What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-12 · 87 added, 50 removed, 192 unchanged (42% of the section changed)

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We selected firmonertinib for global development against nonclassical, or uncommon, mutations based on preliminary reductions in tumor size observed in seven out of ten patients in first-line treatment with EGFR exon 20 insertion mutations in the ongoing Phase 1b clinical trial, the FAVOUR trial, conducted by Allist in China, and preclinical activity in EGFR P-loop and-alpha-c-helix compressing (PACC) mutations, each a subtype of uncommon mutation.

In a subsequent interim data readout from the FAVOUR trial of firmonertinib in first-line patients with locally advanced or metastatic EGFRm NSCLC with exon 20 insertion mutations, 79% of patients

(n=22 out of 28 patients) who were administered a 240 mg once daily dose of firmonertinib were observed to experience a reduction in tumor size of at least 30%.

If the future clinical trial results of the FAVOUR trial are unfavorable, our clinical development plans for firmonertinib, which include conducting our global, pivotal Phase 3 FURVENT clinical trial in first-line non-squamous locally advanced or metastatic EGFRm NSCLC patients with exon 20 insertion mutations, may be adversely affected.

first-line non-squamous locally advanced or metastatic EGFRm NSCLC patients with exon 20 insertion mutations, may be adversely affected.

As one of the most prevalent cancers in the world, lung cancer imposes a significant global burden on human health, and EGFRm NSCLC represents a significant proportion of those affected.

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Median DOR had not yet been reached, with 90.9% (n=20/22) of patients with confirmed responses remaining on study.

In June 2025, we announced additional positive interim data from the FURTHER trial.

In this interim readout, patients treated with 240 mg of firmonertinib were observed to experience 16.0 months median progression free survival and 14.6 months median duration of response.

Further, 68.2% of patients treated in first-line at 240 mg and 43.5% of patients treated in first-line at 160 mg were observed to experience a reduction in tumor size of at least 30% from the baseline in a patient without evidence of progression as measured by RECIST 1.1 criteria, which measurement of reduction is the threshold in this trial for determination of the ORR.

In addition, 41% (n=7/17) of patients with brain metastases at baseline were observed to experience a confirmed response utilizing modified RECIST 1.1 and 53% (n=9/17) of first line patients with brain metastases at baseline were observed to experience a reduction in tumor size of at least 30% from the baseline in a patient without evidence of progression as measured by RECIST 1.1 criteria.

Firmonertinib was generally well-tolerated with interim safety results.

Interim results may not be indicative of final results;

however, we believe these interim clinical results underscore firmonertinib’s potential in patients whose tumors contain an uncommon EGFRm.

however, we believe these interim clinical results continue to underscore firmonertinib’s potential in patients whose tumors contain an uncommon EGFRm.

In June 2025, we also announced plans to initiate ALPACCA (FURMO-006), the first randomized global Phase 3 study in first-line NSCLC in patients across PACC mutations.

Enrollment of the first patient in the ALPACCA trial is expected in the second half of 2025.

We entered into the Global Technology Transfer and License Agreement (Allist License Agreement), pursuant to which, we have, among other things, secured an exclusive, royalty bearing and sublicensable license under certain intellectual property, including patents and know-how, owned or controlled by Allist to develop and commercialize any product containing firmonertinib or any of its salts or derivatives as an active ingredient of a product, which is led by a joint collaboration committee, comprising of representatives from both Allist and us.

Under the Allist License Agreement, we are obligated to pay Allist milestone payments up to an aggregate of $765.0 million upon the achievement of certain development, regulatory and sales milestone events as set forth in the Allist License Agreement.

During the three months ended March 31, 2025 and 2024, no milestones were met or achieved.

During the six months ended June 30, 2025 and 2024, no milestones were met or achieved.

We are also obligated under the Allist License Agreement to pay Allist tiered royalties based on net sales of Licensed Products (as defined in the Allist License Agreement).

See “Business — Licenses, Partnerships and Collaborations — Allist Agreements” in our Annual Report.

In February 2025, we entered into the Exclusive License Agreement (Lepu Biopharma Agreement) with Lepu Biopharma Co., Ltd.

(Lepu), pursuant to which, we have, among other things, secured an exclusive, royalty bearing and sublicensable license under certain intellectual property, including patents and know-how, owned or controlled by Lepu to develop and commercialize any product containing ARR-217 or the antibody component of ARR-217.

In January 2025, we entered into the Exclusive License Agreement (Lepu Biopharma Agreement) with Lepu Biopharma Co., Ltd.

(Lepu), pursuant to which we have, among other things, secured an exclusive, royalty bearing and

sublicensable license under certain intellectual property, including patents and know-how, owned or controlled by Lepu to develop and commercialize any product containing ARR-217 or the antibody component of ARR-217.

Further, we are obligated to pay Lepu milestone payments up to an aggregate of approximately $1.17 billion upon the achievement of certain development, regulatory and sales milestone events as set forth in the Lepu Biopharma Agreement.

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We do not have any products approved for sale and have not generated any revenue from product sales or otherwise.

We have funded our operations

to date primarily through the private placement of convertible preferred stock and our initial public offering in January 2024.

We have funded our operations to date primarily through the private placement of convertible preferred stock, our initial public offering in January 2024, and “at-the-market” offerings beginning in February 2025.

We have incurred significant operating losses since our inception and have not yet generated any revenue.

Our net losses were $64.4 million and $17.4 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $302.7 million.

Our net losses were $95.8 million and $39.3 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, we had an accumulated deficit of $334.1 million.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies, clinical trials and our expenditures on other research and development activities.

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● seek regulatory approval for our product candidates;

● pursue commercialization of our product candidates;

● pursue commercialization of our product candidates, if approved;

● maintain, expand, protect and defend our intellectual property portfolio;

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We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities and, if any product candidates receive marketing approval, commercialization activities.

We also anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

We also anticipate increased expenses related to audit, legal, regulatory and tax services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Interest and Investment Income

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Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

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:

Three Months Ended June 30,

(in thousands)

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We do not track internal research and development costs by product candidate.

The following table summarizes our research and development expenses for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following table summarizes our research and development expenses for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $61.3 million and $17.0 million for the three months ended March 31, 2025 and 2024, respectively.

The increase of $44.3 million was primarily due to an increase of $41.0 million related to discovery-stage programs, specifically, a $40.0 million one-time up-front payment to initiate our collaboration with

Increases in total research and development expense were also due to a $1.5 million increase in expenditure on our lead product candidate, firmonertinib, as well as increases of $2.2 million in personnel-related costs due to increased headcount.

Research and development expenses were $27.7 million and $21.8 million for the three months ended June 30, 2025 and 2024, respectively.

The increase of $5.9 million was primarily due to an increase of $5.0 million related to expenditures on our lead product candidate, firmonertinib, and $3.5 million in personnel-related costs due to increased headcount, partially offset by a decrease in expenditures of $2.6 million for discovery-stage programs.

Costs related to firmonertinib increased as a result of increased costs related to our FURVENT Phase 3 clinical trial of $2.8 million and increases in general firmonertinib costs of $3.3 million, offset by a decrease of $1.1 million in our FURTHER Phase 1 clinical trial and a decrease in costs related to our FAVOUR trial.

General and Administrative

General and administrative expenses were $5.5 million and $3.7 million for the three months ended March 31, 2025 and 2024, respectively.

The increase of $1.8 million was due primarily to increases of $1.3 million in personnel-related costs and $0.5 million in insurance, taxes, and outside services.

General and administrative expenses were $5.9 million and $3.9 million for the three months ended June 30, 2025 and 2024, respectively.

The increase of $2.0 million was due primarily to increases of $1.5 million in personnel-related costs and $0.6 million in accounting, legal, and other outside services.

Interest and Investment Income

Interest income was $2.4 million and $3.3 million for the three months ended March 31, 2025 and 2024, respectively.

Interest income was $2.2 million and $3.8 million for the three months ended June 30, 2025 and 2024, respectively.

The decrease in interest income is due to decreased invested balances.

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:

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Operating loss

Interest and investment income

Research and Development

We track outsourced clinical and preclinical costs and other external research and development costs associated with our lead product candidate, firmonertinib, and other discovery-stage programs.

We do not track internal research and development costs by product candidate.

The following table summarizes our research and development expenses for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

(in thousands)

Firmonertinib:

Other Firmonertinib costs

Total Firmonertinib

Discovery-stage programs

Personnel-related and other internal costs

Total research and development expenses

Research and development expenses were $89.0 million and $38.8 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $50.3 million was primarily due to an increase of $38.0 million related to expenditures on discovery-stage programs, $6.6 million of expenditures on our lead product candidate, firmonertinib, and $5.7 million in personnel-related costs due to increased headcount.

