What changed in this filing

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Item 1. Financial Statements

2026-08-07 compared with 2026-05-15 · 78 added, 64 removed, 364 unchanged (28% of the section changed)

25 unchanged sentences

Preferred stock, $ 0.001 par value per share;

5,000,000 undesignated authorized shares as of March 31, 2026 (unaudited) and December 31, 2025, respectively;

no shares issued or outstanding as of March 31, 2026 (unaudited) and December 31, 2025

5,000,000 undesignated authorized shares as of June 30, 2026 (unaudited) and December 31, 2025, respectively;

no shares issued or outstanding as of June 30, 2026 (unaudited) and December 31, 2025

Common stock, $ 0.001 par value per share;

170,000,000 authorized shares as of March 31, 2026 (unaudited) and December 31, 2025;

issued and outstanding shares – 98,051,212 as of March 31, 2026 (unaudited) and 98,031,104 as of December 31, 2025

340,000,000 and 170,000,000 authorized shares as of June 30, 2026 (unaudited) and December 31, 2025, respectively;

98,087,425 and 98,031,014 issued and outstanding shares as of June 30, 2026 (unaudited) and December 31, 2025, respectively

Additional paid-in capital

10 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

13 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Consolidated net loss

Other comprehensive loss:

Change in unrealized loss on available-for-sale investments, net of tax

Change in unrealized gain (loss) on available-for-sale investments, net of tax

Comprehensive loss

6 unchanged sentences

(in thousands, except share data)

Three Months Ended March 31, 2026 (unaudited)

Six Months Ended June 30, 2026 (unaudited)

Comprehensive

6 unchanged sentences

Balance as of March 31, 2026

Three Months Ended March 31, 2025 (unaudited)

Issuance of common stock pursuant to employee stock purchase plan

Stock-based compensation

Net unrealized gain on investments, net of tax

Balance as of June 30, 2026

Six Months Ended June 30, 2025 (unaudited)

Comprehensive

8 unchanged sentences

Balance as of March 31, 2025

Issuance of common stock upon exercise of stock options

Issuance of common stock pursuant to employee stock purchase plan

Issuance of common stock from at-the-market offerings, net of offering costs

Stock-based compensation

Net unrealized loss on investments, net of tax

Balance as of June 30, 2025

See accompanying notes.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

5 unchanged sentences

Amortization of right-of-use assets

Gain on financing lease bargain purchase option

Changes in operating assets and liabilities:

11 unchanged sentences

Proceeds from issuance of common stock through option exercises

Proceeds from issuance of common stock through employee stock purchase plan

Proceeds from issuance of common stock from at-the-market offerings, net of offering costs

33 unchanged sentences

Liquidity and Financial Condition

We have incurred net losses and negative cash flows from operations since our inception in 2005, including a consolidated net loss of $ 10.8 m illion for the three months ended March 31, 2026.

As of March 31, 2026, we had an accumulated deficit of $ 617.0 million.

We have incurred net losses and negative cash flows from operations since our inception in 2005, including a consolidated net loss of $ 10.3 m illion and $ 21.1 million for the three and six months ended June 30, 2026.

As of June 30, 2026, we had an accumulated deficit of $ 627.3 million.

We currently have an “at-the-market” offering program (the Jefferies ATM Offering Program) through an Open Market Sale Agreement SM with Jefferies LLC (Jefferies).

We did not utilize the Jefferies ATM Offering Program during the three months ended March 31, 2026.

We did not utilize the Jefferies ATM Offering Program during the three and six months ended June 30, 2026.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years at a minimum.

2 unchanged sentences

The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts and the timing and nature of the regulatory approval process for our product candidates.

We anticipate that we will seek to fund our operations through equity offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements, and when we are closer to commercialization of our product candidates potentially through debt financings.

We anticipate that we will seek to fund our operations through equity or debt offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements.

However, we may be unable to raise additional capital or enter into such arrangements when needed on favorable terms or at all.

Our failure to raise capital or enter into such arrangements when needed would have a negative impact on our financial condition and ability to develop our product candidates.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 68.3 million as of March 31, 2026 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 filing date of this Quarterly Report on Form 10-Q.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 58.9 million as of June 30, 2026 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 filing date of this Quarterly Report on Form 10-Q.

Restricted Cash

As of March 31, 2026, restricted cash was approximate ly $ 1.8 mil lion, which was held as a security deposit in conjunction with our corporate headquarters facility lease and financing leases as discussed further in Note 4 - Commitments and Contingencies.

As of June 30, 2026, restricted cash was approximate ly $ 1.5 mil lion, which was held as a security deposit in conjunction with our corporate headquarters facility lease and financing leases as discussed further in Note 4 - Commitments and Contingencies.

Allowance of Credit Losses

55 unchanged sentences

Potentially dilutive securities not considered for the calculation of diluted net loss per share are as follows (in common stock equivalents):

Six Months Ended June 30,

Common stock options and restricted stock units

4 unchanged sentences

Our CODM is our Chief Executive Officer , who reviews and evaluates consolidated research and development expenses, general and administrative expenses, net loss, net cash used in operating activities and our consolidated cash and cash equivalents for purposes of making operating decisions, allocating resources and planning and forecasting future periods.

The table below summarizes the significant expense categories regularly reviewed by our CODM for the three months ended March 31, 2026 and 2025.

Three Months Ended March 31,

The table below summarizes the significant expense categories regularly reviewed by our CODM for the three and six months ended June 30, 2026 and 2025.

Three Months Ended June 30,

Six Months Ended June 30,

Research and development expenses:

27 unchanged sentences

Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted cash flow techniques and include our investments in commercial paper, corporate debt securities and U.S.

government agencies securities.

government agencies

We have no financial liabilities measured at fair value on a recurring basis.

6 unchanged sentences

for Identical

As of March 31, 2026

As of June 30, 2026

Cash equivalents

17 unchanged sentences

Total assets measured at fair value

As of March 31, 2026 and December 31, 2025, available-for-sale investments are detailed as follows (in thousands):

March 31, 2026

As of June 30, 2026 and December 31, 2025, available-for-sale investments are detailed as follows (in thousands):

June 30, 2026

Contractual Maturity

19 unchanged sentences

When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made.

We recorded no allowance for credit losses in the unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2026.

As of March 31, 2026, all available-for-sale investments had a variety of effective maturity dates of less than one year .

As of March 31, 2026, 11 out of 18 available-for-sale investments were in a gross unrealized loss position, all of which have held this status for less than one year.

As of March 31, 2026 and December 31, 2025, accrued interest receivable on available-for-sale investments was $ 0.4 million for each period.

We recorded no allowance for credit losses in the unaudited condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2026.

As of June 30, 2026, all available-for-sale investments had a variety of effective maturity dates of less than one year .

As of June 30, 2026, 12 out of 13 available-for-sale investments were in a gross unrealized loss position, all of which have held this status for less than one year.

As of June 30, 2026 and December 31, 2025, accrued interest receivable on available-for-sale investments was $ 0.4 million for each period.

License, Collaboration and Other Agreements

2 unchanged sentences

(Kyorin) for the development and commercialization of efzofitimod for the treatment of interstitial lung disease (ILD) in Japan.

Under the Kyorin Agreement, Kyorin received an exclusive right 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.

In 2020, Kyorin conducted and funded a Phase 1 clinical trial of efzofitimod (known as KRP-R120 in Japan).

The Phase 1 clinical trial was a placebo-controlled clinical trial to evaluate the safety, pharmacokinetics (PK) and immunogenicity of efzofitimod in 32 healthy Japanese male volunteers.

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 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.

To date, the Kyorin Agreement has generated $ 20.0 million in upfront and milestone payments to us.

We assessed our license and collaboration with Kyorin in accordance with Topic 606 which applies to delivered goods or services to a customer and concluded that Kyorin is a customer.

For the three months ended March 31, 2026 and 2025, t here were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

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

On May 12, 2026, we received notice of termination of the Kyorin Agreement with Kyorin.

Refer to our discussion of the termination in Note 6 – Subsequent Events.

Kyorin elected to terminate the Kyorin Agreement without cause in accordance with the terms of the Kyorin Agreement, and the termination became effective on July 30, 2026 (the Termination Date).

Following the Termination Date, the rights to develop and commercialize efzofitimod in Japan for all forms of ILD have reverted to us.

Consequently, we hold the rights to develop and commercialize efzofitimod globally.

Commitments and Contingencies

6 unchanged sentences

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 March 31, 2026.

Future minimum payments under the facility lease and a reconciliation to the operating lease liability as of March 31, 2026 were as follows (in thousands):

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, 2026.

Future minimum payments under the facility lease and a reconciliation to the operating lease liability as of June 30, 2026 were as follows (in thousands):

Operating Leases

4 unchanged sentences

Long-term operating lease liability, net of current portion

For each of the three months ended March 31, 2026 and 2025, we recorded an operating lease expense of $ 0.4 million.

As of March 31, 2026, the weighted-average remaining lease term was 7.3 years and the weighted average discount rate was 8.8 %.

For each of the three months ended June 30, 2026 and 2025, we recorded an operating lease expense of $ 0.4 million.

For each of the six months ended June 30, 2026 and 2025, we recorded an operating lease expense of $ 0.8 million.

As of June 30, 2026, the weighted-average remaining lease term was 7.1 years and the weighted average discount rate was 8.8 %.

Financing Leases

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

Future minimum payments under the financing lease and reconciliation to the financing lease liability as of March 31, 2026 were as follows (in thousands):

In April 2022, we entered into a master financing lease agreement.

Under this master agreement, we entered into various financing lease agreements from July 2022 through November 2023 to lease various research and development and information technology equipment over a 48-month term.

Future minimum payments under the financing lease and reconciliation to the financing lease liability as of June 30, 2026 were as follows (in thousands):

Financing Leases

3 unchanged sentences

Long-term financing lease liability, net of current portion

As of March 31, 2026, the weighted-average remaining lease term was 1.0 years and the weighted-average discount rate was 8.4 %.

