Context Therapeutics Inc. 10-K

Item 8. Financial Statements and Supplementary Data Context Therapeutics Inc. Index To Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 596 ) 69 Consolidated Balance Sheets 70 Consolidated Statements of Operations 71 Consolidated Statements of Changes in Stockholders’ Equity 72 Consolidated Statements of Cash Flows 73 Notes to Consolidated Financial Statements 74 68 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders of Context Therapeutics Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Context Therapeutics Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated 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 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ CohnReznick LLP We have served as the Company’s auditor since January 2021. Parsippany, New Jersey March 20, 2025 69 Table of Contents Context Therapeutics Inc. Consolidated Balance Sheets December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 94,429,824 $ 14,449,827 Prepaid expenses and other current assets 3,466,160 1,597,384 Total current assets 97,895,984 16,047,211 Operating lease right-of-use asset 218,816 — Property and equipment, net 11,959 15,524 Total assets $ 98,126,759 $ 16,062,735 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,452,188 $ 2,383,016 Accrued expenses and other current liabilities 1,188,929 1,808,699 Operating lease liability - current 107,316 — Total current liabilities 2,748,433 4,191,715 Operating lease liabilities - non-current 112,064 — Total liabilities 2,860,497 4,191,715 Commitments and contingencies (Note 8) Stockholders' equity: Preferred stock, $ 0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock—$ 0.001 par value; 200,000,000 and 100,000,000 shares authorized at December 31, 2024 and December 31, 2023, respectively; 89,704,194 and 15,966,053 issued and outstanding at December 31, 2024 and December 31, 2023, respectively 89,704 15,966 Additional paid-in capital 189,956,252 79,909,644 Accumulated deficit ( 94,779,694 ) ( 68,054,590 ) Total stockholders' equity 95,266,262 11,871,020 Total liabilities and stockholders' equity $ 98,126,759 $ 16,062,735 The accompanying notes are an integral part of these consolidated financial statements. 70 Table of Contents Context Therapeutics Inc. Consolidated Statements of Operations Year ended December 31, 2024 2023 Operating expenses: Research and development $ 22,701,335 $ 17,782,731 General and administrative 7,222,565 7,289,885 Loss from operations ( 29,923,900 ) ( 25,072,616 ) Interest income 3,200,224 1,163,975 Other expense ( 1,428 ) ( 55,570 ) Net loss $ ( 26,725,104 ) $ ( 23,964,211 ) Net loss per common share, basic and diluted $ ( 0.46 ) $ ( 1.50 ) Weighted average shares outstanding, basic and diluted 58,416,141 15,966,053 The accompanying notes are an integral part of these consolidated financial statements. 71 Table of Contents Context Therapeutics Inc. Consolidated Statements of Changes in Stockholders’ Equity Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at January 1, 2023 15,966,053 $ 15,966 $ 78,832,779 $ ( 44,090,379 ) $ 34,758,366 Share-based compensation expense — — 1,076,865 — 1,076,865 Net loss — — — ( 23,964,211 ) ( 23,964,211 ) Balance at December 31, 2023 15,966,053 $ 15,966 $ 79,909,644 $ ( 68,054,590 ) $ 11,871,020 Share-based compensation expense — — 841,867 — 841,867 Sale of common stock and prefunded warrants in private placement, net of offering costs of $ 5,234,020 59,032,259 59,032 94,699,715 — 94,758,747 Sale of common stock from ATM facility, net of offering costs of $ 480,268 14,705,882 14,706 14,505,026 — 14,519,732 Net loss — — — ( 26,725,104 ) ( 26,725,104 ) Balance at December 31, 2024 89,704,194 $ 89,704 $ 189,956,252 $ ( 94,779,694 ) $ 95,266,262 The accompanying notes are an integral part of these consolidated financial statements. 72 Table of Contents Context Therapeutics Inc. Consolidated Statements of Cash Flows Year ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 26,725,104 ) $ ( 23,964,211 ) Adjustments to reconcile net loss to net cash used in operating activities: Acquired in-process research and development charge 14,750,000 — Share-based compensation expense 841,867 1,076,865 Depreciation and amortization expense 10,881 12,044 Reduction in the carrying amount of operating lease right-of-use asset 41,822 51,967 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 1,868,776 ) 758,829 Other assets — 32,750 Accounts payable ( 946,096 ) 1,446,686 Accrued expenses and other current liabilities ( 619,770 ) ( 407,470 ) Operating lease liability ( 41,258 ) ( 55,078 ) Cash used in operating activities ( 14,556,434 ) ( 21,047,618 ) Cash flows from investing activities: Acquired in-process research and development ( 14,750,000 ) — Purchase of property and equipment ( 7,316 ) — Cash used in investing activities ( 14,757,316 ) — Cash flows from financing activities: Proceeds from the sale of common stock and prefunded warrants in private placement, net 94,758,747 — Proceeds from the sale of common stock from ATM facility, net 14,535,000 — Cash provided by financing activities 109,293,747 — Net increase (decrease) in cash and cash equivalents 79,979,997 ( 21,047,618 ) Cash and cash equivalents at beginning of year 14,449,827 35,497,445 Cash and cash equivalents at end of year $ 94,429,824 $ 14,449,827 Supplemental disclosure of non-cash activities: Unpaid offering costs in accounts payable $ 15,268 $ — Right-of-use asset acquired under operating lease $ 260,638 $ — The accompanying notes are an integral part of these consolidated financial statements. 