What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 79 added, 75 removed, 192 unchanged (45% of the section changed)

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Our discovery platform is focused on unlocking hidden therapeutic intervention points by uncovering signaling pathways driven by our proprietary library of domains derived from all 20 tRNA synthetases.

Our lead therapeutic candidate is efzofitimod, a first-in-class biologic immunomodulator in clinical development for the treatment of interstitial lung disease (ILD), a group of immune-mediated disorders that can cause inflammation and fibrosis, or scarring, of the lungs.

Our lead therapeutic candidate is efzofitimod, a novel biologic immunomodulator in clinical development for the treatment of interstitial lung disease (ILD), a group of immune-mediated disorders that can cause inflammation and fibrosis, or scarring, of the lungs.

Efzofitimod is a tRNA synthetase derived therapy that selectively modulates activated myeloid cells through neuropilin-2 (NRP2) to resolve aberrant inflammation without immune suppression and potentially prevent the progression of fibrosis.

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Food and Drug Administration (FDA) has granted efzofitimod orphan drug designations for the treatment of sarcoidosis and for the treatment of SSc, and Fast Track designations for the treatment of pulmonary sarcoidosis and for the treatment of SSc-ILD.

The European Commission has granted efzofitimod orphan drug designations for the treatment of sarcoidosis and for the treatment of SSc, based on the opinion of the European Medicines Agency (EMA) Committee for Orphan Medicinal Products (COMP).

The European Commission has granted efzofitimod orphan drug designations for the treatment of sarcoidosis and for the treatment of SSc, based on the opinion of the European Medicines Agency

(EMA) Committee for Orphan Medicinal Products (COMP).

The Pharmaceutical and Medical Devices Agency (PMDA) has granted efzofitimod orphan drug designation for the treatment of sarcoidosis to Kyorin Pharmaceutical Co., Ltd.

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The study was designed to evaluate the safety, tolerability, immunogenicity and preliminary efficacy of three doses of intravenous (IV) efzofitimod, 1.0, 3.0 and 5.0 mg/kg, in the context of a forced steroid taper.

Efzofitimod was safe and well-tolerated at all doses administered with no serious drug-related adverse events or signal of immunogenicity.

Efzofitimod was well-tolerated at all doses administered with no serious drug-related adverse events or signal of immunogenicity.

Additionally, the study demonstrated consistent dose response for efzofitimod on key efficacy endpoints and improvements compared to placebo, including measures of steroid reduction, lung function, pulmonary sarcoidosis symptom measures and inflammatory biomarkers.

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In October 2024, the same published data for efzofitimod was featured in the Best of CHEST Journals session at the CHEST 2024 Annual Meeting.

In February 2022, we met with the FDA in an end-of-Phase 2 meeting to discuss our plans for subsequent clinical development and path to registration for efzofitimod for pulmonary sarcoidosis.

Subsequently, we initiated a global pivotal Phase 3 randomized, double-blind, placebo-controlled clinical trial to evaluate the efficacy and safety of efzofitimod in patients with pulmonary sarcoidosis (the EFZO-FIT study).

The EFZO-FIT study is a 52-week study consisting of three parallel cohorts randomized equally to either 3.0 mg/kg or 5.0 mg/kg of efzofitimod or placebo dosed intravenously once a month for a total of 12 doses.

The study design incorporates a forced steroid taper.

The objective of the study is to evaluate the efficacy and safety of efzofitimod in patients with pulmonary sarcoidosis.

The primary endpoint of the study is steroid reduction.

Secondary endpoints include measures of lung function assessed by health-related quality of life assessments and questionnaires (KSQ lung score) and forced vital capacity (FVC).

In September 2022, we dosed the first patient in the study.

During 2023, 2024 and 2025, we have had data and safety monitoring board (DSMB) reviews of our EFZO-FIT study.

The DSMB reviews concluded that the study could continue unmodified.

In July 2024, we completed enrollment of 268 subjects with pulmonary sarcoidosis at multiple centers in the United States, Europe, Brazil, and Japan, exceeding target enrollment.

In July 2025, we completed the last patient visit in the EFZO-FIT study.

