What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-07 · 89 added, 79 removed, 251 unchanged (40% of the section changed)

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Th1 cells lead to the generation of killer T cells that can eliminate tumor cells or viral infected cells.

Th1 cells produce interferon gamma and tumor necrosis factor that are cytokines known to destroy cancer cells.

Th1 cells produce interferon gamma and tumor necrosis factor that are cytokines known to destroy cancer cells and fight infection.

We believe, based on our preclinical and Phase 1/1b data from our T cell lymphoma clinical trial, that soquelitinib has the potential to reprogram normal immune responses that also could be beneficial for the treatment of certain autoimmune, inflammatory and allergic diseases.

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● The median duration of response for the nine patients with objective response by Lugano criteria was 17.2 months.

● Three patients continue on therapy at 25+ months, 18+ months and 14+ months.

● Three patients were continue on therapy at 25+ months, 18+ months and 14+ months.

● Kaplan Meier estimated median progression free survival (“PFS”) was 6.2 months.

● At 18-month follow-up, the PFS rate was 30%, which compares favorably to 18-month PFS of <20% with belinostat or pralatrexate.

● Peripheral blood samples were collected from patients both prior to the initiation of soquelitinib therapy and during the course of treatment.

These samples were analyzed for markers of T cell exhaustion in normal T cells.

The results indicated that the majority of patients exhibited a reduction in T cell exhaustion markers on both CD4+ and CD8+ cells after 21 days of treatment.

T cell exhaustion is a state in which T cells exhibit diminished functionality due to prolonged exposure to antigens.

We plan to present final data from this Phase 1/1b clinical trial in an oral session at the Annual ASH meeting in December 2025.

In August 2023, we completed an End-of-Phase/Pre-Phase 3 meeting with the Food and Drug Administration (“FDA”) regarding our plans to conduct a potentially registrational Phase 3 clinical trial of soquelitinib in relapsed/refractory peripheral T cell lymphoma (“PTCL”).

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We believe these findings suggest that the inhibition of ITK by soquelitinib produced changes in the tumor microenvironment that enhanced anti-tumor immunity creating a less favorable environment for tumor growth and provides the rationale for clinical investigation in a monotherapy trial of soquelitinib in solid tumors.

We are planning a Phase 1b/2 clinical trial, in collaboration with the Kidney Cancer Research Consortium, of soquelitinib in solid tumors in patients with renal cell cancer who have failed checkpoint inhibitor therapy.

We are considering evaluating soquelitinib in clinical trials of solid tumors in the future.

In December 2024, we and our academic collaborators published results describing the chemistry, enzymology and preclinical anti-tumor activity of soquelitinib in the journal npj Drug Discovery.

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● Selectively bound to and inhibited ITK function while sparing other closely related kinases, including resting lymphocyte kinase.

● Inhibited Th2 T cell function and the production of various Th2 cytokines leading to Th1 skewing and production of interferon gamma and tumor necrosis factor, which are important cytokines in tumor

Th2 cytokines have been previously implicated in promoting tumor growth and are also involved in autoimmune and allergic diseases.

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Percent Reduction in Mean EASI Score for Combined Cohorts 1, 2 and 3.

The data is displayed below with cohorts combined.

The data is displayed below with cohorts receiving active drug combined.

Figure 3 below shows the percent of patients that achieved IGA (Investigator Global Assessment) 0 or 1 or EASI 75 at day 28 of treatment.

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Percent Patients Achieving Endpoints IGA 0 or 1, EASI 75 at Day 28 of Treatment

Patients in the trial recorded the intensity of their pruritus, or itch, using the Peak Pruritus Numerical Rating Scale (“PP-NRS”), which rates the severity of itch on a scale from 0 (no itch) to 10 (the worst itch imaginable).

A reduction of ≥4 points from baseline on the PP-NRS is considered to be a clinically meaningful result.