73 Table of Contents CONTEXT THERAPEUTICS INC. Notes to Consolidated Financial Statements (1) Organization and Description of Business Context Therapeutics Inc. (the “Company”) is a clinical-stage biopharmaceutical company advancing T cell engaging (“TCE”) bispecific antibodies (“bsAb”) for solid tumors. The Company’s product candidates include CTIM-76, a Claudin 6 (“CLDN6”) x CD3 TCE, CT-95, a Mesothelin (“MSLN”) x CD3 TCE, and CT-202, a Nectin cell adhesion protein 4 (“Nectin-4”) x CD3 TCE. The Company had also been developing onapristone extended release (“ONA-XR”). However, in March 2023, the Company announced its plan to discontinue the development of this product candidate and focus its efforts on the development of CTIM-76. All close-out costs associated with the ONA-XR program were recognized in research and development expense in 2023. The Company does not expect to incur future expenses related to this program. The Company was organized in April 2015 under the laws of the State of Delaware. The Company is headquartered in Philadelphia, Pennsylvania. (2) Risks and Liquidity The Company has incurred losses and negative cash flows from operations since inception and had an accumulated deficit of $ 94.8 million as of December 31, 2024. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant revenues from its current or any future product candidates. The Company believes its cash and cash equivalents of $ 94.4 million as of December 31, 2024 are sufficient to fund its projected operations for a period of at least 12 months from the issuance date of these consolidated financial statements. Substantial additional funding will be needed by the Company to fund its operations and to commercially develop its current and any future product candidates. Management plans to seek additional capital in the future through a combination of equity offerings, debt financings, collaborations, strategic transactions and/or marketing, distribution or licensing arrangements to carry out the Company’s planned development activities. If additional capital is not available when required, the Company may need to delay or curtail its operations until such funding is received. There is no assurance that such financing will be available when needed or on acceptable terms. Various internal and external factors will affect whether and when the Company’s current or any future product candidates become approved for marketing and successful commercialization. The regulatory approval and market acceptance of the Company’s current and any future product candidates, length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the approval process will materially affect the Company’s financial condition and future operations. The Company faces risks associated with companies whose products are in development. These risks include the need for additional financing to complete its research and development, achieving its research and development objectives, defending its intellectual property rights, recruiting and retaining skilled personnel, and dependence on key members of management, among others. (3) Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of the Company, Context Therapeutics LLC, Context Biopharma, Inc. and Context Ireland Ltd., the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. 74 Table of Contents Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed, and the effects of the revisions are reflected in the accompanying consolidated financial statements in the period they are determined to be necessary. Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, share-based compensation arrangements, the fair value of warrants, and in recording the prepayments, accruals and associated expense for research and development activities performed for the Company by third parties. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance. The Company has one reportable segment which consists of the development of clinical and preclinical product candidates for the advancement of therapies to treat solid tumors. The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the Company’s segment based on net loss, which is reported on the income statement as net loss. The measure of segment assets is reported on the balance sheet as total assets. To date, the Company has not generated any product revenue. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. As such, the CODM uses cash forecast models in deciding how to deploy capital at the Company. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results is used in assessing performance of the segment, along with cash forecast models. The CODM is regularly provided with net loss and consolidated assets, which are reported on the consolidated statements of operations and consolidated balance sheets, respectively. The table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024 and 2023: 75 Table of Contents Year ended December 31, 2024 2023 Operating Expenses: ONA-XR $ — $ 1,889,220 CTIM-76 5,581,896 14,593,973 CT-95 4,871,254 — CT-202 11,151,496 — Personnel-related costs 3,760,439 3,851,073 Professional fees 2,249,207 2,219,565 Share-based compensation 841,867 1,076,865 Interest income ( 3,200,224 ) ( 1,163,975 ) Other segment items (a) 1,469,169 1,497,490 Segment and Net Loss $ 26,725,104 $ 23,964,211 (a) Other segment items included in Segment loss mainly includes board fees, insurance, facilities and information technology costs. The Company tracks outsourced development costs and other external research and development costs to specific product candidates on a program-by-program basis. However, it does not track internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents and accounts payable, approximate their fair values given their short-term nature. Cash and Cash Equivalents The Company considers all highly liquid investments that have original maturities of three months or less when acquired to be cash equivalents. Cash equivalents consist of amounts invested in money market accounts. At December 31, 2024, the Company’s cash and cash equivalent balances exceeded federally insured limits by approximately $ 94.0 million. Deferred Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of an equity financing, the costs are recorded as a reduction of additional paid-in capital generated as a result of such offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations. As of December 31, 2024, there was $ 0.2 million of deferred offering costs included in prepaid expenses and other current assets. Property and Equipment Property and equipment consist of office equipment, furniture, and leasehold improvements and are recorded at cost. Property and equipment are depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are amortized over the shorter of their economic lives or the remaining lease term. Leases The Company determines if an arrangement is a lease at inception. Balances recognized related to operating leases are included in operating lease right-of-use assets and operating lease liabilities in the consolidated balance 76 Table of Contents sheets. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not yet paid. Acquired In-Process Research and Development Costs Acquired in-process research and development (“IPR&D”) expense consists of payments incurred in connection with the acquisition or licensing of products or technologies that do not meet the definition of a business under FASB ASC Topic 805, Business Combinations. Payments for acquired IPR&D as well as future product development milestones are initially treated as the acquisition of an asset but then immediately expensed as there is no future alternative use for the asset. These payments are reflected as a component of research and development expense as an investing activity outflow on the Company’s consolidated statements of cash flows due to the nature of the underlying acquisition of an asset. See Note 8 for further discussion. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs include external costs of outside vendors engaged to conduct clinical studies and other research and development activities, acquired IPR&D, salaries, share-based compensation, and other operational costs related to the Company’s research and development activities. Costs for certain development activities, such as the provision of services for product candidate development, clinical and preclinical development and related supply and manufacturing costs, are estimated based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to the Company by its vendors with respect to their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development expense, as the case may be. The estimates are adjusted to reflect the best information available at the time of the financial statement issuance. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the Company's estimate of the status and timing of services performed relative to the actual status and timing of services performed may vary. Nonrefundable advance payments for goods and services, including fees for clinical trial expenses, process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed. Patent Costs Costs related to filing and pursuing patent applications are recorded as general and administrative expense and expensed as incurred since recoverability of such expenditures is uncertain. Share-Based Compensation The Company measures and recognizes share-based compensation expense for both employee and non-employee awards based on the grant date fair value of the awards. The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The Company recognizes forfeitures as they occur. The Company classifies share-based compensation expense in its consolidated statements of operations in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified. The Company estimates the fair value of employee and non-employee stock awards as of the date of grant using the Black-Scholes option pricing model. The Company lacks Company-specific historical and implied volatility 77 Table of Contents information. Therefore, management estimates the expected share price volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own publicly traded share price. The expected term of the Company’s stock awards has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” stock awards. The risk-free interest rate is determined by reference to the yield curve of a zero-coupon U.S. Treasury bond on the date of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Income Taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as consideration of the available facts and circumstances. To date, the Company has not taken any uncertain tax position or recorded any reserves, interest or penalties. Net Loss Per Share Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period, including pre-funded warrants to purchase shares of common stock that were issued in the private placement transaction in May 2024 (Note 6). Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as preferred stock, warrants and share-based awards, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares of common stock outstanding, as they would be anti-dilutive: December 31, 2024 2023 Stock options 3,273,615 2,164,031 Warrants 5,860,000 5,860,000 9,133,615 8,024,031 Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis. This ASU was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company adopted this standard for the Company’s year-ended 2024 annual reporting period. See above for additional disclosures added upon adoption. 78 Table of Contents In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures. Recently Issued but Not yet Adopted Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses . ASU 2024-03 requires additional disclosure of specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its disclosures. (4) Fair Value Measurements The Company utilizes a valuation hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques related to its financial assets and financial liabilities. The three levels of inputs used to measure fair value are described as follows: Level 1 – Observable inputs such as quoted prices in active markets. Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3 – Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. In accordance with the fair value hierarchy described above, the following table sets forth the Company’s assets and liabilities measured at fair value on a recurring basis: December 31, 2024 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial assets Cash equivalents (Money Market Accounts) $ 93,949,553 $ 93,949,553 $ — $ — December 31, 2023 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial assets Cash equivalents (Money Market Accounts) $ 14,017,306 $ 14,017,306 $ — $ — 79 Table of Contents (5) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, 2024 2023 Compensation and benefits $ 891,917 $ 652,804 Research and development costs 229,908 1,084,009 Professional fees 17,325 63,393 Other 49,779 8,493 Total $ 1,188,929 $ 1,808,699 (6) Stockholders’ Equity Increase to Authorized Shares On September 17, 2024, the Company held a Special Meeting of Stockholders (the “Special Meeting”). At the Special Meeting, the Company’s stockholders approved, among other things, an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000 . Private Placement On May 1, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) for the private placement (the “Private Placement”) of (i) 59,032,259 shares (the “PIPE Shares”) of the Company’s common stock at a purchase price of $ 1.55 per PIPE Share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 5,482,741 shares of common stock at a purchase price of $ 1.549 per Pre-Funded Warrant. The Pre-Funded Warrants have an exercise price of $ 0.001 per share of common stock, are immediately exercisable and remain exercisable until exercised in full. As of December 31, 2024, the Pre-Funded Warrants had not been exercised. The aggregate gross proceeds for the Private Placement were approximately $ 100 million, before deducting offering expenses of approximately $ 5.2 million, and the Private Placement closed on May 6, 2024. At-the-Market Facility On December 2, 2024, the Company entered into a Sales Agreement (the “ATM Sales Agreement”) with Leerink Partners LLC (the “Agent”). Pursuant to the terms of the ATM Sales Agreement, the Company may offer and sell shares of the Company’s common stock, $ 0.001 par value per share (the “ATM Shares”), having an aggregate offering amount of up to $ 75.0 million from time to time through the Agent. Sales of the ATM Shares may be made in sales deemed to be an “at-the-market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. On December 23, 2024, the Company sold 14,705,882 shares of its common stock under the ATM Sales Agreement for net proceeds of approximately $ 14.5 million. Warrants for Common Stock At December 31, 2024, the Company had the following warrants outstanding to acquire common stock: Outstanding Exercise price Expiration dates Issued in connection with 2021 initial public offering 250,000 $ 6.25 October 2026 Issued in connection with 2021 private placement 5,250,000 $ 6.25 June 2027 Issued in 2022 for consulting services 360,000 $ 10.00 December 2027 Issued in connection with 2024 private placement 5,482,741 $ 0.001 No expiration 11,342,741 80 Table of Contents (7) Share-based Compensation In April 2021, the Company adopted the 2021 Long-Term Performance Incentive Plan (“2021 Incentive Plan”). Under the 2021 Incentive Plan, the Company can grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and stock grants. The 2021 Incentive Plan allows for the issuance of up to 1,266,092 shares of common stock (the “Share Limit”). The Share Limit automatically increases on January 1 st of each year, during the term of the 2021 Incentive Plan, commencing on January 1 of the year following the year in which the effective date occurs, in an amount equal to four percent ( 4 %) of the total number of