Topline data from the study are expected in mid-September 2025.

In September 2025, we announced top-line data from a global Phase 3 randomized, double-blind, placebo-controlled clinical trial to evaluate the efficacy and safety of efzofitimod in patients with pulmonary sarcoidosis (the EFZO-FIT study).

The EFZO-FIT study was a 52-week study in 268 patients with pulmonary sarcoidosis consisting of three parallel cohorts randomized equally to either 3.0 mg/kg or 5.0 mg/kg of efzofitimod or placebo dosed intravenously once every four weeks for a total of 12 doses, with a four week safety follow-up.

The study design incorporated a protocol guided steroid taper in the first 12 weeks of the study, followed by continued taper or rescue until week 48.

The study did not meet its primary endpoint of change from baseline in mean daily oral corticosteroid (OCS) dose at week 48.

The change from baseline in mean daily OCS dose reduced to an average of 2.79 mg for 5.0 mg/kg efzofitimod vs 3.52 mg for placebo (p=0.3313).

The study’s statistical analysis plan was designed on a hierarchical assessment basis, as such since the primary endpoint was not met, all subsequent statistical testing is reported as nominal findings.

The study demonstrated a clinically meaningful improvement in the King’s Sarcoidosis Questionnaire (KSQ)-Lung score at week 48 for 5.0 mg/kg efzofitimod compared to placebo (p=0.0479), with a responder analysis of patients who achieved complete steroid withdrawal at week 48 with an improved KSQ-Lung score also showing improvement in patients treated with 5.0 mg/kg efzofitimod compared to placebo (p=0.0196).

Lung function as measured by forced vital capacity (FVC) at week 48 was maintained in all groups.

Efzofitimod was generally well-tolerated at both the 3.0 mg/kg and 5.0 mg/kg doses, consistent with previously observed safety profile in all trials conducted to date.

At the European Respiratory Society (ERS) Congress in late September 2025, we announced additional findings from the EFZO-FIT Study, including analyses of additional pre-specified outcomes that demonstrated clinical improvements in mean change from baseline in the Fatigue Assessment (FAS) Total Score (p=0.0226) and KSQ-General Health score (p=0.0197) in patients treated with 5.0 mg/kg efzofitimod versus placebo.

Treatment with efzofitimod was also associated with a trend toward a greater proportion of patients achieving steroid-free status for at least six months.

Based on the trial findings, which we believe indicate drug activity for efzofitimod as evidenced by improvements across multiple clinically relevant efficacy endpoints, we plan to meet with the FDA in the first quarter of 2026 to review the results and determine the path forward for efzofitimod in pulmonary sarcoidosis.

In February 2024, we announced an Individual Patient Expanded Access Program (Individual Patient EAP).

The Individual Patient EAP has been initiated based on blinded EFZO-FIT study investigator and patient participant feedback.

The program is designed to allow access for patients who complete the Phase 3 EFZO-FIT study and wish to receive treatment with efzofitimod outside of the clinical trial.

The administration of efzofitimod as part of the Individual Patient EAP will occur independent of the EFZO-FIT study protocol, and we, principal investigators and patients will remain blinded to the treatment that occurred as part of the EFZO-FIT study.

As this Individual Patient EAP will occur independent of the EFZO-FIT study, this program is not an open-label extension (OLE) and no long-term data will be collected by us.

Based on the results of the Phase 1b/2a clinical trial, we believe efzofitimod has potential applications in the treatment of other ILDs, such as chronic hypersensitivity pneumonitis (CHP) and connective tissue disease related ILD (CTD-ILD), including SSc-ILD and rheumatoid arthritis-associated ILD.

The Individual Patient EAP was initiated based on blinded EFZO-FIT study investigator and patient participant feedback.

The program was designed to allow access for patients who completed the Phase 3 EFZO-FIT study and wished to receive treatment with efzofitimod outside of the clinical trial.

The Individual Patient EAP will continue to progress while we engage with the FDA to determine the path forward for efzofitimod in pulmonary sarcoidosis.

The administration of efzofitimod as part of the Individual Patient EAP is independent of the EFZO-FIT study protocol.