In cohort 3, of the patients for whom adequate PP-NRS data was available, 4 of 8 (50%) had a ≥4 point reduction in PP-NRS score from baseline at day 28, with a reduction in itch seen as early as day 8.

Of the remaining patients, two had baseline PP-NRS of less than 4 and two had incomplete PP-NRS data.

1 of 10 evaluable placebo patients (10%) experienced a ≥4 point reduction in PP-NRS score at Day 28.

Soquelitinib was well tolerated, with no dose limiting toxicities and no clinically significant laboratory abnormalities observed in any of the cohorts.

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Increasing trends were seen in numbers of circulating T regulatory cells, consistent with the presumed mechanism of action of soquelitinib.

The Company amended the clinical trial protocol to replace cohort 4 (400 mg once per day) with an expansion cohort of 24 patients randomized 1:1 between active and placebo.

Treatment for this group is extended to 8 weeks with

additional 30-day follow-up with no treatment.

The Company amended the clinical trial protocol to replace cohort 4 (400 mg once per day) with an extension cohort of 24 patients randomized 1:1 between active and placebo.

Treatment for this group is extended from 4 weeks for cohort 3 to 8 weeks with additional 30-day follow-up with no treatment to determine if longer treatment duration would provide further improvement in disease.

The dose level for this group is the same as cohort 3 – 200 mg orally twice per day.

Based on results to-date from our Phase 1 clinical trial in atopic dermatitis, we have initiated planning of a Phase 2 clinical trial in atopic dermatitis, which we expect to open for enrollment by the end of 2025.

We expect that the trial will be placebo controlled and we intend to enroll a total of approximately 200 patients randomized in to four cohorts comparing different dosing regimens of soquelitinib to placebo.

Cohort 3 patients experienced earlier responses and deeper separation from placebo compared to cohorts 1 and 2, which studied a lower dose of 100 mg twice per day or 200 mg once per day.

Cohort 3 patients also had a clinically meaningful reduction in itch as early as day 8.

Enrollment in extension cohort 4 is now complete and announcement of data is anticipated in January 2026.

anticipated to enroll approximately 200 patients with moderate-to-severe atopic dermatitis that have failed at least one prior topical or systemic therapy.

The trial is anticipated to enroll four cohorts of 50 patients each, with soquelitinib doses of:

200 mg once per day;

200 mg twice per day;

and 400 mg once per day;

along with a placebo group.

The treatment period is anticipated to be 12 weeks with a 30-day follow-up period with no treatment.

Beyond our current and planned clinical trials for soquelitinib, we also continue to advance our next-generation ITK inhibitor preclinical product candidates, which were designed to deliver precise T-cell modulation that is optimized for specific immunology indications.

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We are collaborating with the Kidney Cancer Research Consortium to evaluate ciforadenant in an open label Phase 1b/2 clinical trial as a first line therapy for metastatic RCC in combination with ipilimumab (anti-CTLA-4) and nivolumab (anti-PD-1).

An interim analysis performed on May 31, 2024 determined the clinical trial has met the interim threshold for efficacy and therefore enrollment continued.

Enrollment in the clinical trial now has been completed and patients are being followed.

In October 2025, data from the open label Phase 1b/2 clinical trial was presented at the European Society of Clinical Oncology annual meeting.

Ciforadenant in combination with both ipililumab and nivolumab was well tolerated.

At the time of data cut-off (May 2025), 50 patients were enrolled and the overall response rate was 44% with 4% CR and 42% PR.

The primary endpoint of the study is deep response rate defined as a greater than 50% reduction in tumor volume.

Although 19 patients remain on therapy and follow-up continues, at this time the deep response rate is 34%, which is not a statistically significant different from historical control of 32% for ipililumab and nivolumab.

Mupadolimab, B Cell Activating Anti-CD73 Antibody

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While we believe mupadolimab has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of cancers and infectious diseases, we are waiting to initiate a potential Phase 2 randomized clinical trial in order to prioritize the development of our other product candidates.