shares of the Company’s common stock outstanding on December 31 st of the preceding calendar year; provided that the board of directors may determine that there will be no such increase or a smaller increase for any particular year. As of December 31, 2024, 209,115 shares remained available for future grants. In addition, from time to time, the Company makes inducement grants of stock options to new hires, which awards are made pursuant to the Nasdaq’s inducement grant exception to the shareholder approval requirement for grants of equity compensation. During the year ended December 31, 2024, the Company granted inducement stock options covering 317,407 shares of the Company’s common stock to new employees. Share-based awards generally vest over a period of one year to four years , and share-based awards that lapse or are forfeited are available to be granted again. The contractual life of all share-based awards is 10 years. The expiration dates of the outstanding share-based awards range from January 2028 to October 2034. The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the service period of the awards. Share-based compensation is allocated to employees and consultants based on their respective departments. All board of directors’ compensation is charged to general and administrative expense. Share-based compensation expense related to the issuance of stock options was as follows for the years ended December 31, 2024 and 2023: Year ended December 31, 2024 2023 Research and development $ 61,121 $ 61,545 General and administrative 780,746 1,015,320 $ 841,867 $ 1,076,865 The weighted average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock option awards granted during 2024 and 2023 were as follows: 2024 2023 Expected stock price volatility 95.54 % 91.98 % Expected term (in years) 6.00 6.00 Risk-free interest rate 4.13 % 3.86 % Expected dividend yield — — As the Company began trading publicly in October 2021, there is a lack of Company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption for employee grants is based on a permitted simplified method, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. 81 Table of Contents The following table summarizes the share-based award activity for the periods presented: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at January 1, 2024 2,164,031 $ 2.20 8.4 $ 260,688 Granted 1,244,604 $ 1.51 Forfeited ( 135,020 ) $ 1.30 Outstanding at December 31, 2024 3,273,615 $ 1.97 8.2 $ 176,045 Vested and exercisable at December 31, 2024 1,466,077 $ 2.69 7.2 $ 92,875 Vested and expected to vest at December 31, 2024 3,273,615 $ 1.97 8.2 $ 176,045 The aggregate intrinsic value in the above table is calculated as the difference between fair market value of the Company’s common stock price and the exercise price of the stock options. The weighted average fair value of share-based awards granted during the years ended December 31, 2024 and 2023 was $ 1.19 and $ 0.65 , respectively. As of December 31, 2024, the unrecognized compensation cost related to outstanding share-based awards was $ 1.6 million and is expected to be recognized as expense over a weighted-average period of approximately 2.7 years. (8) Commitments and Contingencies Collaboration Agreement with Tyligand Bioscience In March 2020, the Company entered into a process development agreement (the “Tyligand Process Development Agreement”) with Tyligand Bioscience (Shanghai) Limited (“Tyligand”) for the development, manufacturing, registration and future commercialization of onapristone extended release (“ONA-XR”). Upon completion of specific performance-based milestones under the Tyligand Process Development Agreement, in August 2021, the Company and Tyligand entered into a license agreement (the “Tyligand License Agreement”) whereby Tyligand was granted the exclusive right to ONA-XR and was solely responsible for the development and commercialization of ONA-XR in China, Hong Kong and Macau. The Company retained rights in the rest of the world to commercialize ONA-XR. In August 2024, the Company and Tyligand mutually agreed to terminate the Tyligand License Agreement, and any ongoing payment obligations the Company may have had to Tyligand under the Tyligand Process Development Agreement. Collaboration and Licensing Agreement with Integral Molecular In April 2021, the Company entered into a collaboration and licensing agreement with Integral Molecular, Inc. (“Integral”) (the “Integral License Agreement”) for the development of a CLDN6 bsAb for cancer therapy. Under the terms of the Integral License Agreement, Integral and the Company developed a CLDN6 bsAb that is intended to trigger the activation of T cells and eliminate cancer cells displaying CLDN6. The Company will conduct preclinical and all clinical development, as well as regulatory and commercial activities through exclusive worldwide rights to develop and commercialize the novel CLDN6 candidates. The payment for the initial upfront license fee as well as subsequent payments for milestones achieved were expensed to acquired in-process research and development. As a part of the Integral License Agreement, Integral was eligible to receive remaining development and regulatory milestone payments totaling approximately $ 55.0 million, sales milestone payments totaling up to $ 130.0 million, and tiered royalties of up to 12 % of net sales of certain products developed under the Integral License Agreement. On March 20, 2023, the Company amended the Integral License Agreement (the “First Amendment”) to remove the previously agreed to second milestone payment and to change the amount of the third milestone payment to increase such payment by the amount of the prior second milestone payment and to add payment for third-party research funding obtained and used by Integral in connection with the development of CTIM-76. 82 Table of Contents On February 29, 2024, the Company further amended the Integral License Agreement (the "Second Amendment") to reflect updated financial terms. Integral’s right to receive certain future payments was reduced as follows: aggregate development and regulatory milestone payments were reduced from $ 55 million to $ 15 million, aggregate sales milestone payments were reduced from $ 130 million to $ 12.5 million, and a tiered royalty of 8 - 12 % that commenced at first commercial sale was reduced to a flat royalty rate of 6 % on net sales beginning no sooner than February 1, 2034. The Second Amendment also narrowed the license grant from Integral to the Company to only cover CTIM-76, removed any further obligation to reimburse Integral for any independently obtained research funding Integral applied against CTIM-76 research, and included mutual releases by the parties. Asset Purchase Agreement On July 9, 2024, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) pursuant to which the Company acquired CT-95 (formerly known as LNK-101), an MSLN x CD3 T cell engaging bispecific antibody, from Link (assignment for the benefit of creditors), LLC (“Link”), which succeeded to the assets of Link Immunotherapeutics Inc. Pursuant to the Asset Purchase Agreement, the Company purchased all of the assets from Link associated with CT-95, including patent rights, know-how, regulatory filings, and inventory of drug substance and drug product (the “Transferred Assets”), on an “as is” and “where is” basis. CT-95 patents are currently being prosecuted and/or maintained in the United States, Europe, Canada, Australia, Taiwan and Japan. The Company also assumed certain liabilities relating to the Transferred Assets. In consideration of the purchase of the Transferred Assets, the Company made a one-time payment to Link of $ 3.75 million and is not obligated to make any other payments. This transaction qualified as an asset purchase as prescribed by ASC 805-50 and the assets purchased were determined to have no alternative future use under the accounting definition, and therefore the Company expensed the one time payment as a component of research and development expense in the consolidated statements of operations for the year ended December 31, 2024. Collaboration and Licensing Agreement with BioAtla On September 23, 2024, the Company entered into a license agreement (the “BioAtla License Agreement”) with BioAtla, Inc. ("BioAtla"), pursuant to which the Company obtained an exclusive, worldwide license to develop, manufacture and commercialize two licensed antibodies (the “BioAtla Assets”), including BA3362 (renamed by the Company as CT-202), BioAtla’s Nectin-4 x CD3 T cell engaging bispecific antibody. As partial consideration for the exclusive license under the BioAtla License Agreement, the Company made an upfront payment of $ 11.0 million for the IPR&D asset, which was determined to have no alternative future use under the accounting definition. Therefore, the upfront payment was expensed as a component of research and development expense in the consolidated statements of operations for the year ended December 31, 2024. The Company may be obligated to pay up to $ 122.5 million in additional milestone payments based upon the achievement of specified pre-clinical, clinical, development and commercial milestones, as well as tiered mid-single digit to low double-digit royalties on future net sales for products containing the BioAtla Assets, subject to standard reductions. The BioAtla License Agreement will continue on a country-by-country, product-by-product basis until the expiration of the royalty term as defined in the BioAtla License Agreement, unless earlier terminated. Research and Development Arrangements In the course of normal business operations, the Company enters into agreements with investigative sites and contract research organizations to assist in the performance of research and development activities and contract manufacturers to assist with chemistry, manufacturing, and controls-related expenses. Expenditures to contract research organizations represent a significant cost in clinical development for the Company. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and long-term commitments of cash. Operating Leases In February 2022, the Company commenced a noncancellable operating sublease for corporate office space in Philadelphia, Pennsylvania. In March 2023, the Company entered into a direct lease for this same office space that 83 Table of Contents commenced on August 1, 2023. In March 2024, the Company amended the lease to extend the expiration date to November 30, 2024. In July 2024, the Company further amended the lease, which is now set to expire on November 30, 2026, thus making the arrangement no longer qualify for the short-term lease exception under ASC 842. The Company also retains the right to renew the lease for up to two consecutive 12-month terms upon at least nine months advance notice to the landlord before any such successive renewal. These renewal options were not contemplated in the Company's calculation of its right of use asset and lease liability. As of December 31, 2024, the operating lease right-of-use asset and the operating lease liabilities were each approximately $ 0.2 million, which were estimated using a discount rate of 11 %. As of December 31, 2024, the remaining term of the Company’s noncancellable operating lease was 1.92 years. Future minimum lease payments under the lease are $ 0.2 million at December 31, 2024. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not yet paid. Rent expense related to the Company’s operating lease was approximately $ 125,000 and $ 94,000 for the years ended December 31, 2024 and 2023, respectively. Employee Benefit Plans The Company established a defined contribution 401(k) plan in which employees may contribute up to 100 % of their salary and bonus, subject to statutory maximum contribution amounts. The Company contributes a safe harbor minimum contribution equivalent to 3 % of employees’ compensation. The Company generally assumes all administrative costs of the plan. For the years ended December 31, 2024 and 2023, the Company provided contributions of approximately $ 60,000 and $ 66,000 , respectively. Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. The Company believes no matters existed at either December 31, 2024 or 2023 that will have a material impact to the Company’s financial position, results of operations or cash flows. Indemnification In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by applicable law. The Company currently has directors and officers insurance. The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2024 and 2023. (9) Income Taxes The Company is a corporation and is subject to federal, state and local corporate income taxes which have been provided for in the consolidated financial statements based upon ASC 740. Context BioPharma, Inc. has always been subject to corporate income taxes. The Company had no income tax expense due to operating losses incurred for the years ended December 31, 2024 and 2023. The Company had also not recorded any income tax benefits for the net operating losses incurred in 84 Table of Contents each period due to its uncertainty of realizing a benefit from those items. All of the Company’s losses before income taxes were generated in the United States. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows: December 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 9,318,875 $ 7,749,636 Research and development credits 1,765,100 1,231,315 Capitalized research and development Section 174 expense 8,268,682 6,799,428 Share-based compensation 1,094,621 843,345 Amortization 4,258,804 — Other accruals 299,517 201,671 Gross deferred tax assets 25,005,599 16,825,395 Deferred tax liabilities: Prepaid expenses ( 243,408 ) ( 215,507 ) Property and equipment ( 2,799 ) ( 4,585 ) Net deferred tax assets 24,759,392 16,605,303 Less: valuation allowance ( 24,759,392 ) ( 16,605,303 ) $ — $ — In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to allow for the realization of deferred tax assets. Based upon the historical and anticipated future losses, management has determined that the deferred tax assets do not meet the more likely than not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of December 31, 2024 and 2023. The valuation allowance increased by $ 8.2 million and $ 7.4 million during the years ended December 31, 2024 and 2023, respectively. A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows: Year ended December 31, 2024 2023 Federal income tax benefit at statutory rate 21.0 % 21.0 % State income tax, net of federal benefit 7.5 7.8 Research and development credit 2.0 2.2 Change in valuation allowance ( 30.5 ) ( 31.0 ) Effective income tax rate — % — % The following table summarizes carryforwards of federal, state and local net operating losses (“NOL”) and research tax credits: December 31, 2024 2023 NOL carryforwards—Federal $ 33,850,215 $ 27,502,184 NOL carryforwards—State 33,934,258 27,502,184 NOL carryforwards—Local 18,967,829 19,390,882 Research tax credits—Federal 1,765,100 1,231,315 85 Table of Contents The NOL carryforwards begin expiring in 2037 for federal and state income tax purposes; however, all federal NOL carryforwards generated subsequent to January 1, 2018 are able to be carried forward indefinitely. Local NOL carryforwards expire after three years with the 2022 NOL set to expire in 2025. As of December 31, 2024 and 2023, the Company had federal research and development tax credit carryforwards of $ 1.8 million and $ 1.2 million, respectively, that will begin to expire in 2037, unless previously utilized. The NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. To date, the Company has not performed an analysis to determine whether or not ownership changes have occurred since inception. State and local NOLs may also be limited. As of December 31, 2024 and 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations. Due to NOLs and tax credit carryforwards that remain unutilized, income tax returns for tax years from all years remain subject to examination by the taxing jurisdictions. The NOL carryforwards remain subject to review until utilized. 86 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.