As this Individual Patient EAP is independent of the EFZO-FIT study, this program is not an open-label extension (OLE) and no long-term data will be collected by us.

We believe efzofitimod has potential applications in the treatment of other ILDs, such as chronic hypersensitivity pneumonitis (CHP) and connective tissue disease related ILD (CTD-ILD), including SSc-ILD and rheumatoid arthritis-associated ILD.

As such, we designed a focused Phase 2 proof-of-concept clinical trial of efzofitimod (the EFZO-CONNECT study) in patients with SSc-ILD.

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Patients who complete the study and wish to receive ongoing treatment with efzofitimod are eligible to participate in the 24-week OLE.

In June 2025 we announced interim data from the study showing three out of four efzoftimod-treated diffuse SSc-ILD patients showed clinically important improvement based on the modified Rodnan Skin Score (mRSS) assessment at 12 weeks and that efzofitimod was generally safe and well tolerated at all doses.

We are continuing enrollment and moving toward the 24-week endpoints, including the evaluation of the lung function endpoints to evaluate the ILD component of the disease.

In June 2025, we announced interim data from the study showing three out of four efzofitimod-treated diffuse SSc-ILD patients showed clinically important improvement based on the modified Rodnan Skin Score (mRSS) assessment at 12 weeks and that efzofitimod was generally well-tolerated at all doses.

We expect to complete enrollment of the study in the first half of 2026.

In January 2020, we entered into a collaboration and license agreement (Kyorin Agreement) with Kyorin for the development and commercialization of efzofitimod for the treatment of ILD in Japan.

Under the terms of the Kyorin Agreement, Kyorin received exclusive rights to develop and commercialize efzofitimod in Japan for all forms of ILD, and is obligated to fund all research, development, regulatory, marketing and commercialization activities in Japan.

Under the terms of the Kyorin Agreement, Kyorin received exclusive rights to develop and commercialize efzofitimod in Japan for all forms of ILD, and is obligated to fund all research,

development, regulatory, marketing and commercialization activities in Japan.

We are responsible for supplying all drug product for Japan, as well as supporting development activities for efzofitimod.

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Efzofitimod was observed to be generally well-tolerated with no drug-related serious adverse events, and PK findings were consistent with previous studies of efzofitimod.

Kyorin is also participating in the EFZO-FIT study as the local sponsor in Japan.

Kyorin has also participated in the EFZO-FIT study as the local sponsor in Japan.

In February 2023, Kyorin dosed the first patient in Japan in the EFZO-FIT study which triggered a $10.0 million milestone payment to us.

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We have incurred losses and negative cash flows from operations since our inception.

As of June 30, 2025, we had an accumulated deficit of $566.5 million, and we expect to continue to incur net losses for the foreseeable future.

As of June 30, 2025, we had cash, cash equivalents, restricted cash and available-for-sale investments of $83.2 million.

As of September 30, 2025, we had an accumulated deficit of $592.2 million, and we expect to continue to incur net losses for the foreseeable future.

As of September 30, 2025, we had cash, cash equivalents, restricted cash and available-for-sale investments of $92.9 million.

We believe that our current cash, cash equivalents, restricted cash and available-for-sale investments will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the date of this Quarterly Report.

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Sources of Cash

From our inception through June 30, 2025, we have financed our operations primarily through the sale of equity securities and convertible debt, venture debt, term loans and through license and collaboration agreement revenues.

From our inception through September 30, 2025, we have financed our operations primarily through the sale of equity securities and convertible debt, venture debt, term loans and through license and collaboration agreement revenues.

We rely primarily on the Jefferies ATM Offering Program for financing our activities.

Given recent volatility in capital markets generally, the price of our common stock has fluctuated materially since the start of 2025.

If markets remain volatile or our stock price continues to fluctuate, this may negatively affect our ability to generate cash from financing activities in future periods.

Given ongoing volatility in capital markets generally, the price of our common stock has fluctuated materially since the start of 2025 and, since the announcement of top-line data from the EFZO-FIT Study particularly, we have experienced a material decline in our stock price.

