.

We have adopted insider trading policies and procedures governing the purchase, sale and other dispositions of our securities by directors, officers and employees that are designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards, as well as procedures designed to further the foregoing purposes.

A copy of our insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.

Executive Compensation.

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Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023

Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2023 and 2022

Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023

Statements of Cash Flows for the years ended December 31, 2024 and 2023

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March 4, 2022

Certificate of Designations of Series A Junior Participating Preferred Stock of AN2 Therapeutics, Inc.

filed with the Secretary of State of the State of Delaware on August 15, 2024.

August 19, 2024

Form of Common Stock Certificate.

4 unchanged sentences

March 29, 2023

Rights Agreement, dated as of August 15, 2024, between AN2 Therapeutics, Inc.

and Equiniti Trust Company, LLC, which includes Form of Certificate of Designations of Series A Junior Participating Preferred Stock as Exhibit A, the Form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Stock as Exhibit C.

August 19, 2024

AN2 Therapeutics, Inc.

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2022 Equity Incentive Plan

March 29, 2024

Forms of Stock Option Grant Notice, Stock Option Agreement and Notice of Exercise under the AN2 Therapeutics, Inc.

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2022 Equity Incentive Plan.

AN2 Therapeutics, Inc.

2022 Employee Stock Purchase Plan.

March 29, 2024

AN2 Therapeutics, Inc 1022 Employee Stock Purchase Plan.

March 29, 2024

AN2 Therapeutics, Inc.

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March 4, 2022

Incorporated by Reference

Offer Letter by and between the Registrant and Joshua Eizen, dated September 19, 2022.

November 9, 2022

Offer Letter by and between the Registrant and Kevin Krause, dated November 19, 2019.

March 29, 2023

Offer Letter by and between the Registrant and Paul Eckburg, dated April 30, 2021.

March 29, 2023

Incorporated by Reference

AN2 Therapeutics, Inc.

2024 Amended Non-Employee Director Compensation Policy

Exclusive Patent License Agreement, dated October 10, 2023, by and between the Registrant and the University of Georgia Research Foundation, Inc

AN2 Therapeutics, Inc.

2022 Insider Trading Policy

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

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Compensation Recovery Policy.

March 29, 2024

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document**

Inline XBRL Taxonomy Extension Calculation Linkbase Document**

Inline XBRL Taxonomy Extension Definition Linkbase Document**

Inline XBRL Taxonomy Extension Label Linkbase Document**

Inline XBRL Taxonomy Extension Presentation Linkbase Document**

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents**

Cover Page Interactive Data File (embedded within the Inline XBRL document)

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(iii) the Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023;

(iv) the Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2023 and 2022;

(iv) the Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023;

(vi) the Statements of Cash Flows for the years ended December 31, 2024 and 2023;

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/s/ Eric Easom

Chief Executive Officer and Director

Chief Executive Officer, Chair and Director

(Principal Executive Officer)

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March 25, 2025

/s/ Joseph Zakrzewski

Chair and Director

March 29, 2024

Joseph Zakrzewski

/s/ Kabeer Aziz

March 29, 2024

/s/ Maggie FitzPatrick

Lead Independent Director

March 25, 2025

Maggie FItzPatrick

/s/ Kabeer Aziz

March 25, 2025

/s/ Gilbert L.

11 unchanged sentences

Stephanie Wong

/s/ Joseph Zakrzewski

March 25, 2025

Joseph Zakrzewski

INDEX TO FINANCIAL STATEMENTS

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Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023

Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2023 and 2022

Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023

Statements of Cash Flows for the years ended December 31, 2024 and 2023

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We have audited the accompanying balance sheets of AN2 Therapeutics, Inc.

(the “Company”) as of December 31, 2023 and 2022, and the related statements of operations and comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit) and of cash flows for each of the two years in the period ended December 31, 2023, including the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2024 and 2023, and the related statements of operations and comprehensive loss, of stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 , and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Prepaid expenses and other current assets

Right-of-use asset, net

Total current assets

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Other current liabilities

Operating lease liabilities

Options subject to repurchase, short-term

Total current liabilities

Options subject to repurchase, long-term

Total liabilities

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Preferred stock, $ 0.00001 par value;

10,000,000 shares authorized December 31, 2023 and 2022;

no shares issued and outstanding at December 31, 2023 and 2022

10,000,000 shares authorized at December 31, 2024 and December 31, 2023, respectively;

no shares issued and outstanding at December 31, 2024 and December 31, 2023

Common stock, $ 0.00001 par value;

500,000,000 shares authorized at December 31, 2023 and 2022;

29,741,445 and 19,402,658 shares issued and outstanding at December 31, 2023 and 2022, respectively

500,000,000 shares authorized at December 31, 2024 and December 31, 2023;

29,919,634 and 29,741,445 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated other comprehensive gain (loss)

Accumulated other comprehensive gain

Accumulated deficit

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(in thousands, except share and per share amounts)

Years ended December 31,

Year Ended December 31,

Operating expenses:

Research and development

Research and development—related party

General and administrative

Restructuring charges

Total operating expenses

Loss from operations

Other income, net

Accretion to redemption value and cumulative dividends on preferred stock

Net loss attributable to common stockholders

Interest income

Net loss per share attributable to common stockholders, basic and diluted

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Other comprehensive loss:

Unrealized gain (loss) on investments

Unrealized (loss) gain on investments

Comprehensive loss

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AN2 THERAPEUTICS, INC.

STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOL DERS’ EQUITY (DEFICIT)

STATEMENTS OF STOCKHOL DERS’ EQUITY

(in thousands, except share and per share amounts)

Preferred Stock

Comprehensive

Stockholders’

Equity (Deficit)

Balances at December 31, 2022

Conversion of convertible preferred stock into common stock

Issuance of common stock upon initial public offering, net of underwriters’ commission and offering costs of $ 8.9 million

Vesting of early exercised stock options

Repurchase of early exercised stock options

Stock-based compensation

Accretion to redemption value and cumulative dividends on preferred stock

Unrealized loss on available-for-sale investments

Balances at December 31, 2022

Issuances of common stock in the “at the market” offering, net of underwriter’s commission and offering costs of $ 0.9 million

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Balances at December 31, 2023

Issuance of common stock under the ESPP

Issuance of common stock upon exercise of stock options

Vesting of early exercised stock options

Issuance of common stock upon release of restricted stock units

Issuance of common stock upon release of restricted stock awards

Stock-based compensation

Unrealized loss on available-for-sale investments

Balances at December 31, 2024

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

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(in thousands)

Year ended December 31,

Cash flows from operating activities

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Maturities of investments

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

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Proceeds from exercise of stock options

Proceeds from issuance of common stock from the initial public offering, net of underwriting discounts, commissions and offering expenses

Repurchase of early exercised stock options

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

Supplemental disclosure of noncash financing items

Conversion of redeemable convertible preferred stock into common stock

Accretion to redemption value and cumulative dividends on preferred stock

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

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AN2 Therapeutics, Inc.