Angel Pharmaceuticals is continuing the development of mupadolimab in China.

To date, the majority of our efforts have been focused on the research, development and advancement of soquelitinib, ciforadenant, and mupadolimab, and we have not generated any revenue from product sales and, as a result, we have incurred significant losses.

We expect to continue to incur significant research and development and general and administrative expenses related to our operations.

Our net loss for the three months ended June 30, 2025 was $8.0 million and our net income for the six months ended June 30, 2025 was $7.2 million, which includes $27.1 million in non-operating income from the change in fair value of warrant liability.

Our net loss for the three and six months ended June 30, 2024 was $4.3 million and $10.0 million, respectively.

As of June 30, 2025, we had an accumulated deficit of $389.8 million.

Our net loss for the three months ended September 30, 2025 was $10.2 million and our net loss for the nine months ended September 30, 2025 was $3.0 million, which includes $27.1 million in non-operating income from the change in fair value of warrant liability.

Our net loss for the three and nine months ended September 30, 2024 was $40.2 million and $50.2 million, respectively, which includes $32.8 million and $31.0 million in non-operating loss from the change in fair value of warrant liability, respectively.

As of September 30, 2025, we had an accumulated deficit of $400.0 million.

We expect our losses will increase as we continue our development of, seek regulatory approval for and begin to commercialize, soquelitinib, ciforadenant and mupadolimab, and as we develop other product candidates.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

Since our inception and through June 30, 2025, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016, in which we raised net proceeds of $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of $32.0 million

and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

Immediately prior to the consummation of the IPO, all of our outstanding shares of redeemable convertible preferred stock were converted into 14.3 million shares of our common stock.

Since our inception and through September 30, 2025, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016, in which we raised net proceeds of $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

As of September 30, 2025, all of the common warrants sold during the registered direct offering in May 2024 have been exercised resulting in proceeds of $54.3 million.

On August 6, 2024, we entered into an open market sale agreement (the “2024 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of our common stock, from time-to-time, with aggregate gross sales proceeds of up to $100.0 million, through an at-the-market equity offering program under which Jefferies will act as our sales agent.

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Jefferies is entitled to compensation for its services of up to 3.0% of the gross proceeds of any shares of common stock sold through Jefferies under the 2024 Sales Agreement.

During the six months ended June 30, 2025, we did not sell any shares of common stock under our at-the-market offering program and $100.0 million remained for sale under the 2024 Sales Agreement.

During the nine months ended September 30, 2025, we did not sell any shares of common stock under our at-the-market offering program and $100.0 million remained for sale under the 2024 Sales Agreement.

Our three product candidates, soquelitinib, ciforadenant and mupadolimab, are in clinical development by us and/or our partner, Angel Pharmaceuticals.

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We will need to generate significant revenue to achieve profitability, and we may never do so.

As of June 30, 2025, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $74.4 million.

We believe that our cash, cash equivalents and marketable securities as of June 30, 2025 will be sufficient to fund our planned operations for a period of at least 12 months from the date these condensed consolidated financial statements are issued.

However, the Company will need to continue to raise additional capital to fund its operations.

As of September 30, 2025, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $65.7 million.

Based on our currently available cash resources and our currently planned level of operations and cash flows for at least the 12 month period subsequent to the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we will require additional funding by the fourth quarter of 2026.

In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least 12 months beyond the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Under the applicable accounting standards, the receipt of potential funding from future equity issuances cannot be considered probable, as these events are outside our control.

Accordingly, management has concluded that substantial doubt exists about our ability to continue as a going concern for at least 12 months from the date the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued.

See “Risk Factors—Risks Related to Our Limited Operating History, Financial Condition and Need for Additional Capital” for additional information.

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We have no commercial manufacturing facilities for our product candidates.

As such, we are dependent on third parties to supply our product candidates according to our specifications, in sufficient quantities, on time, in compliance with appropriate regulatory standards and at competitive prices.

As such, we are dependent on third parties to supply

our product candidates according to our specifications, in sufficient quantities, on time, in compliance with appropriate regulatory standards and at competitive prices.

Significant Accounting Policies

Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

There have been no material changes to our significant accounting policies during the six months ended June 30, 2025 from those discussed in our Annual Report on Form 10-K.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2025 from those discussed in our Annual Report on Form 10-K.

Components of Results of Operations

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● a potential Phase 2 clinical trial for soquelitinib in atopic dermatitis;

● process development and manufacturing of drug supply of soquelitinib and ciforadenant;

● process development and manufacturing of drug supply of soquelitinib;

● preclinical studies under our other programs in order to select development product candidates.

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The duration, costs and timing of clinical trials and development of product candidates will depend on a variety of factors, including many of which are beyond our control.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming, and the

successful development of our product candidates is uncertain.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming, and the successful development of our product candidates is uncertain.

The risks and uncertainties associated with our research and development projects are discussed more fully in “Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Change in fair value of warrant liability

Income (loss) before equity method investment

Loss before equity method investment

Loss from equity method investment

Net income (loss)

Research and Development Expenses

Research and development expenses for the three and six months ended June 30, 2025 and 2024 consisted of the following costs by program as well as unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Research and development expenses for the three and nine months ended September 30, 2025 and 2024 consisted of the following costs by program as well as unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Unallocated employee and overhead costs

For the three months ended June 30, 2025, the increase in soquelitinib costs of $3.1 million as compared to the three months ended June 30, 2024, primarily consisted of an increase of $1.7 million in drug manufacturing costs, an increase of $1.2 million in clinical trial expenses and an increase of $0.2 million in other outside service costs.

For the six months ended June 30, 2025, the increase in soquelitinib costs of $6.0 million as compared to the six months ended June 30, 2024, primarily consisted of an increase of $3.3 million in drug manufacturing costs, an increase of $2.6 million in clinical trial expenses and an increase of $0.1 million in other outside service costs.

For the three months ended June 30, 2025, the decrease in ciforadenant costs of $0.2 million as compared to the three months ended June 30, 2024, primarily consisted of a decrease in clinical trial expenses.

For the six months ended June 30, 2025, the decrease in ciforadenant costs of $0.3 million as compared to the six months ended June 30, 2024, primarily consisted of a decrease in clinical trial expenses

For the three months ended June 30, 2025, the increase in mupadolimab costs of $0.2 million as compared to the three months ended June 30, 2024, primarily consisted of an increase of $0.1 million in drug manufacturing costs and an increase of $0.1 million in clinical trial expenses.

For the six months ended June 30, 2025, the increase in mupadolimab costs of $0.1 million as compared to the six months ended June 30, 2024, primarily consisted of an increase of $0.1 million in drug manufacturing costs.

For the three months ended June 30, 2025, the increase in unallocated costs of $0.7 million as compared to the three months ended June 30, 2024, primarily consisted of an increase of $0.6 million in personnel and related costs and an increase of $0.1 million in other outside service costs.

For the six months ended June 30, 2025, the increase in unallocated costs of $1.3 million as compared to the six months ended June 30, 2024, primarily consisted of an increase in personnel and related costs.

For the three months ended September 30, 2025, the increase in soquelitinib costs of $3.3 million as compared to the three months ended September 30, 2024, primarily consisted of an increase of $1.8 million in drug manufacturing costs, an increase of $1.0 million in clinical trial expenses and an increase of $0.5 million in other outside service costs.

For the nine months ended September 30, 2025, the increase in soquelitinib costs of $9.3 million as compared to the nine months ended September 30, 2024, primarily consisted of an increase of $5.1 million in drug manufacturing costs, an increase of $3.6 million in clinical trial expenses and an increase of $0.6 million in other outside service costs.

For the three months ended September 30, 2025, the decrease in ciforadenant costs of $0.2 million as compared to the three months ended September 30, 2024, primarily consisted of a decrease in clinical trial expenses.

For the nine months ended September 30, 2025, the decrease in ciforadenant costs of $0.5 million as compared to the nine months ended September 30, 2024, primarily consisted of a decrease in clinical trial expenses

For the three and nine months ended September 30, 2025, the increase (decrease) in mupadolimab costs were negligible.

For the three months ended September 30, 2025, the increase in unallocated costs of $0.2 million as compared to the three months ended September 30, 2024, primarily consisted of an increase of $0.5 million in personnel and related costs, which were partially offset by a decrease of $0.3 million in facilities related costs.

For the nine months ended September 30, 2025, the increase in unallocated costs of $1.5 million as compared to the nine months ended September 30, 2024, primarily consisted of an increase of $1.6 million in personnel and related costs and an increase of $0.4 million in outside services costs, which were partially offset by a decrease of $0.5 million in facilities related costs.

General and Administrative Expense

For the three months ended June 30, 2025, the increase in general and administrative expenses of $0.6 million as compared to the three months ended June 30, 2024, primarily consisted of an increase of $0.3 million in personnel and related costs and an increase of $0.3 million in outside service costs.

For the six months ended June 30, 2025, the increase in general and administrative expenses of $0.9 million as compared to the six months ended June 30, 2024, primarily consisted of an increase of $0.6 million in personnel and related costs and an increase of $0.3 million in outside service costs.

For the three months ended September 30, 2025, the increase in general and administrative expenses of $0.1 million as compared to the three months ended September 30, 2024, primarily consisted of an increase of $0.3 million in personnel and related costs, which were partially offset by a decrease of $0.2 million in outside service costs.

For the nine months ended September 30, 2025, the increase in general and administrative expenses of $0.9 million as compared to the nine months ended September 30, 2024, primarily consisted of an increase of $0.8 million in personnel and related costs and an increase of $0.1 million in outside service costs.

Interest Income and Other Expense, net

For the three months ended June 30, 2025, the increase in interest income and other expense, net of $0.2 million as compared to the three months ended June 30, 2024, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

For the six months ended June 30, 2025, the increase in interest income and other expense, net of $0.4 million as compared to the six months ended June 30, 2024, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities

For the three months ended September 30, 2025, the increase in interest income and other expense, net of $0.2 million as compared to the three months ended September 30, 2024, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

For the nine months ended September 30, 2025, the increase in interest income and other expense, net of $0.6 million as compared to the nine months ended September 30, 2024, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities

Change in fair value of warrant liabilities

For the three months ended June 30, 2025, the change in fair value of warrant liability of $2.0 million represents a decrease in the fair value of common warrants from March 31, 2025 to the dates on which the common warrants were exercised during the three months ended June 30, 2025.

For the six months ended June 30, 2025, the change in fair value of warrant liability of $27.1 million represents a decrease in the fair value of common warrants from December 31, 2024 to the dates on which the common warrants were exercised during the six months ended June 30, 2025.

Income (loss) from equity method investment

For the three months ended June 30, 2025, the decrease in loss from equity method investment of $0.2 million as compared to the three months ended June 30, 2024, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended June 30, 2025.

For the six months ended June 30, 2025, the increase in loss from equity method investment of $0.6 million as compared to the six months ended June 30, 2024, primarily consisted of an increase in Angel Pharmaceuticals’ loss for the six months ended June 30, 2025.

For the three months ended September 30, 2025, the change in fair value of warrant liability was zero as all common warrants had been exercised as of June 30, 2025.

For the nine months ended September 30, 2025, the change in fair value of warrant liability of $27.1 million represents a decrease in the fair value of common warrants from December 31, 2024 to the dates on which the common warrants were exercised during the nine months ended September 30, 2025.

Loss from equity method investment

For the three months ended September 30, 2025, the decrease in loss from equity method investment of $0.4 million as compared to the three months ended September 30, 2024, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended September 30, 2025.

For the nine months ended September 30, 2025, the increase in loss from equity method investment of $0.2 million as compared to the nine months ended September 30, 2024, primarily consisted of an increase in Angel Pharmaceuticals’ loss for the nine months ended September 30, 2025.

Liquidity and Capital Resources

As of June 30, 2025, we had cash, cash equivalents and marketable securities of $74.4 million, and an accumulated deficit of $389.8 million.

Since our inception and through June 30, 2025, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common stock warrants for net proceeds of approximately $30.3 million and proceeds of $54.3 million from the exercise of common stock warrants.

During the six months ended June 30, 2025, we did not sell any shares of common stock under our at-the-market offering program.

As of June 30, 2025, $100 million remained available for sale under the 2024 Sales Agreement.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $65.7 million, and an accumulated deficit of $400.0 million.

Since our inception and through September 30, 2025, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common stock warrants for net proceeds of approximately $30.3 million and proceeds of $54.3 million from the exercise of common stock warrants.

During the nine months ended September 30, 2025, we did not sell any shares of common stock under our at-the-market offering program.

As of September 30, 2025, $100 million remained available for sale under the 2024 Sales Agreement.

Funding Requirements

Since our inception, we have incurred significant losses and negative cash flows from operations.

We have an accumulated deficit of $389.8 million through June 30, 2025.

We have an accumulated deficit of $400.0 million through September 30, 2025.

We do not expect positive cash flows from operations in the foreseeable future, if ever.

Historically, we have incurred operating losses as a result of ongoing efforts to develop our product candidates, including conducting ongoing research and development, clinical and preclinical studies and providing general and administrative support for these operations.

We do not have any products approved for sale, and we do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current and future product candidates and/or enter into additional significant collaboration agreements with third parties, and we do not know when, or if, either will occur.

We expect to continue to incur net operating losses for at least the next several years and we expect the losses to increase as we advance our soquelitinib, ciforadenant and mupadolimab product candidates, as well as any future product candidates, through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization and continue our research and development efforts.

We do not have any products approved for

sale, and we do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current and future product candidates and/or enter into additional significant collaboration agreements with third parties, and we do not know when, or if, either will occur.

We expect to continue to incur net operating losses for at least the next several years and we expect the losses to increase as we advance soquelitinib, ciforadenant and mupadolimab, as well as any other product candidates, through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization and continue our research and development efforts.

We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

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We expect to incur substantial additional losses in the future as we conduct our planned research and development activities.

We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our planned operating and capital needs into the fourth quarter of 2026.

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 based on a number of factors, including, but not limited to the factors discussed in the section of this report entitled “Risk Factors”.

We believe that our existing cash, cash equivalents and marketable securities will only be sufficient to fund our planned operating and capital needs into the fourth quarter of 2026 and will not be sufficient to enable us to fund our projected operations through at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of at least 12 months from the date of the issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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 based on a number of factors.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect.

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Our future capital requirements depend on many factors, including:

● the progress, timing, costs and results of clinical trials for soquelitinib, including the potential registrational clinical trial for soquelitinib, and to a lesser extent, the timing, costs and results of the clinical trials for ciforadenant and mupadolimab ;

● the progress, timing, costs and results of clinical trials for soquelitinib, including the potential registrational clinical trial for soquelitinib ;

● the timing, progress, costs and results of preclinical and clinical development activities for our other product candidates;

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The following table summarizes our cash flows for the periods indicated (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by (used in):

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Cash Flows from Operating Activities

Cash used in operating activities during the six months ended June 30, 2025 was $14.0 million, which primarily consisted of a net income of $7.2 million, adjusted by net non-cash transactions of $24.3 million, that primarily consisted of $2.5 million of stock-based compensation expense, $0.9 million of loss from equity method investment and a decrease of $27.1 million in the fair value of warrant liability;

Cash used in operating activities during the nine months ended September 30, 2025 was $23.6 million, which primarily consisted of a net loss of $3.0 million, adjusted by net non-cash transactions of $23.5 million, that primarily consisted of $3.8 million of stock-based compensation expense, $1.3 million of loss from equity method investment and a decrease of $27.1 million in the fair value of warrant liability;

a decrease of $1.1 million in prepaid and other current assets;

an increase of $0.6 million in accounts payable;

a decrease of $0.6 million in accounts payable;

an increase of $2.0 million in accrued and other current liabilities;

an increase in other assets of $0.2 million;

and a decrease of $0.1 million in operating lease right-of-use asset.

Cash used in operating activities during the six months ended June 30, 2024 was $10.6 million, which primarily consisted of a net loss of $10.0 million, adjusted by net non-cash transactions of $0.3 million, that primarily consisted of $1.5 million of stock compensation expense, $0.3 million of loss from equity method investment and a decrease of $1.8 million in the fair value of warrant liability;

an increase of $0.2 million in prepaid and other current assets, a decrease of $0.3 million in accounts payable, an increase of $0.3 million in accrued and other current liabilities and a decrease of $0.1 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash used in operating activities during the nine months ended September 30, 2024 was $17.0 million, which primarily consisted of a net loss of $50.2 million, adjusted by net non-cash transactions of $33.4 million, that primarily consisted of $2.2 million of stock compensation expense, $1.0 million of loss from equity method investment and an increase of $31.0 million in the fair value of warrant liability;

an increase of $0.4 million in prepaid and other current assets, an increase of $0.3 million in accounts payable, an increase of $0.2 million in accrued and other current liabilities and a decrease of $0.2 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash Flows from Investing Activities

During the six months ended June 30, 2025.

During the nine months ended September 30, 2025.

net cash flows used in investing activities was $18.7 million, which primarily consisted of purchases of marketable securities of $78.3 million and purchases of property and equipment of $0.2 million, which were partially offset by maturities of marketable securities of $59.8 million.

During the six months ended June 30, 2024, net cash flows used in investing activities was $17.5 million, which primarily consisted of purchases of marketable securities of $30.9 million, which were partially offset by maturities of marketable securities of $13.4 million.

During the nine months ended September 30, 2024, net cash flows used in investing activities was $21.4 million, which primarily consisted of purchases of marketable securities of $49.8 million, which were partially offset by maturities of marketable securities of $28.4 million.

Cash Flows from Financing Activities

During the six months ended June 30, 2025, cash provided by financing activities was $36.0 million, which primarily consisted of proceeds of $35.7 million from the exercise of common warrants and proceeds of $0.3 million from the exercise of stock options.

During the six months ended June 30, 2024, cash provided by financing activities was $30.4 million, which primarily consisted of net proceeds of $16.4 million from the issuance of common stock, net proceeds of $5.0 million from the issuance of pre-funded warrants and proceeds of $8.9 million from the issuance of common warrants.

During the nine months ended September 30, 2025, cash provided by financing activities was $36.4 million, which primarily consisted of proceeds of $35.7 million from the exercise of common warrants and proceeds of $0.7 million from the exercise of stock options.

During the nine months ended September 30, 2024, cash provided by financing activities was $30.4 million, which primarily consisted of net proceeds of $16.4 million from the issuance of common stock, net proceeds of $5.0 million from the issuance of pre-funded warrants and proceeds of $8.9 million from the issuance of common warrants.

Contractual Obligations

There have been no material changes outside the ordinary course of our business to our contractual obligations during the six months ended June 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

There have been no material changes outside the ordinary course of our business to our contractual obligations during the nine months ended September 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates during the six months ended June 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

There have been no changes to our critical accounting estimates during the nine months ended September 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

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