If markets remain volatile or our stock price continues to remain depressed, this may negatively affect our ability to generate cash from financing activities in future periods, including negatively affecting our ability to generate sufficient funds through our “at-the-market” offering program (the Jefferies ATM Offering Program) implemented through our Open Market Sale Agreement SM with Jefferies LLC (Jefferies).

At-the-Market Offering Programs

In April 2022, we entered into an Open Market Sale Agreement SM with Jefferies LLC (Jefferies) implementing an “at-the-market” offering program (the Jefferies ATM Offering Program).

In April 2022, we established the Jefferies ATM Offering Program.

In December 2024, we amended the Jefferies ATM Offering Program.

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During the year ended December 31, 2024, we sold an aggregate of 20,653,450 shares of common stock at a weighted-average price of $2.02 per share for net proceeds of approximately $40.3 million under the Jefferies ATM Offering Program.

During the six

months ended June 30, 2025, we sold an aggregate of 8,771,725 shares of common stock at a weighted-average price of $4.32 per share for net proceeds of approximately $36.7 million under the Jefferies ATM Offering Program.

During the nine months ended September 30, 2025, we sold an aggregate of 13,887,177 shares of common stock at a weighted-average price of $4.94 per share for net proceeds of approximately $66.4 million under the Jefferies ATM Offering Program.

Kyorin Agreement Milestone Payments

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The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used in):

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Operating activities.

Net cash used in operating activities for the six months ended June 30, 2025 and 2024 was $29.3 million and $42.8 million, respectively.

The net cash used during the six months ended June 30, 2025 and 2024 was primarily for on-going costs for efzofitimod development and pre-commercialization activities.

The decrease in net cash used in operating activities during the six months ended June 30, 2025 as compared to the same period in 2024 was due primarily to the timing of certain upfront efzofitimod manufacturing payments made during the six months ended June 30, 2024.

Net cash used in operating activities for the nine months ended September 30, 2025 and 2024 was $49.8 million and $56.0 million, respectively.

The net cash used during the nine months ended September 30, 2025 and 2024 was primarily for on-going costs for efzofitimod development and pre-commercialization activities.

The decrease in net cash used in operating activities during the nine months ended September 30, 2025 as compared to the same period in 2024 was due primarily to a decrease in cash used for the EFZO-FIT study as the study substantially completed during the nine months ended September 30, 2025 as well as the timing of certain upfront efzofitimod manufacturing payments made during the nine months ended September 30, 2024.

Investing activities.

Net cash (used in) provided by investing activities for the six months ended June 30, 2025 and 2024 was $(1.1) million and $5.4 million, respectively.

Net cash (used in) provided by investing activities for the nine months ended September 30, 2025 and 2024 was $(21.5) million and $23.3 million, respectively.

The fluctuation in net cash used in investing activities resulted primarily from the timing differences in investment purchases, sales and maturities, and the fluctuation of our portfolio mix between cash equivalents and investment holdings.

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Financing activities.

Net cash provided by financing activities for the six months ended June 30, 2025 and 2024 was $36.5 million and $21.1 million, respectively.

Net cash provided by financing activities for the six months ended June 30, 2025 primarily consisted of $36.7 million in net proceeds from the issuance of common stock through the Jefferies ATM Offering Program.

Net cash provided by financing activities for the six months ended June 30, 2024 consisted of $21.3 million in net proceeds from the issuance of common stock through the Jefferies ATM Offering Program.

Net cash provided by financing activities for the nine months ended September 30, 2025 and 2024 was $66.1 million and $21.0 million, respectively.

Net cash provided by financing activities for the nine months ended September 30, 2025 primarily consisted of $66.4 million in net proceeds from the issuance of common stock through the Jefferies ATM Offering Program.

Net cash provided by financing activities for the nine months ended September 30, 2024 consisted of $21.4 million in net proceeds from the issuance of common stock through the Jefferies ATM Offering Program.

Material Cash Requirements

To date, we have not generated any revenues from product sales.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to advance efzofitimod in clinical development, manufacturing, regulatory and pre-commercialization activities, continue our research and development activities with respect to other potential therapies based on tRNA synthetase biology and seek marketing approval for product candidates that we may develop.

Our expenses may increase in connection with the potential advancement of efzofitimod in clinical development, manufacturing, regulatory and pre-commercialization activities, and the continuation of our research and development activities with respect to other potential therapies based on tRNA synthetase biology and the seeking of marketing approval for product candidates that we may develop.

In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

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To the extent we raise additional capital through the sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

If we raise additional funds through

collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

The incurrence of additional indebtedness would increase our fixed payment obligations and may require us to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

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If we are unable to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

As of June 30, 2025, our material cash requirements from known contractual and other obligations consisted primarily of (i) an operating lease for our corporate headquarters and laboratory space, and (ii) our master financing lease agreement for various research and development and informational technology equipment.

As of September 30, 2025, our material cash requirements from known contractual and other obligations consisted primarily of (i) an operating lease for our corporate headquarters and laboratory space, and (ii) our master financing lease agreement for various research and development and informational technology equipment.

Corporate Headquarters Facility Lease

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The amendment increased the total rentable square feet from 23,696 rentable square feet to 24,866 rentable square feet.

We provided a $0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of June 30, 2025.

We provided a $0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of September 30, 2025.

Financing Lease

In April 2022, we entered into a financing lease to lease various research and development and information technology equipment over a 48-month term.

Financing lease liabilities totaled $1.2 million as of June 30, 2025.

Additionally, as of June 30, 2025, we have $1.7 million in cash collateral for the financing lease, and this amount is included in restricted cash.

We did not have any off-balance sheet arrangements as of June 30, 2025.

Financing lease liabilities totaled $1.0 million as of September 30, 2025.

Additionally, as of September 30, 2025, we have $1.5 million in cash collateral for the financing lease, and this amount is included in restricted cash.

We did not have any off-balance sheet arrangements as of September 30, 2025.

Financial Operations Overview

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was incorporated in the State of Delaware in September 2005.

The unaudited condensed consolidated financial statements in this Quarterly Report include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma, as of June 30, 2025.

The unaudited condensed consolidated financial statements in this Quarterly Report include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma, as of September 30, 2025.

All intercompany transactions and balances are eliminated in consolidation.

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Efzofitimod was observed to be generally well-tolerated with no drug-related serious adverse events and PK findings were consistent with previous studies of efzofitimod.

Kyorin is also participating in the EFZO-FIT study as the local sponsor in Japan.

Kyorin has also participated in the EFZO-FIT study as the local sponsor in Japan.

To date, the Kyorin Agreement has generated $20.0 million in upfront and milestone payments to us and we are eligible to receive up to an additional $155.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties on any net sales in Japan.

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Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024 (in thousands):

Three Months Ended June 30,

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

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):

Three Months Ended September 30,

License and collaboration agreement revenues

Research and development expenses:

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Other income (expense), net

License and collaboration agreement revenues.

Revenues for the three months ended September 30, 2025 consisted of drug product material sold to Kyorin to support analytical method validation in Japan.

Research and development expenses.

Research and development expenses were $15.4 million and $14.0 million for the three months ended June 30, 2025 and 2024, respectively.

The increase of $1.4 million was due primarily to an increase of $1.0 million in manufacturing costs for preparation toward a potential BLA filing.

Research and development expenses were $22.1 million and $14.8 million for the three months ended September 30, 2025 and 2024, respectively.

The increase of $7.3 million was due primarily to an increase of $8.2 million in manufacturing costs for preparation toward a potential BLA filing and commercial supply for efzofitimod offset by a decrease of $1.3 million in expenses in EFZO-FIT study as the study substantially completed during the three months ended September 30, 2025.

Preclinical development and other shared research and development expenses increased by $0.4 million, and was primarily attributable to increased discovery costs for our preclinical product candidates.

Non-cash expenses increased by $0.1 million primarily due to increased non-cash stock-based compensation expense.

We expect research and development expenses to increase as we advance toward the potential commercialization of efzofitimod.

Non-cash expenses increased by $0.1 million primarily due to

increased non-cash stock-based compensation expense.

We anticipate that our research and development expenses will fluctuate and be dependent upon our determination of the path forward for efzofitimod in pulmonary sarcoidosis.

General and administrative expenses.