As of March 31, 2026, we have a $ 1.1 million deposit held as collateral for the leased equipment, and this deposit is included in restricted cash.

As of June 30, 2026, the weighted-average remaining lease term was 0.8 years and the weighted-average discount rate was 8.4 %.

As of June 30, 2026, we have a $ 0.8 million deposit held as collateral for the leased equipment, and this deposit is included in restricted cash.

On October 9, 2025 and October 22, 2025 , two substantially similar putative securities class action complaints were filed in the U.S.

10 unchanged sentences

Broadfoot, as a defendant.

Under the current schedule, the deadline to respond to the Amended Consolidated Complaint, including by filing a motion to dismiss, is July 17, 2026.

Any opposition to a motion to dismiss is due August 28, 2026 , with any reply due September 28, 2026 .

On July 17, 2026, we moved to dismiss the Amended Consolidated Compliant.

Under the current schedule, any opposition to a motion to dismiss is due August 28, 2026 , with any reply due September 28, 2026 .

We make provisions for liabilities when they are both probable that a liability has been incurred and the amount can be reasonably estimated.

5 unchanged sentences

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

Under the Jefferies ATM Offering Program we may

offer and sell, from time to time and at our option, up to an aggregate of $ 215.0 million of shares of our common stock (inclusive of $ 65.0 million of sales made prior to the amendment) through Jefferies, acting as sales agent.

Under the Jefferies ATM Offering Program we may offer and sell, from time to time and at our option, up to an aggregate of $ 215.0 million of shares of our common stock (inclusive of $ 65.0 million of sales made prior to the amendment) through Jefferies, acting as sales agent.

Jefferies is entitled to a fixed commission rate of up to 3.0 % of the gross sales proceeds of shares sold under the Jefferies ATM Offering Program.

We did not utilize the Jefferies ATM Offering Program during the three months ended March 31, 2026.

During the year ended December 31, 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.

We did not utilize the Jefferies ATM Offering Program during the six months ended June 30, 2026.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance was as follows:

March 31, 2026

June 30, 2026

Common stock options and restricted stock units

2 unchanged sentences

Shares available under the employee stock purchase plan

The following table summarizes our stock option activity under all equity incentive plans for the three months ended March 31, 2026:

The following table summarizes our stock option activity under all equity incentive plans for the six months ended June 30, 2026:

Stock Options

2 unchanged sentences

Canceled/forfeited/expired

Outstanding as of March 31, 2026

Outstanding as of June 30, 2026

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Expected term (in years)

2 unchanged sentences

3.7 % – 4.2 %

3.9 % – 4.5 %

Expected volatility

1 unchanged sentence

105.5 % – 107.5 %

75.9 % – 77.5 %

Expected dividend yield

The following table summarizes our restricted stock unit activity under all equity incentive plans for the three months ended March 31, 2026:

The following table summarizes our restricted stock unit activity under all equity incentive plans for the six months ended June 30, 2026:

Number of Outstanding

2 unchanged sentences

Balance as of December 31, 2025

Balance as of March 31, 2026

Balance as of June 30, 2026

Stock-based Compensation

The allocation of stock-based compensation for all options and restricted stock units and stock issued pursuant to our employee stock purchase plan is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

2 unchanged sentences

Subsequent Events

On May 12, 2026, we received notice of termination of the Kyorin Agreement with Kyorin.

Kyorin elected to terminate the Kyorin Agreement without cause in accordance with the terms of the Kyorin Agreement, and the termination will become effective 90 days after the date of receipt of the notice of termination (the Termination Date).

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

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

As a result of the termination of the Kyorin Agreement, we will not be entitled to receive any further milestone or other payments, including $ 155.0 million in the aggregate that would have been due upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties on any net sales in Japan.

Both parties will also cease to have any development or commercialization obligations after the Termination Date and the licenses we granted to Kyorin pursuant to the Kyorin Agreement will cease to be in effect after the Termination Date.

Following the Termination Date, the rights to develop and commercialize efzofitimod in Japan for all forms of ILD will revert to us.

Consequently, we will hold the rights to develop and commercialize efzofitimod globally.

On August 7, 2026, our board of directors approved the implementation of a corporate restructuring and program prioritization plan (the Restructuring Plan) to streamline our operations, and conserve capital prior to the potential initiation of a new Phase 3 study of efzofitimod in pulmonary sarcoidosis (the Planned Phase 3 Study).

In connection with the Restructuring Plan, we committed to a reduction in our total workforce by approximately 60% to 20 full-time employees.

We began notifying affected employees on August 7, 2026.

We estimate that we will record charges of approximately $4.2 million for employee severance, employee health benefit obligations and other related termination benefits.

Severance payments are expected to be paid in full between August 2026 and September 2027.

The charges that we expect to incur in connection with, or as a result of, the Restructuring Plan, are subject to a number of assumptions, and actual results may differ materially.

We may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the Restructuring Plan.

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

What changed 10-Q

Item 1. Financial Statements