Costs increases related to discovery-stage programs were largely due to a $40.0 million one-time up front payment pursuant to our collaboration with Lepu.

Costs related to firmonertinib increased as a result of increased costs related to our FURVENT Phase 3 clinical trial of $3.9 million and increases in general firmonertinib costs of $4.5 million, offset by a decrease of $1.9 million in our FURTHER Phase 1 clinical trial and a decrease in costs related to our FAVOUR trial.

General and Administrative

General and administrative expenses were $11.4 million and $7.6 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $3.8 million was due primarily to increases of $2.8 million in personnel-related costs and $1.0 million in accounting, legal, software, and other outside services.

Interest and Investment Income

Interest income was $4.6 million and $7.1 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease in interest income is due to decreased invested balances.

Liquidity and Capital Resources

Sources of Liquidity

We have previously funded our operations primarily through the private placement of convertible preferred stock and our initial public offering of common stock.

We have previously funded our operations primarily through the private placement of convertible preferred stock, our initial public offering of common stock, and “at-the-market” offering.

To date, we have raised gross proceeds of $305.0 million from the issuance of convertible preferred stock.

Additionally, in the first quarter of 2024, we completed our initial public offering of 11,180,555 shares of our common stock at a price to the public of $18.00 per share, including the exercise in full by the underwriters of their option to purchase 1,458,333 additional shares of our common stock, for aggregate proceeds of $183.2 million, net of underwriting discounts, commissions and other offering expenses.

As of March 31, 2025, we had cash and cash equivalents and marketable securities of $205.5 million.

As of June 30, 2025, we had cash and cash equivalents and marketable securities of $254.5 million.

On February 3, 2025, we filed an automatic shelf registration statement on Form S-3ASR (File No.

333-284661) with the SEC.

The shelf registration statement consists of (i) a base prospectus pursuant to which we may offer and sell, from time to time, shares of our common stock, shares of our preferred stock, various series of debt securities, warrants, rights, and/or units to purchase any of such securities in one or more registered offerings, and (ii) a prospectus supplement pursuant to which we may offer and sell, from time to time, up to $250 million of shares of common stock in “at-the-market” offerings.

During the three months ended March 31, 2025, we sold 264,458 shares of common stock pursuant to our Open Market Sale Agreement SM with Jefferies LLC (ATM Program) for total proceeds of $6.5 million, net of fees.

As of March 31, 2025, we have approximately $242.8 million remaining for future issuances of common stock pursuant to the ATM Program.

supplement pursuant to which we may offer and sell, from time to time, up to $250 million of shares of common stock in “at-the-market” offerings.

During the six months ended June 30, 2025, we sold 3,693,224 shares of common stock pursuant to our Open Market Sale Agreement SM with Jefferies LLC (ATM Program) for total proceeds of $81.9 million, net of commissions.

As of June 30, 2025, we have approximately $164.9 million remaining for future issuances of common stock pursuant to the ATM Program.

There has been no material change in the planned use of proceeds as described in the shelf registration statement.

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The credit facility provides the right, but not the obligation, to draw up to $75 million of capital, of which $40 million will be available if certain conditions and milestones are met.

No amounts have been drawn on this facility at the date of this Quarterly Report on Form 10-Q.

See “Part II – Other Information – Item 5 – Other Information – Silicon Valley Bank Credit Facility” for further details.

No amounts have been drawn on this facility at the date of this Quarterly Report.

On July 3, 2025, we closed an underwritten public offering in which we issued and sold an aggregate of 3,059,615 shares of our common stock, including the exercise in full of the underwriters’ option to purchase 576,923 additional shares of common stock, at a public offering price of $19.50 per share, and, in lieu of shares of common stock to certain investors, pre-funded warrants to purchase up to 1,363,469 shares of common stock at a public offering price of $19.4999 per pre-funded warrant, which represents the per share public offering price for the shares less the $0.0001 per share exercise price for each pre-funded warrant.

The proceeds to us, net of underwriting discounts and commissions, were $81.1 million.

Future Funding Requirements

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This could have an adverse impact on our ability to achieve certain of our planned objectives, and thus, materially harm our business.

Our ability to successfully transition to

profitability will depend upon obtaining additional financing and achieving a level of product sales adequate to support our cost structure.

Our ability to successfully transition to profitability will depend upon obtaining additional financing and achieving a level of product sales adequate to support our cost structure.

We cannot be assured that we will ever be profitable or generate positive cash flows from operating activities.

We believe that our existing cash and cash equivalents and marketable securities as of March 31, 2025 will be sufficient to meet our anticipated cash requirements through at least twelve months from the issuance date of these financial statements.

We believe that our existing cash and cash equivalents and marketable securities as of June 30, 2025, along with the net proceeds from the July 2025 public offering of common stock, will be sufficient to meet our anticipated cash requirements through at least twelve months from the issuance date of these financial statements.

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

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If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our platform technology, future revenue streams, research programs or product candidates or may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

If we are unable to raise additional funds through equity or debt financings when needed, 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.

If we are unable to raise additional funds through equity or debt financings when needed, 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.

The following table summarizes our cash flows for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Operating Activities

Net cash used in operating activities was $68.0 million for the three months ended March 31, 2025 reflecting our net loss of $64.4 million and a $5.9 million decrease in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities.

Net cash used in operating activities was $94.1 million for the six months ended June 30, 2025 reflecting our net loss of $95.8 million and a $3.9 million decrease in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities.

These decreases were partially offset by $5.6 million in stock-based compensation.

Included in the net loss is a $40.0 million upfront payment made in conjunction with our collaboration with Lepu.

Net cash used in operating activities was $18.6 million for the three months ended March 31, 2024 reflecting our net loss of $17.4 million and a $1.8 million net change in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities offset, in part, by $0.6 million in stock-based compensation.

Net cash used in operating activities was $37.7 million for the six months ended June 30, 2024 reflecting our net loss of $39.3 million, offset by $1.4 million in stock-based compensation and a $0.2 million net decrease in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities.

Investing Activities

Net cash of $36.8 million was provided by investing activities for the three months ended March 31, 2025.

Net cash of $50.7 million was provided by investing activities for the six months ended June 30, 2025.

This was attributable to maturities of marketable securities.

No net cash was provided by investing activities for the three months ended March 31, 2024.

No net cash was provided by investing activities for the six months ended June 30, 2024.

Financing Activities

Net cash provided by financing activities was $6.7 million for the three months ended March 31, 2025.

This was due to $6.5 million of sales under the ATM Program and $0.3 million of stock option exercises.

Net cash provided by financing activities was $185.6 million for the three months ended March 31, 2024, due to the net proceeds from our initial public offering.

Net cash provided by financing activities was $81.9 million for the six months ended June 30, 2025.

This was due to $81.9 million of sales under the ATM Program and $0.4 million of stock option exercises, partially offset by $0.4 million of deferred financing costs.

Net cash provided by financing activities was $185.9 million for the six months ended June 30, 2024, due to the net proceeds from our initial public offering.

Contractual Obligations and Commitments

As of March 31, 2025, except for the operating lease, we did not have any long-term obligations, capital lease obligations, purchase obligation or long-term liabilities.

As of June 30, 2025, except for the operating lease, we did not have any long-term obligations, capital lease obligations, purchase obligation or long-term liabilities.

We enter into contracts in the normal course of business with third-party CROs and clinical trial sites for our clinical trials, and with supply vendors for other services and products for operating purposes.

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Additionally, we are required to make royalty payments in connection with the sale of products developed under these agreements.

Because the achievement of these milestones and royalties is not probable and payment is not required as of March 31, 2025, such contingencies have not been recorded in our financial statements.

Because the achievement of these milestones and royalties is not probable and payment is not required as of June 30, 2025, such contingencies have not been recorded in our financial statements.

For additional information regarding our agreements, see Note 9 to our accompanying financial statements in Part I, Item 1 of this Quarterly Report.

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We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our initial public offering , (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (Exchange Act), which would occur if, among other factors, the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year (subject to certain conditions) or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a smaller reporting company as defined in the Exchange Act.

We may continue to be a smaller reporting company even after we are no longer an emerging growth company.

We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

We will remain an emerging growth company and a smaller reporting company until December 31, 2025.

As we transition out of emerging growth company status at the end of 2025, we will no longer be able to rely on exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

Accordingly, we expect to incur significant additional legal, accounting and other expenses.

Additionally, our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.

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