(the “Company”) is a clinical-stage biopharmaceutical company focused on developing treatments for rare, chronic, and serious infectious diseases with high unmet needs.

The Company’s initial product candidate, epetraborole, is under development as a once-daily, oral treatment for patients with non-tuberculous mycobacterial (NTM) lung disease.

(the “Company”) is a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics derived from its boron chemistry platform.

The Company has a pipeline of boron-based compounds in development for Chagas disease, non-tuberculous mycobacterial (“NTM”), and melioidosis, along with early-stage programs focused on targets in infectious diseases and oncology.

The Company was incorporated in the state of Delaware in February 2017, began operations in November 2019, began trading on the Nasdaq Global Select Market on March 25, 2022 under the symbol “ANTX”, and is based in Menlo Park, California.

Since launching operations in November 2019, the Company has devoted substantially all of its resources to performing research and development activities, including with respect to its initial product candidate, epetraborole, and other product candidates, business planning, hiring personnel, raising capital and providing general and administrative support for these operations.

Since launching operations in November 2019, the Company has devoted substantially all of its resources to performing research and development activities, including with respect to its initial product candidate, epetraborole, and other product candidates, business planning and restructuring, hiring personnel, raising capital, and providing general and administrative support for these operations.

Initial Public Offering

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The IPO closed on March 29, 2022, at which time the Company issued an aggregate of 4,600,000 shares of its common stock at a price to the public of $ 15.00 per share.

In addition, immediately prior to the closing of the IPO, all outstanding shares of the Company’s redeemable convertible preferred stock automatically converted into 11,409,488 shares of common stock.

In addition, immediately prior to the closing of the IPO, all outstanding shares of the Company’s then existing redeemable convertible preferred stock automatically converted into 11,409,488 shares of common stock.

The aggregate offering proceeds for shares sold in the IPO was $ 69.0 million.

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The Company will pay commissions to the Agent of up to 3.0 % of the gross proceeds of the sale of the Shares sold under the Sales Agreement and reimburse the Agent for certain expenses.

During the year ended December 31, 2023, the Company issued and sold 2,502,000 shares of common stock und er the ATM Offering, resulting in net proceeds of $ 19.1 million, after deducting commissions and other offering costs .

During the year ended December 31, 2023, the Company issued and sold 2,502,000 shares of common stock under the ATM Offering, resulting in net proceeds of $ 19.1 million, after deducting commissions and other offering costs.

The Company did no t sell any shares of common stock through the ATM Offering during the year ended December 31, 2024.

Underwritten Offering

On August 15, 2023, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Cowen and Company, LLC, Leerink Partners LLC and Evercore Group L.L.C.

as representatives of several underwriters to issue and sell 7,777,778 shares of common stock at an offering price of $ 9.00 per share, resulting in net proceeds of $ 65.5 million, after deducting commissions and other offering costs (the "Underwritten Offering").

On August 15, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement” ) with Cowen and Company, LLC, Leerink Partners LLC and Evercore Group L.L.C., as representatives of several underwriters, to issue and sell 7,777,778 shares of common stock at an offering price of $ 9.00 per share, resulting in net proceeds of $ 65.5 million, after deducting commissions and other offering costs (the “Underwritten Offering” ).

AN2 Therapeutics, Inc.

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Certain reclassifications have been made to the prior year presentation to conform to the current year presentation.

The prior year presentation of "interest income" and "other expense" on the statements of operations and comprehensive loss has been condensed into "other income, net" and conformed to reflect the current year's presentation.

The prior year presentation of issuance of common stock upon initial public offering has been condensed within the statements of redeemable convertible preferred stock and stockholders’ equity (deficit).

For all periods presented, shares of common stock and then existing redeemable convertible preferred stock and per share amounts have been adjusted on a retroactive basis to reflect our 2.352936 -for-1 forward stock split , which was effected on March 18, 2022.

The stock split did not change the par value of the common stock and redeemable convertible preferred stock or the authorized number of shares of common stock and redeemable convertible preferred stock.

The prior year presentation of "other income, net" on the statements of operations and comprehensive loss has been separated to “interest income” and “other income” and conformed to reflect the current year's presentation.

Risks and Uncertainties

Prior to the Company’s IPO in March 2022, the Company’s operations had historically been financed through the issuance of redeemable convertible preferred stock.

Prior to the IPO, the Company’s operations had historically been financed through the issuance of redeemable convertible preferred stock.

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

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The Company has an accumulated deficit of $ 205.8 million and $ 154.5 million as of December 31, 2024 and 2023, respectively, and will require substantial additional capital for research and development activities.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidate currently in development.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

As of December 31, 2024, the Company had cash, cash equivalents, short-term investments and long-term investments of $ 88.6 million.

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The Company operates and manages its business as one reportable and operating segment.

The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on a company-wide basis for purposes of allocating resources and assessing financial performance.

For financial information related to the Company's one operating segment see Note 13 - Segment Reporting.

Use of Estimates

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Actual results could differ from those estimates.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Deferred Offering Costs

The Company capitalizes certain legal, accounting and other third-party fees that are directly related to the Company’s equity financings, including its Underwritten Offering in August 2023, ATM Offering filed in April 2023 and its IPO in 2022, until such financings are consummated.

After consummation of the equity financing, these costs are recorded as a reduction of the proceeds received as a result of the financing.

The Company capitalized certain legal, accounting and other third-party fees that were directly related to the Company’s Underwritten Offering, ATM Offering and IPO.

After the completion of the IPO in March 2022, the total deferred offering costs of $ 3.3 million were offset against the proceeds from the IPO and reclassified to additional paid-in capital in the accompanying balance sheets.

After the completion of the ATM Offering in June 2023, the total deferred offering costs of $ 0.9 million were offset against the proceeds from the ATM Offering and reclassified to additional paid-in capital in the accompanying balance sheets.

After the completion of the Underwritten Offering in August 2023, the total deferred offering costs of $ 4.5 million were offset against the proceeds from the Underwritten Offering and reclassified to additional paid-in capital in the accompanying balance sheets.

At December 31, 2023 and 2022 , no deferred offering costs were included as non-current assets in the accompanying balance sheets.

Research and Development Expenses

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Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods are received or services are rendered.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

As part of the process of preparing its financial statements, the Company estimates its accrued expenses.

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The significant estimates in the Company’s accrued research and development expenses relate to expenses incurred with respect to contract manufacturing and clinical and other research organizations, academic research centers and other vendors in connection with research and development activities for which the Company has not yet been invoiced.

Redeemable Convertible Preferred Stock

The Company recorded the redeemable convertible preferred stock at fair value on the dates of issuance, net of issuance costs.

The carrying value of the redeemable convertible preferred stock was accreted to its redemption value.

Immediately prior to the closing of the IPO, all outstanding shares of the Company’s redeemable convertible preferred stock were converted into shares of common stock and the related carrying value was reclassified to common stock and additional paid-in capital.

There were no shares of redeemable convertible preferred stock outstanding as of December 31, 2023 and 2022.

Stock-Based Compensation

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Compensation expense for non-employee awards is recognized in the same period and manner as if the Company had paid cash for the goods or services provided.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

The valuation model used for calculating the fair value of stock options for stock compensation expense is the Black-Scholes option-pricing model (the Black-Scholes model).

The valuation model used for calculating the fair value of stock options for stock-based compensation expense is the Black-Scholes option-pricing model (the Black-Scholes model).

The Black-Scholes model requires management to make assumptions and judgments about the variables used in the calculation, including the expected term, the expected volatility of common stock, an assumed risk-free interest rate, and expected dividends the Company may pay.

Management elected to apply the practical expedient for private companies and used the simplified method to determine the awards’ expected term.

Management uses the simplified calculation (based on the mid-point between the vesting date and the end of the contractual term) of the expected term for its stock options as the Company has concluded that its stock option history does not provide a reasonable basis upon which to estimate expected term.

Volatility is based on an average of the historical volatilities of the common stock of entities with characteristics similar to the Company’s.

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As a result, no compensation expense would be recognized until the performance-based vesting condition is achieved.

Fair Value of Common Stock

Prior to the Company's IPO, the absence of an active market for the Company’s common stock required the Company’s board of directors ("Board") to determine the fair value of its common stock for purposes of granting stock options.

The fair value of the Company’s common stock was determined by the Company’s Board with assistance from management and an independent third-party valuation firm.

Management’s approach to estimating the fair value of the Company’s common stock was consistent with the methods outlined in the American Institute of Certified Public Accountants’ Practice Aid, Valuation of Privately-Held- Company Equity Securities Issued as Compensation .

Determining the best estimated fair value of the Company’s common stock requires significant judgment and management considers several factors, including the Company’s stage of development, equity market conditions affecting comparable public companies, significant milestones and progress in research and development efforts.

Since the completion of its IPO, the Company uses its stock price traded on the Nasdaq Global Select Market to determine the fair value of its common stock.

Cash and Cash Equivalents

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Investments consist of U.S.

Treasury securities, commercial paper, and U.S.

Government agency securities.

Treasury securities, commercial paper, U.S.

Government agency securities, asset-backed securities, and corporate debt securities.

All of the Company’s investments are classified as available-for-sale and are carried at estimated fair values and reported in cash equivalents, short-term investments or long-term investments.

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The cost of investments sold, if any, is based on the specific identification method.

Unrealized gains and losses on available-for-sale investments are reported in accumulated other comprehensive gain (loss) as a separate component of stockholders’ equity (deficit).

Unrealized gains and losses on available-for-sale investments are reported in accumulated other comprehensive gain (loss) as a separate component of stockholders’ equity.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

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Accrued interest receivable is recorded to prepaid expenses and other current assets.

There have been no uncollectible accrued interest write-offs in the years ended December 31, 2024 or 2023.

As of December 31, 2024 and 2023, the Company had investments of $ 67.3 million and $ 118.8 million, respectively.

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The Company’s exposure to any individual corporate entity is limited by its investment policy.

Deposits may at times exceed federally insured limits, but minimal credit risk exists.

Deposits have and will continue to exceed federally insured limits.

The Company invests its cash equivalents in highly rated money market funds.

The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds.

The Company has not experienced any credit losses in such accounts.

The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash to the extent recorded on the balance sheets.

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In September 2022, the Company received a cost-reimbursement contract award under which the Company is eligible to receive up to $ 17.8 million from the U.S.

National Institute of Allergy and Infection Diseases (“NIAID”) to support preclinical, Phase 1 studies and other activities to enable advancement of epetraborole into late-stage development for acute systemic melioidosis and other biothreat pathogens.

This project will be funded in whole or in part with Federal funds from the NIAID, National Institutes of Health, Department of Health and Human Services, under Contract No.

National Institute of Allergy and Infectious Diseases (“NIAID”) to support preclinical, Phase 1 studies and other activities to enable advancement of epetraborole into late-stage development for acute systemic melioidosis and other biothreat pathogens.

This project will be funded in whole or in part with Federal funds from the NIAID, National Institutes of Health, Department of Health and Human Services, and Department of Defense Contract No.

75N93022C00059.

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Grant Agreements

In September 2022, the Company entered into a subcontract agreement with the University of Georgia Research Foundation (“UGARF”) to receive up to $ 1.4 million from UGARF to support preclinical development of a boron-containing small molecule for Chagas disease.

In September 2023, the Company entered into a grant agreement with the Bill and Melinda Gates Foundation (“BMGF”) to fund up to $ 1.8 million to generate new boron-based lead compounds with the potential to be developed into drugs that treat tuberculosis and malaria.

The Company recognizes grant proceeds in accordance with ASC 958-605, Revenue Recognition Not-for-Profit Entities, when qualifying costs are incurred and the conditions of the grant agreement have been met.

In September 2022, the Company entered into a subcontract agreement with the University of Georgia Research Foundation (“UGARF”) to receive up to $ 1.4 million from the UGARF to support preclinical development of a boron-containing small molecule for Chagas disease.

In July 2024, the Company entered into an amendment to the 2022 subcontract agreement with the UGARF for additional funding in the amount of $ 0.2 million.

In September 2024, the Company entered into a second-year continuation grant agreement with BMGF to fund up to $ 2.0 million to support an early-stage research program focused on delivering novel leads as starting points for new drugs that can be combined to deliver shorter, safer and simpler TB drug regimens.

The Company recognizes grant proceeds in accordance with ASC 958-605, Not-for-Profit Entities - Revenue Recognition, when qualifying costs are incurred and the conditions of the grant agreement have been met.

When receipt of grant proceeds is reasonably assured, the Company records a reduction to the research and development expenses incurred and a corresponding grant receivable.

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Comprehensive Loss

Comprehensive loss includes net loss and certain changes in stockholders’ equity (deficit) that are excluded from net loss.

Comprehensive loss includes net loss and certain changes in stockholders’ equity that are excluded from net loss.

The Company’s other comprehensive loss consists of net changes in unrealized gains and losses on its available-for-sale investments.

For the years ended December 31, 2023 and 2022 , the Company had $ 0.6 million of net unrealized gain and $ 0.3 million of net unrealized loss on available-for-sale investments, respectively.

For the years ended December 31, 2024 and 2023 , the Company had $ 0.2 million of net unrealized loss and $ 0.6 million of net unrealized gain on available-for-sale investments, respectively.

AN2 Therapeutics, Inc.

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Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, stock options, common stock subject to repurchase related to unvested early exercise of stock options are considered to be potentially dilutive securities.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security because it participates in dividends with common stock and is accreted to redemption.

For purposes of the diluted net loss per share calculation, stock options, unvested RSUs, common stock subject to repurchase related to unvested early exercise of stock options, and shares committed under ESPP are considered to be potentially dilutive securities.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities.

The Company also considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of all series of redeemable convertible preferred stock and the holders of early exercised shares subject to repurchase do not have a contractual obligation to share in the Company’s losses.

The holders of early exercised shares subject to repurchase do not have a contractual obligation to share in the Company’s losses.

As such, the net loss was attributed entirely to common stockholders.

Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods because the impact of potentially dilutive securities would be anti-dilutive.

Restructuring Charges

Restructuring charges consist primarily of employee severance payments and other employee termination-related expenses.

The Company records restructuring charges based on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement.

The Company accounts for on-going benefit arrangements, such as those documented by employment agreements or a pre-existing severance policy, in accordance with ASC 712, Nonretirement Postemployment Benefits.

Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated.

The Company accounts for one-time employment benefit arrangements in accordance with ASC 420, Exit or Disposal Cost Obligations.

JOBS Act Accounting Election

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Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security.

ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842):

Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for SEC reporting companies that are smaller reporting companies such as the Company.

The Company adopted this standard beginning January 1, 2023 .

Adoption of this standard did not have a material impact on the Company's financial statements.

In July 2018, the FASB issued ASU No.

2018-11, Leases (Topic 842):

Targeted Improvements (“ASU 2018-11”).

ASU 2018-11 provided an alternative method in addition to the modified retrospective transition method for ASU No.

2016-02, Leases:

Amendments to the FASB Accounting Standards Codification (“ASU 2016-02”), issued in February 2016.

Under ASU 2018-11, an entity may elect to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Under ASU 2016-02, a lease is required to recognize assets and liabilities with lease terms of more than twelve months.

ASU 2016-02 is effective for nonpublic business entities and public entities eligible to be Smaller Reporting Companies for fiscal years beginning after December 15, 2021.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

The Company adopted the new standard on January 1, 2022 using the modified retrospective approach.

The Company has elected to apply the transition method that allows companies to continue applying the guidance under the lease standard in effect at that time in the comparative periods presented in the financial statements and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit on the date of adoption.

The Company has elected to combine lease components (e.g., fixed rent payments) with non-lease components (e.g., common-area maintenance costs) on its facility and clinical research organization (“CRO”) embedded lease asset classes.

The Company also elected the “package of practical expedients”, which permits the Company not to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs.

The Company also elected the short-term lease practical expedients allowed under the standard.

Lastly, the Company did not elect the practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date.

Results for reporting periods beginning after January 1, 2022 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period.

Upon adoption of the new lease standard, on January 1, 2022, the Company capitalized operating lease right-of-use (ROU) assets of $ 50 thousand and $ 50 thousand of operating lease liabilities, within the balance sheets upon adoption.

In November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance.

GAAP has no specific authoritative guidance on the accounting for, or the disclosure of, government assistance received by business entities.

The amendments in this update improve financial reporting by requiring disclosures that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including the types of transactions, the accounting for those transactions, and the effect of those transactions on an entity’s financial statements.

The amendments in this update require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including:

(1) information about the nature of the transactions and the related accounting policy used to account for the transactions;

(2) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item;

and (3) the significant terms and conditions of the transactions, including commitments and contingencies.

The amendments in this update are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021.

Early application of the amendments is permitted.

The Company adopted this update during the year ended December 31, 2022 and accounted for the NIAID contract in accordance with this update, which did not have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”.

This update is intended to guide entities in evaluating the accounting for fees paid by a customer in a cloud computing arrangement by providing guidance for determining when the arrangement includes a software license.

This standard was effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2019, and effective for financial statements issued by non-public entities for annual periods beginning after December 15, 2020.

The Company adopted this standard beginning July 1, 2022 , noting that this standard was applied prospectively.

Adoption of this standard did not have a material impact on the Company's financial statements.

Recent Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date.

Unless otherwise noted, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial statements and disclosures.

As an "emerging growth" company, it has been the Company's intention to take advantage of certain temporary exemptions from various reporting requirements, as well as taking advantage of additional transitional relief.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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Early adoption is permitted.

The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

The Company adopted ASU 2023-07 on January 1, 2024 , retrospectively.

Newly required disclosures have been included in Note 13 - Segment Reporting.

Recent Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date.

Unless otherwise noted, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial statements and disclosures.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU No.

2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date , which clarified the effective date of ASU 2024-03.

ASU 2024-03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Statements of Operations, as well as qualitatively describe remaining amounts included in those captions.

ASU 2024-03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and may be adopted on a prospective or retrospective basis.

Early adoption is permitted.

The Company is evaluating the impact of this standard on its financial statements and related disclosures.

Fair Value Measurements

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Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s primary financial instruments include cash, cash equivalents, short-term investments and long-term investments, prepaid expenses, accounts payable, and accrued liabilities.

The carrying amounts of the Company’s financial instruments, other than cash equivalents, short- and long-term investments, approximate fair value due to their relatively short maturities.

The Company’s primary financial instruments include cash, cash equivalents and investments, prepaid expenses, accounts payable, and accrued liabilities.

The carrying amounts of the Company’s financial instruments, other than cash equivalents and investments, approximate fair value due to their relatively short maturities.

The following table presents the Company’s financial assets, which consist of cash equivalents and investments classified as available-for-sale investments, that are measured at fair value on a recurring basis (in thousands):

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Treasury securities

Commercial paper

Government agency securities

Asset Backed Securities

Corporate debt securities

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Treasury securities

Government agency securities

AN2 Therapeutics, Inc.

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Treasury securities

Commercial paper

Government agency securities

Asset-backed securities

Corporate debt securities

Long-term investments:

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The Company classifies its investments in commercial paper, corporate debt securities, U.S.

government agency securities and asset-backed securities as Level 2 within the fair value hierarchy.

government agency securities, U.S.

Treasury securities and asset-backed securities as Level 2 within the fair value hierarchy.

The fair values of these investments are estimated by taking into consideration valuations obtained from third-party pricing services.

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As of December 31, 2024 and 2023, the Company had accrued interest receivable of $ 0.3 million and $ 0.4 million, respectively, which was included in prepaid expenses and other current assets on the balance sheets.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Funding Arrangements

NIAID Contract

In September 2022, the Company received a cost-reimbursed contract award from the NIAID to support preclinical, Phase 1 studies and other activities to enable the advancement of epetraborole into late-stage development for acute systemic melioidosis and other biothreat pathogens.

The Company can receive up to $ 17.8 million in funding over a total term of 48 months , consisting of a base period and seven option periods.

In July 2023, the NIAID exercised one of seven available options under the NIAID contract (No:

75N93022C00059), resulting in an increase in committed contract funding of $ 0.7 million, for a total of $ 5.0 million.

Funding for this option extends the estimated completion of the contract by 13 months beyond the base period of 18 months (April 2025).

In September 2022, the Company received a cost-reimbursement contract award from the NIAID to support preclinical, Phase 1 studies and other activities to enable the advancement of epetraborole into late-stage development for acute systemic melioidosis and other biothreat pathogens.

The Company is eligible to receive up to $ 17.8 million in funding over a total term of 48 months , consisting of a base period and seven option periods.

In July 2023 and May 2024, the NIAID exercised two of seven available options under the NIAID contract (No:

75N93022C00059), resulting in an increase in committed contract funding of $ 0.7 million and $ 3.8 million, respectively, for a cumulative total of $ 8.8 million.

Funding for these options extends the estimated completion of the current contract by 29 months beyond the base period of 18 months to August 2026 .

As of December 31, 2024 , a total of $ 8.8 million of funding for the 18-month base period plus an additional 29 months for a total of 47 months has been committed.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

During the year ended December 31, 2023 , the Company recorded income of $ 0.9 million as reduction in research and development operating expenses under the NIAID contract, of which $ 0.5 million was received during the year.

As of December 31, 2023, the Company had recorded a receivable of $ 0.4 million which was included in prepaid expenses and other current assets on the balance sheets.

The Company did no t recognize any income under this agreement during the year ended December 31, 2022.

As of December 31, 2024 and 2023 , the Company had recorded a receivable of zero and $ 0.4 million, respectively, which was included in prepaid expenses and other current assets on the balance sheets.

During the years ended December 31, 2024 and 2023 , the Company recorded $ 1.8 million and $ 0.9 million of income under the NIAID contract as a reduction in research and development operating expenses.

In September 2022, the Company entered into a subcontract agreement with the UGARF to conduct preclinical activities on behalf of UGARF (“UGARF Agreement”).

UGARF reimburses the Company under an award from The Wellcome Trust.

The Company is eligible to receive up to $ 1.4 million from UGARF to support preclinical development of a boron-containing small molecule for Chagas disease.

As of December 31, 2023 , the Company had recorded a grant receivable of $ 0.6 million which was included in prepaid expenses and other current assets on the balance sheets.

During the year ended December 31, 2023 , the Company recorded income of $ 1.3 million as a reduction in research and development operating expenses under the UGARF agreement.

The Company did no t recognize any income under this agreement during the year ended December 31, 2022.

The UGARF reimburses the Company under an award from Wellcome.

The Company received $ 1.4 million from the UGARF to support preclinical development of a boron-containing small molecule for Chagas disease.

In July 2024, the Company signed an amendment to the UGARF Agreement for additional funding in the amount of $ 0.2 million.

As of December 31, 2024 and 2023 , the Company had recorded a grant receivable of zero and $ 0.6 million, respectively, which was included in prepaid expenses and other current assets on the balance sheets.

During the years ended December 31, 2024 and 2023 , the Company recorded income of $ 0.2 million and $ 1.3 million, respectively, as a reduction in research and development operating expenses under the UGARF agreement.

In September 2023, the Company received a cost-reimbursement contract award from the Bill and Melinda Gates Foundation (“2023 BMGF Agreement”) under which the Company was awarded $ 1.8 million to support the discovery of novel, boron containing small molecules for the treatment of tuberculosis and malaria.

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The Company received $ 1.0 million of funding in advance and tracks and reports eligible expenses incurred to the BMGF.

In April 2024, the Company received $ 0.8 million in funding, making the grant fully funded.

In September 2024, the Company entered into a second-year continuation cost-reimbursement contract award with the Bill and Melinda Gates Foundation (“2024 BMGF Agreement”) under which the Company was awarded $ 2.0 million to support an early-stage research program focused on delivering novel leads as starting points for new drugs that can be combined to deliver shorter, safer and simpler TB drug regimens.

The Company is required to apply the funds it receives under the 2024 BMGF Agreement solely toward direct costs related to this research program.

The Company received $ 1.1 million of funding in advance and tracks and reports eligible expenses incurred to the BMGF.

Any unspent funds and any funds spent that have not yet been incurred are recorded as part of other current liabilities on the balance sheets.

As of December 31, 2023 , the Company had recorded $ 0.7 million to other current liabilities.

During the year ended December 31, 2023, the Company recorded income of $ 0.3 million as a reduction in research and development operating expenses under the BMGF agreement.

As of December 31, 2024 and 2023 , the Company recorded $ 0.8 million and $ 0.7 million, respectively, to other current liabilities on the balance sheets.

During the years ended December 31, 2024 and 2023 , the Company recorded income of $ 1.7 million and $ 0.3 million, respectively, as a reduction in research and development operating expenses under the 2024 and 2023 BMGF Agreements.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Collaboration and License Agreements

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In exchange for the worldwide, sublicensable, exclusive right and licenses to develop, manufacture, and commercialize the specified compounds, the Company paid Anacor a non-refundable $ 2.0 million upfront payment and granted Anacor shares of Series A redeemable convertible preferred stock.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

The Company agreed to make further payments to Anacor upon achievement of various development milestones for an aggregate maximum of $ 2.0 million, upon achievement of various commercial and sales threshold milestones for an aggregate maximum payment of $ 125.0 million, and up to 50 % of royalties received under certain sublicensing arrangements.

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The Anacor License Amendment has no impact on the Anacor License financial terms.

None of the development, regulatory, commercial or sales milestones or royalty payments were recognized during the year ended December 31, 2023 .

As a result, the Company did no t record any research and development expense—related party in the statements of operations for the year ended December 31, 2023.

During the year ended December 31, 2022 , the Company recorded $ 1.0 million in research and development expense—related party to Anacor upon the achievement of development milestones.

None of the development, regulatory, commercial or sales milestones or royalty payments were recognized during the years ended December 31, 2024 and 2023.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Brii Biosciences Agreement

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Future milestone payments and royalties will be accounted for under ASC 606.

In May 2021, the Company entered into an operating lease agreement for its principal office in Menlo Park, California.

In September 2021, the lease was amended to extend the term to expire in August 2022 .

In July 2022, the lease was amended to exercise a renewal option and extend the term to expire in August 2023 .

In July 2023, the lease was further amended to exercise a renewal option and extend the term to expire in August 2024 .

At the time of amendment, the Company determined that this lease meets the criteria for a short-term lease.

Under the lease agreement, the Company has one additional 12-month renewal option through August 2025 .

The Company has not entered into any finance lease agreements as of December 31, 2023.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

The following table summarizes total lease expense during the year ended December 31, 2023 (in thousands):

Statements of Operations and Comprehensive Loss Classification

Year Ended December 31, 2023

Operating lease expense

Operating expenses

Short-term lease expense

Operating expenses

Total lease expense

The Company paid $ 50 thousand and $ 80 thousand in operating cash flows from operating leases for amounts included in the measurement of liabilities during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 , all leases were determined to be short-term leases.

As of December 31, 2022, the weighted-average remaining lease term and discount rate for operating leases was 0.67 years and 5.1 %, respectively.

Balance Sheet Components

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Accrued liabilities consist of the following (in thousands):

Accrued clinical trial-related expenses

Accrued research and development-related expenses

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Adjuvant Global Health Agreement

In conjunction with Adjuvant Global Health Technology Fund L.P.’s (“Adjuvant”) investment in the Company’s Series A redeemable convertible preferred stock financing in 2019 and 2020, the Company entered into a Global Health Agreement with Adjuvant, pursuant to which the Company agreed to support the creation of innovative and affordable drugs to treat disease, through public health programs and private purchasers in Low and Lower-Middle-Income Countries (as such terms are defined by the World Bank and in the agreement).

Adjuvant’s investment supports the development of the Company’s product candidate, epetraborole, for use in melioidosis-endemic and melioidosis-at-risk countries as defined in the agreement.

These global access commitments became effective as of the Series A redeemable convertible preferred stock financing closing date and will remain in effect until the latter of either that Adjuvant ceases to be a shareholder of the Company, or ten years following epetraborole approval for the treatment of melioidosis by a regulatory authority.

In conjunction with Adjuvant Global Health Technology Fund L.P.’s (“Adjuvant”) investment in the Company in 2019 and 2020, the Company entered into a Global Health Agreement with Adjuvant, pursuant to which the Company agreed to support the creation of innovative and affordable drugs to treat disease, through public health programs and private purchasers in Low and Lower-Middle-Income Countries (as such terms are defined by the World Bank and in the agreement).

Adjuvant’s investment supports the development of the Company’s product candidate, epetraborole, for use in melioidosis-endemic and melioidosis-at-risk countries and in tuberculosis-endemic and tuberculosis-at-risk countries, as defined in the agreement as amended and restated.

These global access commitments will remain in effect until the latter of either that Adjuvant ceases to be a shareholder of the Company, or ten years following epetraborole approval for the treatment of melioidosis by a regulatory authority.

The Global Health Agreement contains various affirmative and negative covenants agreed to by the Company, including its use of reasonably diligent endeavors to develop the agreed-upon products using non-dilutive funding and make accessible to people in need in the target countries so long as the Company does not sell products at a loss.

Other covenants include prohibition of use of investment for propaganda, attempt to influence legislation, influence of any public election or voter registration drive or promotion of terrorist activities, as well as compliance with certain environmental, social and governance requirements and anti-corruption requirements.

If the Company does not maintain compliance with these non-financial covenants, Adjuvant may be entitled to repayment for any portion of its investment that is not used for the purposes outlined in the Global Health Agreement.

In conjunction with Adjuvant’s investment in the Company’s Series B redeemable convertible preferred stock financing in 2021, the Company entered into an Amended and Restated Global Health Agreement (the “Adjuvant Amendment”).

The Adjuvant Amendment expands Adjuvant’s investment support to include the development of the Company’s product candidate, epetraborole, for use in tuberculosis-endemic and tuberculosis-at-risk countries as defined in the agreement.

In connection with Adjuvant’s investment in the Company’s common stock as part of the IPO, the Company entered into an Amended and Restated Global Health Agreement dated March 24, 2022 (the “Adjuvant IPO Amendment”).

As part of the Adjuvant IPO Amendment, Adjuvant purchased 166,666 shares of the Company's common stock in March 2022 for a total additional investment of $ 2.5 million, which is subject to Adjuvant’s right of repayment should the Company not utilize the proceeds from Adjuvant’s investment towards the agreed-upon purpose.

The Company has complied with all applicable covenants as of December 31, 2023.

As of December 31, 2023 , the $ 2.5 million of proceeds from Adjuvant’s IPO investment, as well as the proceeds from Adjuvant’s Series A and B redeemable convertible preferred stock investments, were fully utilized to support the epetraborole development program, which overlaps with the melioidosis and other global health development programs.

The Company’s certificate of incorporation, as amended, authorizes the Company to issue up to 500,000,000 shares of $ 0.00001 par value common stock.

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No dividends have been declared to date.

On April 6, 2023, the Company entered into a Sales Agreement with Cowen and Company, LLC as the Company’s Agent, to issue and sell up to an aggregate gross sales of $ 100.0 million in Shares of the Company’s common stock through the ATM Offering.

During the year ended December 31, 2023, the Company issued and sold 2,502,000 shares of common stock under the ATM program, resulting in net proceeds of $ 19.1 million, after deducting commissions and other offering costs.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

On August 15, 2023, the Company entered into an Underwriting Agreement with Cowen and Company, LLC, Leerink Partners LLC and Evercore Group L.L.C.

In April 2023, the Company entered into a Sales Agreement with Cowen and Company, LLC as the Company’s Agent, to issue and sell up to an aggregate gross sales of $ 100.0 million in Shares of the Company’s common stock through the ATM Offering.

During the year ended December 31, 2023, the Company issued and sold 2,502,000 shares of common stock under the ATM Offering, resulting in net proceeds of $ 19.1 million, after deducting commissions and other offering costs.

The Company did not sell any shares of common stock through the ATM Offering during the year ended December 31, 2024.

In August 2023, the Company entered into an Underwriting Agreement with Cowen and Company, LLC, Leerink Partners LLC and Evercore Group L.L.C.

as representatives of several underwriters to issue and sell 7,777,778 shares of common stock at an offering price of $ 9.00 per share through the Underwritten Offering, resulting in net proceeds of $ 65.5 million, after deducting commissions and other offering costs.

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Stock options, issued and outstanding

Unvested restricted stock units

Stock options, authorized for future issuance

ESPP, authorized for future issuance

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Preferred Stock

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No shares of preferred stock were issued and outstanding at December 31, 2024 and 2023.

Shareholder Rights Plan

In August 2024, the Company entered into a Rights Agreement between the Company and Equiniti Trust Company, LLC as Rights Agent (as amended from time to time, the “Rights Agreement"), which was previously approved by the Board.

In connection with the Rights Agreement, a dividend was declared of one preferred stock purchase right (individually, a “Right” and collectively, the “Rights”) for each share of the common stock, par value $ 0.00001 per share, of the Company outstanding at the close of business on August 29, 2024 (the “Record Date”).

Each Right entitles the registered holder thereof, after the Rights become exercisable and until August 15, 2025 (or the earlier redemption, exchange or termination of the Rights), to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $ 0.00001 per share (the “Series A Preferred”), of the Company at a price of $ 6.50 per one one-thousandth of a share of Series A Preferred, subject to adjustment.

The Rights are not exercisable until the Distribution Date (as defined in the Rights Agreement”) and the Rights will expire on August 15, 2025 , subject to the Company’s right to extend such date, unless earlier redeemed or exchanged by the Company or terminated.

Additional information regarding the Rights Agreement is contained in a Current Report on Form 8-K filed with the SEC.

The adoption of the Shareholder Rights Plan had no impact on the financial position of the Company.

Equity Incentive Plan and Stock-Based Compensation

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The Company adopted the 2022 Equity Incentive Plan (the “2022 Plan”) effective upon the closing of the IPO, which provides for the granting of incentive stock options (“ISOs”) to the Company's employees, and for the grant of nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other forms of awards to employees, directors, and consultants.

As of December 31, 2023 , no stock appreciation rights, restricted stock awards, restricted stock unit awards or performance awards were issued.

As of December 31, 2024 , no stock appreciation rights or performance awards were issued.

The Company initially reserved for issuance 1,870,000 new shares of common stock pursuant to the 2022 Plan.

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Shares underlying outstanding stock awards granted under the 2017 Plan that expire or are repurchased by, forfeited to, cancelled or withheld by the Company will also be reserved for issuance under the 2022 Plan.

The maximum number of shares of the Company’s common stock that may be issued under the 2022 Plan will not exceed 4,423,920 shares of the Company's common stock, which is the sum of (i) 1,870,000 new shares, plus (ii) 2,553,920 shares related to the 2017 Plan.

In addition, the number of shares of the Company’s common stock reserved for issuance under the 2022 Plan will automatically increase on January 1 of each year for a period of ten years , beginning on January 1, 2023 and continuing through January 1, 2032, in an amount equal to (1) 4 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Board no later than December 31 of the immediately preceding year.

The maximum number of shares of the Company's common stock that may be issued on the exercise of stock options under the 2022 Plan is 13,271,760 shares.

Since the date of incorporation and through December 31, 2023, the Company issued stock options to its employees, directors and consultants.

The initial number of shares of the Company’s common stock that may be issued under the 2022 Plan will not exceed 4,423,920 shares of the Company's common stock, which is the sum of (i) 1,870,000 new shares, plus (ii) 2,553,920 shares related to the 2017 Plan.

In addition, the number of shares of the Company’s common stock reserved for issuance under the 2022 Plan will automatically increase on January 1 of each year for a period of ten years , beginning on January 1, 2023 and continuing through January 1, 2032, in an amount equal to (1) 4 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Company's board of directors no later than December 31 of the immediately preceding year.

Accordingly, effective January 1, 2024, the number of shares in the 2022 Plan increased by 1,189,657 shares, representing 4 % of the prior year end’s common stock outstanding .

The maximum number of shares of the Company's common stock that may be issued on the exercise of stock options or vesting of RSUs and RSAs under the 2022 Plan is 13,271,760 shares.

Since the date of incorporation and through December 31, 2024, the Company issued stock options, RSUs and RSAs to its employees, directors and consultants.

As of December 31, 2024 , 859,841 shares of common stock remained available for future issuance under the 2022 Plan.

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NSOs vest in accordance with the terms of the specific agreement under which the options were provided and expire ten years from the date of grant.

RSUs granted to employees generally vest annually over a two to four year period of service and expire ten years from the grant date.

RSAs granted to non-employees generally vest at the time of grant and expire ten years from the grant date.

Stock-Based Compensation Expense

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Therefore, the Company used an expected dividend yield of zero .

For options granted to non-employee consultants, the fair value of these options is also remeasured using the Black-Scholes option pricing model reflecting the same assumptions as applied to employee options in each of the reported periods, other than the expected term, which is assumed to be the remaining contractual term of the option.

The following weighted average assumptions were used to value options granted during the periods indicated:

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Notes to Financial Statements — Continued

Stock Option Plan Activity

Stock Option Activity

A summary of the stock plan activity is as follows:

Total Options Outstanding

Weighted-Average Exercise Price

Weighted-Average

Exercise Price

Weighted-Average Remaining Contractual Life

Aggregate Intrinsic Value

Outstanding at December 31, 2022

(in thousands)

Outstanding at December 31, 2023

Forfeited/expired

Vested and expected to vest at December 31, 2024

Exercisable as of December 31, 2024

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Weighted-average grant-date fair value of the options granted during the year ended December 31, 2024 was $ 2.05 per share.

RSUs entitle the holder to receive shares of the Company’s common stock upon vesting.

The fair value of RSUs is based upon the closing sales price of the Company’s common stock on the grant date.

A summary of the RSU activity is as follows:

Number of Units

Weighted-Average

Grant Date Fair Value

Unvested at December 31, 2023

Vested and released

Unvested at December 31, 2024

As of December 31, 2024 , there was unrecognized stock-based compensation expense of $ 0.9 million related to unvested restricted stock units which the Company expects to recognize over a weighted-average period of 2.3 years.

RSAs entitle the holder to receive shares of the Company’s common stock upon vesting.

The fair value of RSAs is based upon the closing sales price of the Company’s common stock on the grant date.

A summary of the RSA activity is as follows:

Number of Units

Weighted-Average

Grant Date Fair Value

Unvested at December 31, 2023

Vested and released

Unvested at December 31, 2024

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

As of December 31, 2024 , there was no unrecognized stock-based compensation expense related to unvested restricted stock awards.

Liability for Early Exercise of Stock Options

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Upon termination of employment of an option-holder, the Company has the right to repurchase, at the original purchase price, any unvested options.

As of December 31, 2023 , there were 5,040 unvested common shares outstanding that were issued upon the early exercise of stock options prior to the vesting of the underlying shares which are subject to repurchase by the Company at the original issuance price upon termination of the stockholders’ services.

As of December 31, 2024, and 2023, there were none and 5,040 unvested common shares outstanding that were issued upon the early exercise of stock options prior to the vesting of the underlying shares which are subject to repurchase by the Company at the original issuance price upon termination of the stockholders’ services.

The right to repurchase these shares generally lapses with respect to 25 % of the shares underlying the option after one year of service to the Company and 1/48 th of the shares underlying the original grant per month for 36 months thereafter.

6 unchanged sentences

At the end of each offering period, employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or at the end of each applicable purchase period.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Subject to adjustment in the case of certain capitalization events, 187,000 shares of the Company’s common stock were available for purchase at the adoption of the ESPP.

2 unchanged sentences

As of December 31, 2024 , 563,731 shares of common stock remained available for issuance under the ESPP.

The Company began recording stock-based compensation expense for its ESPP on October 1, 2022.

During the years ended December 31, 2024 and 2023 , the Company recognized $ 0.1 million and $ 0.2 million, respectively, in stock-based compensation expense related to the ESPP.

1 unchanged sentence

For the years ended December 31, 2024 and 2023 , the Company did not have any income for income tax purposes and therefore, no tax liability or expense has been recorded in these financial statements.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

The provision for income taxes differs from the tax expense that would result by applying the statutory federal income tax rate to loss before taxes due to the following (in thousands):

4 unchanged sentences

Provision for income taxes

The following table reflects the effective income tax rate reconciliation for the ended December 31, 2023 and 2022 (in thousands):

The following table reflects the effective income tax rate reconciliation for the years ended December 31, 2024 and 2023:

Statutory rate

8 unchanged sentences

The valuation allowance increased by $ 16.3 million from December 31, 2023 to December 31, 2024 due to generation of current year net operating losses, capitalization of research and development costs, and research and development credits claimed.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Components of the Company’s deferred tax assets are as follow (in thousands):

Deferred income taxes reflect the net tax effects of losses, credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Components of the Company’s deferred tax assets are as follows (in thousands):

Deferred tax assets

13 unchanged sentences

Utilization of the net operating loss carryforwards is subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

A Section 382 ownership change generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

5 unchanged sentences

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2024 and 2023 was as follows (in thousands):

Year Ended December 31,

Balance at beginning of year

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The Company files income tax returns in the U.S.

federal jurisdiction and California, Illinois, New York, South Carolina, Virginia and New York City state and city jurisdictions.

federal jurisdiction and California, Illinois, New York, South Carolina and Virginia state jurisdictions.

The Company is not currently under audit by the Internal Revenue Service or other similar state or local authorities.

1 unchanged sentence

and state taxing authorities to which the Company is subject.

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Net Loss Per Share

1 unchanged sentence

Year Ended December 31,

Add accretion to redemption value and cumulative dividends on preferred stock

Net loss attributable to common stockholders

Weighted-average common shares outstanding used to calculate net loss per

share attributable to common stockholders, basic and diluted

Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

2 unchanged sentences

Options issued and outstanding

Unvested RSUs

Early exercised common stock subject to future vesting

Related Party Transactions

In the year ended December 31, 2022, the Company paid $ 1.5 million for two development milestones to Anacor.

Of this amount, a $ 0.5 million payment was recognized as expense in 2021 and was included as accrued expenses in the accompanying balance sheet at December 31, 2021.

In connection with Adjuvant’s investment in the Company’s common stock as part of the IPO, the Company entered into the 2022 Adjuvant Amendment.

As part of the 2022 Adjuvant Amendment, Adjuvant purchased 166,666 shares of the Company’s common stock in 2022 for a total additional investment of $ 2.5 million, which is subject to Adjuvant’s right of repayment should the Company not utilize the proceeds from Adjuvant’s investment towards the agreed-upon purpose.

As of December 31, 2022, the $ 2.5 million of proceeds from Adjuvant’s IPO investment have been fully utilized to support the epetraborole development program, which overlaps with the melioidosis and other global health development programs (see Note 8—Commitments and Contingencies).

ESPP authorized for future issuance

AN2 Therapeutics, Inc.

Notes to Financial Statements — Continued

Restructuring Charges

On August 8, 2024, the Company announced a reduction of approximately 50 % of the Company's workforce, which was approved by the Board in connection with the Company’s planned restructuring following discontinuation of the EBO-301 study and to further extend the Company’s operating capital.

In connection with the workforce reduction, the Company recognized severance and other charges of $ 2.2 million for the year ended December 31, 2024 , primarily related to severance payments and other employee termination-related expenses.

The severance and other charges were recorded to restructuring charges on the statements of operations and comprehensive loss.

The workforce reduction was complete by the end of 2024 .

Cash payments for severance and other charges of $ 2.2 million were made in the year ended December 31, 2024 .

Segment Reporting

The Company operates and manages its business as one reportable and operating segment.

The determination of a single operating segment is consistent with the financial information regularly provided to the Company’s chief operating decision maker (the “CODM”).

The CODM assesses performance for the single segment and decides how to allocate resources based on net loss that also is reported on the statements of operations and comprehensive loss.

The monitoring of budgeted versus actual results are used in assessing performance of the segment, and making operating decisions, allocating resources, and planning and forecasting for future periods.

The measure of segment assets is reported on the balance sheets as total assets.

In addition to the significant expense categories included within net loss presented on the statements of operations and comprehensive loss, see below for disaggregated amounts that comprise research and development expenses:

External research and development expenses:

Clinical trials expenses

Consulting and outside services

Other external research and development (1)

Total external research and development expenses

Internal research and development expenses:

Personnel related expenses

Total research and development expenses

(1) Chemistry manufacturing controls, research and preclinical studies and other miscellaneous 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-K

Item 9A. Controls and Procedures