General and administrative expenses were $4.9 million and $3.3 million for the three months ended June 30, 2025 and 2024, respectively.

Other general and administrative expenses increased by $1.2 million primarily due to higher personnel related costs and pre-commercialization costs.

General and administrative expenses were $4.8 million and $3.3 million for the three months ended September 30, 2025 and 2024, respectively.

Other general and administrative expenses increased by $1.1 million primarily due to higher personnel related costs, professional fees and pre-commercialization costs.

Non-cash expenses increased by $0.4 million primarily due to increased non-cash stock-based compensation expenses.

We expect general and administrative expenses to increase as we incur pre-commercialization costs to prepare for the potential commercialization of efzofitimod.

We anticipate that our general and administrative expenses will fluctuate and be dependent upon our determination of the path forward for efzofitimod in pulmonary sarcoidosis.

Other income (expense), net.

Other income (expense), net was $0.8 million and $1.0 million for the three months ended June 30, 2025 and 2024, respectively.

The change was primarily a result of lower interest income earned on lower cash balances as well as lower interest rates as compared to the same period in the prior year.

Comparison of the Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024 (in thousands):

Six Months Ended June 30,

Other income (expense), net was $1.0 million and $0.9 million for the three months ended September 30, 2025 and 2024, respectively.

The change was primarily a result of higher cash balances as compared to the same period in the prior year.

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

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):

Nine Months Ended September 30,

License and collaboration agreement revenues

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License and collaboration agreement revenues.

Revenues of $0.2 million for the six months ended June 30, 2024 consisted of drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

Revenues for the nine months ended September 30, 2025 consisted of drug product material sold to Kyorin to support analytical method validation in Japan while revenues for the nine months ended September 30, 2024, consisted of drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

Research and development expenses.

Research and development expenses were $27.2 million and $27.3 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease of $0.1 million was due primarily to a decrease of $2.1 million in EFZO-FIT expense due the completion of the last patient visit in July 2025 offset by an increase of $1.1 million in manufacturing costs due to the timing of certain manufacturing activities being completed.

Research and development expenses were $49.3 million and $42.1 million for the nine months ended September 30, 2025 and 2024, respectively.

The increase of $7.2 million was due primarily to an increase of $8.9 million in manufacturing costs for preparation toward a potential BLA filing and commercial supply for efzofitimod offset by a decrease of $3.4 million in expenses in EFZO-FIT study as the study substantially completed during the nine months ended September 30, 2025.

Preclinical development and other shared research and development expenses increased by $1.1 million, and was primarily attributable to increased discovery costs for our preclinical product candidates.

Non-cash expenses increased by $0.4 million primarily due to increased non-cash stock-based compensation expense.

We expect research and development expenses to increase as we advance toward the potential commercialization of efzofitimod.

We anticipate that our research and development expenses will fluctuate and be dependent upon our determination of the path forward for efzofitimod in pulmonary sarcoidosis.

General and administrative expenses.

General and administrative expenses were $8.9 million and $6.8 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $2.0 million was due primarily to higher personnel related costs and pre-commercialization costs.

General and administrative expenses were $13.7 million and $10.2 million for the nine months ended September 30, 2025 and 2024, respectively.

Other general and administrative expenses increased by $2.4 million was due primarily to higher personnel related costs, professional fees and pre-commercialization costs.

Non-cash expenses increased by $1.1 million primarily due to increased non-cash stock-based compensation expenses.

We expect general and administrative expenses to increase as we incur pre-commercialization costs to prepare for the potential commercialization of efzofitimod.

We anticipate that our general and administrative expenses will fluctuate and be dependent upon our determination of the path forward for efzofitimod in pulmonary sarcoidosis.

Other income, net.

Other income, net was $1.7 million and $2.2 million for the six months ended June 30, 2025 and 2024, respectively.

The change was primarily a result of lower interest income earned on lower cash balances as well as lower interest rates as compared to the same period in the prior year.

Other income, net was $2.7 million and $3.0 million for the nine months ended September 30, 2025 and 2024, respectively.

The change was primarily a result of lower interest rates as compared to the same period in the prior year.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis