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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-25 · 44 added, 44 removed, 170 unchanged (34% of the section changed)

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We are a clinical stage biopharmaceutical company developing product candidates that precisely target proteins that are critical to immune cell maturation and function.

We believe our proprietary product candidates have broad potential to address cancers, immune mediated diseases and inflammatory diseases.

We believe our proprietary product candidates have broad potential to address immune mediated diseases, inflammatory diseases and cancers.

Our lead product candidate, soquelitinib (formerly CPI-818), is designed to bind specifically to a protein, interleukin 2 inducible T cell kinase (ITK), involved in T cell activation, T cell receptor signaling and T cell differentiation and function.

Based on the proposed mechanism of action, we believe soquelitinib has the potential to be utilized to inhibit the production of a number of inflammatory cytokines involved in diseases such as atopic dermatitis, asthma, psoriasis and fibrotic diseases.

In preclinical studies, Soquelitinib has affected T cell differentiation leading to enhanced function of T cells involved in tumor cell killing.

In preclinical studies, Soquelitinib has affected T cell differentiation leading to enhanced function of T cells involved in tumor cell eradication.

Since the immune cells targeted by our product candidates play a role in many diseases, our strategy is to leverage our research and development capabilities by evaluating our product candidates in clinical trials where there is an understanding of the role of specific T cells in the target indication and where we believe such product candidates have the broadest potential.

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

Our net loss for the years ended December 31, 2024 and 2023 was $62.3 million and $27.0 million, respectively.

Our net loss for the years ended December 31, 2025 and 2024 was $15.3 million and $62.3 million, respectively, which includes non-operating income of $27.1 million and non-operating loss of $33.4 million, respectively.

As of December 31, 2025, we had an accumulated deficit of $412.3 million.

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

Since our inception and through December 31, 2024, 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 December 31, 2025, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016 and subsequent follow-on public offerings.

In May 2024, we completed a registered direct offering, 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.

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.

issuance and sale of shares of common stock pursuant to the 2024 Sales Agreement are deemed an “at-the-market” offering under the Securities Act of 1933, as amended.

The issuance and sale of shares of common stock pursuant to the 2024 Sales Agreement are deemed an “at-the-market”

offering under the Securities Act of 1933, as amended.

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 year ended December 31, 2025, we did not sell any shares of common stock under our at-the-market offering program and $100.0 million remained available for sale under the 2024 Sales Agreement.

In connection with the Company’s follow-on public offering in January 2026, the Company suspended the “at-the-market” offering with respect to the 2024 Sales Agreement (See Footnote 17, Subsequent Event).

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

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Adequate additional financing may not be available to us on acceptable terms, or at all.

For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of factors such as the impacts of pandemics and increases in inflation rates or interest rates.

As a result, we may face difficulties raising capital through sales of our common stock and any such sales may be on unfavorable terms.

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

As of December 31, 2024, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $52.0 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 consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we will require additional funding by the first quarter of 2026.

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 consolidated financial statements included elsewhere in this Annual Report on Form 10-K are issued.

As of December 31, 2025, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $56.8 million and o n January 23, 2026, we closed a follow-on public offering which resulted in aggregate net proceeds of approximately $189.4 million.

Based on our currently available cash resources and our currently planned level of operations and cash flows, we expect that our cash resources will be sufficient to enable us to advance our programs into the second quarter of 2028.

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 the next 12 months from the date of the issuance of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K and concluded that our existing cash, cash equivalents and marketable securities, including the approximate net proceeds of $189.4 million from our January 2026 follow-on public offering, are sufficient to fund our operations for at least the next 12 months from issuance of the consolidated financial statements.

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

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

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Our current planned research and development activities include the following:

● completion of our ongoing Phase 1/1b clinical trial for soquelitinib in relapsed T cell lymphomas;

● enrollment and completion of our ongoing Phase 3 registrational clinical trial for soquelitinib in PTCL;

● enrollment and completion of our ongoing Phase 1 clinical trial for soquelitinib in atopic dermatitis;

● completion of our ongoing Phase 1 clinical trial for soquelitinib in atopic dermatitis;

● completion of our Phase 1b/2 clinical trial with ciforadenant in collaboration with the Kidney Cancer Research Consortium;

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

● a potential clinical trial for soquelitinib in solid tumors

● enrollment and completion of our Phase 2 clinical trial for soquelitinib in atopic dermatitis;

● a potential clinical trial for soquelitinib in asthma;

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

● a potential clinical trial for soquelitinib in hidradenitis suppurativa;

● 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 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 “Part II, Item 1A—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.

The risks and uncertainties associated with our research and development projects are discussed more fully in “Part II, Item 1A—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.

We may never succeed in achieving regulatory approval for any of our product candidates.

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Unallocated employee and overhead costs

For the year ended December 31, 2025, the increase in soquelitinib costs of $12.4 million as compared to the year ended December 31, 2024, primarily consisted of an increase of $4.8 million in drug manufacturing costs, an increase of $6.0 million in clinical trial expenses and an increase of $1.6 million in other outside service costs.

For the year ended December 31, 2025, the increase in ciforadenant costs of $0.1 million as compared to the year ended December 31, 2024, primarily consisted of an increase in clinical trial expenses.

For the year ended December 31, 2025, the decrease in mupadolimab costs were negligible.

For the year ended December 31, 2025, the increase in unallocated employee and overhead costs of $1.9 million as compared to the year ended December 31, 2024, primarily consisted of an increase of $2.3 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 $0.8 million in facilities related costs.

For the year ended December 31, 2024, the increase in soquelitinib costs of $3.5 million as compared to the year ended December 31, 2023, primarily consisted of an increase of $2.3 million in clinical trial expenses, an increase of $0.8 million in drug manufacturing costs and an increase of $0.4 million in other outside services.

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For the year ended December 31, 2024, the increase in unallocated costs of $1.0 million as compared to the year ended December 31, 2023, primarily consisted of an increase of $0.9 million in personnel related costs and an increase of $0.1 million in other outside services.

For the year ended December 31, 2023, the increase in soquelitinib costs of $1.5 million as compared to the year ended December 31, 2022, primarily consisted of an increase of $1.3 million in outside services and an increase of $0.6 million in clinical trial expenses, which was partially offset by a decrease of $0.4 million in drug manufacturing costs.

For the year ended December 31, 2023, the decrease in ciforadenant costs of $0.4 million as compared to the year ended December 31, 2022, primarily consisted of a decrease of $0.3 million in drug manufacturing costs and a decrease of $0.4 million in other outside services, which was partially offset by an increase of $0.3 million in clinical trial expenses.

For the year ended December 31, 2023, the decrease in mupadolimab costs of $9.0 million as compared to the year ended December 31, 2022, primarily consisted of a decrease of $7.3 million in drug manufacturing costs, a decrease of $1.4 million in clinical trial expenses and a decrease of $0.3 million in other outside services.

For the year ended December 31, 2023, the decrease in unallocated costs compared to the year ended December 31, 2022, was negligible.

General and Administrative Expenses

For the year ended December 31, 2025, the increase in general and administrative expenses of $1.1 million as compared to the year ended December 31, 2024, primarily consisted of an increase of $1.3 million in personnel and related costs, which were partially offset by a decrease of $0.2 million in other outside costs.

For the year ended December 31, 2024, the increase in general and administrative expenses of $1.3 million as compared to the year ended December 31, 2023, primarily consisted of an increase of $0.9 million in personnel and related costs and an increase of $0.4 million in other outside costs.

For the year ended December 31, 2023, the decrease in general and administrative expenses of $1.2 million as compared to the year ended December 31, 2022, primarily consisted of a decrease of $0.6 million in personnel and related costs and a decrease of $0.6 million in other outside costs.

Interest Income and Other Expense, net

For the year ended December 31, 2025, the increase in interest income and other expense, net of $0.7 million as compared to the year ended December 31, 2024, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

For the year ended December 31, 2023, the increase in interest income and other expense, net of $0.9 million as compared to the year ended December 31, 2022, primarily consisted of an increase in interest income earned due to an increase in interest rates.

For the year ended December 31, 2024, the increase in interest income and other expense, net of $0.2 million as compared to the year ended December 31, 2023, primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

Gain from sale of property and equipment

For the year ended December 31, 2024 and 2023, the gain from sale of property and equipment consisted of proceeds from the sale of laboratory equipment.

For the year ended December 31, 2024, the gain from sale of property and equipment consisted of proceeds from the sale of laboratory equipment.

Sublease income – related party

For the year ended December 31, 2024, the decrease in sublease income – related party of $0.1 million as compared to the year ended December 31, 2023, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals’ in January 2023.

For the year ended December 31, 2023, the decrease in sublease income – related party of $0.5 million as compared to the year ended December 31, 2022, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals’ in January 2023.

Loss from equity method investment

For the year ended December 31, 2024, the decrease in loss from equity method investment of $2.1 million as compared to the year ended December 31, 2023, primarily consisted of a decrease in our share of Angel Pharmaceutical’s loss for the year ended December 31, 2024.

For the year ended December 31, 2023, the decrease in loss from equity method investment of $4.7 million as compared to the year ended December 31, 2022, primarily consisted of a decrease in our share of Angel Pharmaceutical’s loss for the year ended December 31, 2023.

For the year ended December 31, 2025, the decrease in loss from equity method investment of $1.2 million as compared to the year ended December 31, 2024, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the year ended December 31, 2025.

For the year ended December 31, 2024, the decrease in loss from equity method investment of $2.1 million as compared to the year ended December 31, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the year ended December 31, 2024.

Liquidity and Capital Resources

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As of December 31, 2025, we had cash, cash equivalents and marketable securities of $56.8 million and an accumulated deficit of $412.3 million.

Since our inception and through December 31, 2024, 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 warrants for net proceeds of approximately $30.3 million.

During the year ended December 31, 2024, we raised net proceeds of $18.6 million from the exercise of common warrants.

Since our inception and through December 31, 2025, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our IPO in March 2016 and through subsequent follow-on public offerings.

In May 2024, we complete a registered direct offering, 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 year ended December 31, 2025, we did not sell any shares of common stock under our at-the-market offering program.

As of December 31, 2025, $100.0 million remained available for sale under the 2024 Sales Agreement.

On January 23, 2026, we completed a follow-on offering of common stock, which resulted in aggregate net proceeds of approximately $189.4 million.

In connection with the follow-on offering, we suspended the at-the-market offering with respect to the 2024 Sales Agreement (See footnote 17, Subsequent Event).

Funding Requirements

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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 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.

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, 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.

We do not yet have a sales organization or commercial infrastructure and, accordingly, we will need to incur significant expenses to develop a sales organization and commercial infrastructure in advance of generating any commercial product sales.

Moreover, we incur substantial costs associated with operating as a public company.

we incur substantial costs associated with operating as a public company.

We anticipate that we will need substantial additional funding in connection with our continuing operations.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates or from additional significant collaboration or license agreements with third parties, if ever, we expect to finance our future cash needs through private and public equity offerings, including our “at-the-market” offering program, debt financings, the potential exercise of outstanding common warrants with an exercise price of $3.50 per share and potential future collaboration, license and development agreements.

Adequate funding may not be available to us on acceptable terms, or at all.

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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 only be sufficient to fund our planned operating and capital needs into the first 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 Annual Report on Form 10-K.

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 consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We believe that our existing cash, cash equivalents and marketable securities, including the net proceeds from our financing in January 2026, will be sufficient to fund our planned operating and capital needs into the second quarter of 2028.

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.

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Financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash Flows from Operating Activities

Cash used in operating activities during the year ended December 31, 2025 was $32.8 million, which primarily consisted of a net loss of $15.3 million, adjusted by net non-cash transactions of $21.1 million, that primarily consisted of $5.3 million of stock compensation expense, $2.0 million of loss from equity method investment and a decrease of $27.1 million in the fair value of warrant liability, a decrease of $0.9 million in prepaid and other current assets, an increase of $0.2 million in other assets, a decrease of $0.1 million in accounts payable, an increase of $2.8 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 used in operating activities during the year ended December 31, 2024 was $25.4 million, which primarily consisted of a net loss of $62.3 million, adjusted by net non-cash transactions of $38.5 million, that primarily consisted of $3.0 million of stock compensation expense, $3.2 million of loss from equity method investment and an increase of $33.4 million in the fair value of warrant liability, an increase of $1.6 million in prepaid and other current assets, an increase of $1.1 million in accounts payable, a decrease of $0.3 million in accrued and other current liabilities and a decrease of $0.3 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash used in operating activities during the year ended December 31, 2023 was $23.9 million, which primarily consisted of a net loss of $27.0 million, adjusted by non cash charges of $6.7 million, primarily consisting of $2.1 million of stock compensation expense and $5.3 million in loss from equity method investment, a decrease of $0.5 million in accounts payable, a decrease of $3.6 million in accrued and other liabilities and a decrease of $0.6 million in accounts receivable – related party.

Cash used in operating activities during the year ended December 31, 2022 was $27.0 million, which primarily consisted of a net loss of $41.3 million, adjusted by non-cash charges of $12.9 million, primarily consisting of $2.7 million of stock compensation expense and $10.0 million in loss from equity method investment, a decrease of $0.6 million in prepaid and other current assets, an increase of $0.4 million in accounts payable, an increase of $0.5 million in accrued and other liabilities and an increase of $0.1 million in accounts receivable – related party.

Cash Flows from Investing Activities

Cash used in investing activities during the year ended December 31, 2025 was $7.8 million, which consisted of purchases of marketable securities of $91.8 million and purchases of property and equipment of $0.2 million, which were partially offset by maturities of marketable securities of $84.1 million.

Cash used in investing activities during the year ended December 31, 2024 was $27.5 million, which consisted of purchases of marketable securities of $70.1 million, which were partially offset by maturities of marketable securities of $42.6 million.

Cash provided by investing activities during the year ended December 31, 2023 was $15.5 million, which consisted of proceeds from maturities of marketable securities of $62.6 million, which were partially offset by purchases of marketable securities of $47.0 million.

Cash used in investing activities during the year ended December 31, 2022 was $23.3 million, which consisted of purchases of marketable securities of $66.2 million and purchases of property and equipment of $0.3 million, which were partially offset by proceeds from maturities of marketable securities of $43.2 million.

Cash Flows from Financing Activities

Cash provided by financing activities during the year ended December 31, 2025 was $36.4 million, which primarily consisted of net proceeds of $35.7 million from the exercise of common stock warrants and $0.7 million from the exercise of common stock options.

Cash provided by financing activities during the year ended December 31, 2024 was $49.0 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, proceeds of $8.9 million from the issuance of common warrants, proceeds of $18.6 million from the exercise of common warrants and proceeds of $0.1 million from the exercise of common stock options.

Cash provided by financing activities during the year ended December 31, 2023 was $7.9 million, which primarily consisted of $7.8 million in net proceeds from the issuance of common stock through our at-the-market offering program.

During the year ended December 31, 2022, there was no cash provided by or used in financing activities.

Off-Balance Sheet Arrangements

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Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services are performed.

We determine accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion, or the services completed.

We determine accrual estimates through reports from and discussions with applicable personnel and

outside service providers as to the progress or state of completion, or the services completed.

Our estimates of accrued expenses as of each balance sheet date are based on the facts and circumstances known at the time.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis