What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-12 compared with 2025-03-25 · 134 added, 156 removed, 637 unchanged (31% of the section changed)

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In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has incurred significant net operating losses and negative cash flows from operations since inception that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Clinical Trial Accruals

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Management applies significant judgment in developing estimates for clinical trial accruals based on assumptions related to the vendors’ progress towards completion.

Management estimates the vendors’ progress towards completion using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding actual costs incurred.

Management estimates the vendors’ progress towards completion using data such as clinical site activations,

patient enrollment or information provided to the Company by its vendors regarding actual costs incurred.

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

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Loss from equity method investment

Net loss per share, basic and diluted

Shares used to compute net loss per share, basic and diluted

Net loss per share, basic

Net loss per share, diluted

Shares used to compute net loss per share, basic

Shares used to compute net loss per share, diluted

Other comprehensive loss:

Unrealized gain on marketable securities

Unrealized gain (loss) on marketable securities

Cumulative foreign currency translation adjustment

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Balance at December 31, 2022

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Balance at December 31, 2022

Issuance of common stock in connection with at-the-market offering, net

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Balance at December 31, 2024

Issuance of common stock upon exercise of common stock warrants

Issuance of pre-funded warrants upon exercise of common stock warrants

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Balance at December 31, 2025

The accompanying notes are an integral part of these consolidated financial statements.

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Proceeds from sale of property and equipment

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

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Proceeds from issuance of common warrants (includes $ 1,472 in aggregate gross proceeds from related parties)

Proceeds from the exercise of common stock warrants

Proceeds from the exercise of common stock warrants (includes $ 4,960 in aggregate gross proceeds from related parties for the year ended December 31, 2025)

Proceeds from issuance of common stock in connection with at-the-market offering, net

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Reclassification of common stock warrant liability into additional paid-in capital upon exercise of common stock warrants

Right-of-use asset obtained in exchange for operating lease liability

The accompanying notes are an integral part of these consolidated financial statements.

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All intercompany accounts and transactions have been eliminated from the consolidated financial statements.

Initial Public Offering

On March 22, 2016, the Company’s registration statement on Form S-1 (File No.

333-208850) relating to its initial public offering (“IPO”) of its common stock was declared effective by the Securities and Exchange Commission (“SEC”) and the shares of its common stock began trading on the Nasdaq Global Market on March 23, 2016.

The public offering price of the shares sold in the IPO was $ 15.00 per share.

The IPO closed on March 29, 2016, pursuant to which the Company sold 4,700,000 shares of its common stock.

On April 26, 2016, the Company sold an additional 502,618 shares of its common stock to the underwriters upon partial exercise of their over-allotment option, at the initial offering price of $ 15.00 per share.

The Company received aggregate net proceeds of approximately $ 70.6 million, after underwriting discounts, commissions and offering expenses.

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

Follow-on Public Offering

In March 2018, the Company completed a follow-on public offering in which the Company sold 8,117,647 shares of common stock at a price of $ 8.50 per share, which included 1,058,823 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.

The aggregate net proceeds received by the Company from the offering were approximately $ 64.9 million, net of underwriting discounts and commissions and offering expenses payable by the Company.

In February 2021, the Company completed a follow-on public offering in which the Company sold 9,783,660 shares of common stock at a price of $ 3.50 per share, which included 1,212,231 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.

The aggregate net proceeds received by the Company from the offering were approximately $ 32.0 million, net of underwriting discounts and commissions and offering expenses.

Registered Direct Offering

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The financing consisted of the sale of 13,512,699 shares of common stock and accompanying common stock warrants to purchase 13,078,509 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7312 per share, and the sale of pre-funded warrants to purchase 4,144,085 shares of common stock and accompanying common warrants to purchase 4,010,927 shares of common stock (or pre-funded warrants in lieu thereof) at a combined offering price of $ 1.7311 per share.

The common warrants have an exercise price of $ 3.50 per share of common stock (or $ 3.4999 per pre-funded warrant in lieu thereof), are exercisable at any time after the date of issuance, subject to certain ownership limitations, and expire on June 30, 2025.

The pre-funded warrants have an exercise price of $ 0.0001 and are exercisable any time after the date of the issuance, subject to certain

ownership limitations.

During the year ended December 31, 2024, 5,311,198 of common stock warrants were exercised, resulting in aggregate proceeds of approximately $ 18.6 million received by the Company.

The common warrants had an exercise price of $ 3.50 per share of common stock (or $ 3.4999 per pre-funded warrant in lieu thereof), were exercisable at any time after the date of issuance, subject to certain ownership limitations, and expired on June 30, 2025.

The pre-funded warrants have an exercise price of $ 0.0001 and are exercisable any time after the date of the issuance, subject to certain ownership limitations.

As of December 31, 2025, all of the common warrants have been exercised, resulting in proceeds of $ 54.3 million.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations.

Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of soquelitinib, ciforadenant and mupadolimab.

The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of soquelitinib, ciforadenant and mupadolimab, as well as product candidates under the Company’s other development programs.

The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of soquelitinib, as well as product candidates under the Company’s other development programs.

These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining regulatory approvals, manufacturing and supply, sales and marketing and general operations.

In addition, other unanticipated costs may arise.

Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of soquelitinib, ciforadenant and mupadolimab or any other product candidates.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 412.3 million as of December 31, 2025.

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Management expects operating losses to continue for the foreseeable future.

The Company has funded its operations to date primarily through the sale of redeemable convertible preferred stock and common stock.

The Company has funded its operations to date primarily through the sale of redeemable convertible preferred stock, common stock, pre-

funded warrants and common stock warrants.

As of December 31, 2025, the Company had cash, cash equivalents and marketable securities of $ 56.8 million.

The Company’s cash, cash equivalents and marketable securities are not sufficient to fund the Company’s planned operations for a period of at least 12 months from the date these consolidated financial statements are issued.

To fund the Company's planned operations, the Company will need to raise additional capital.

The Company intends to raise additional capital through private and public equity offerings, including its “at-the-market” offering program, debt financings, the potential exercise of common warrants outstanding with an exercise price of $ 3.50 per share and potential future collaboration, license and development agreements.

On January 23, 2026, the Company received aggregate net proceeds of $ 189.4 million in a follow-on public offering (see note 17.

Subsequent Events).

Management believes that the Company’s current cash, cash equivalents and short-term marketable securities, including proceeds from its January 2026 financing, will be sufficient to fund its planned operations for at least the next 12 months from the date of the issuance of these consolidated financial statements.

To fund all of the Company's ongoing and planned development programs through commercialization, the Company will need to raise additional capital in the future.

The Company intends to raise additional capital through private and public equity offerings, debt financings and license and development agreements.

However, there can be no assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its operations or on terms acceptable to the Company or at all.

If the Company is unsuccessful in its efforts to raise additional capital or if sufficient funds on acceptable terms are not available when needed, the Company could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate one or more of its development programs, out-license intellectual property rights to its product candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on the Company’s business, results of operations, financial condition and/or its ability to fund its obligations on a timely basis or at all.

If the Company is unsuccessful in its efforts to raise additional capital or if sufficient funds on acceptable terms are not available when needed, the Company could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate one or more of its development programs, out-license intellectual property rights to its product candidates, sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on the Company’s business, results of operations, financial condition and/or its ability to fund its obligations on a timely basis or at all.

Failure to manage discretionary spending or raise additional capital, as needed, may adversely impact the Company’s ability to achieve its intended business objectives.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of the issuance of these consolidated financial statements.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

The consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

Summary of Significant Accounting Policies

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In developing these estimates, management estimates vendors’ progress towards completion using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding their actual costs incurred.

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.

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.

The Company determines 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.

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The Company intends to maintain a valuation allowance until sufficient evidence exists to support its reversal.

The Company recognizes benefits of uncertain tax positions if it is more likely than not such positions will be sustained upon examination based solely on their technical merits as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement.

than not to be realized upon the ultimate settlement.

The Company recognizes any material interest and penalties related to unrecognized tax benefits in income tax expense.

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Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares, Prefunded Warrants, and potentially dilutive securities outstanding for the period.

Diluted net loss per share is the same as basic net loss per share for all periods presented since the effect of potentially dilutive securities is anti-dilutive given the net loss of the Company.

Diluted net loss per share is the same as basic net loss per share for the years ended December 31, 2024 and 2023 since the effect of potentially dilutive securities is anti-dilutive during those periods.

Recent Accounting Pronouncements

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The Company is currently evaluating the effect of adopting this ASU.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.

This ASU requires disclosures to include significant segment expenses that are regularly provided to the CODM, a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this update effective December 31, 2024, on a retrospective basis.

Refer to Note 4 Segments for further details.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes.

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The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024.

Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” As adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis.

The Company is currently evaluating the impact of this ASU but does not expect any material impacts upon adoption.

Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” The Company adopted this ASU for the year ended December 31, 2025 and applied the new disclosure requirements on a prospective basis.

For additional information, see Note 13, Income Taxes.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expense.

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Year Ended December 31,

Net loss attributable to common stockholders, basic

Gain from change in fair value of warrant liability

Net loss - basic and diluted

Weighted average common shares and prefunded warrants outstanding used to compute basic and diluted net loss per share

Net loss per share, basic and diluted

Weighted average common shares and pre-funded warrants outstanding used to compute basic and diluted net loss per share

Weighted average shares issuable upon the exercise of common warrants

Weighted average common shares and prefunded warrants outstanding used to compute diluted net loss per share

Net loss per share, basic

Net loss per share, diluted

Weighted average common shares outstanding used in the calculation of basic and diluted net loss per share for the years ended December 31, 2025 and 2024 includes 8,275,913 and 4,144,085 shares of common stock issuable upon conversion of pre-funded warrants, respectively.

Refer to Note 9, “Warrants” for further details.

Shares issuable upon exercise of common warrants used in the calculation of diluted net loss per share were calculated using the treasury stock method.

The amounts in the table below were excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect:

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The measure of segment assets is reported on the balance sheet as total consolidated assets.

Managing and allocating resources on a consolidated basis enables the CODM to assess the overall level of resources available and how to best deploy these resources across functions and programs that are in line with the Company's long-term company-wide strategic goals.

Managing and allocating resources on a consolidated basis enables the CODM to assess the overall

level of resources available and how to best deploy these resources across functions and programs that are in line with the Company's long-term company-wide strategic goals.

The following table presents reportable segment net loss, including significant expense categories, attributable to the Company's reportable segment for the years ended December 31, 2025, 2024 and 2023 (in thousands):

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Drug manufacturing

Clinical trial

Clinical trials

Outside general and administrative

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Marketable securities

As of December 31, 2024, marketable securities had a maximum remaining maturity of less than two years .

As of December 31, 2025, all marketable securities had a maximum remaining maturity of less than ten months and are considered available for current operations.

As of December 31, 2025 and 2024, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

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Warrant liability balance as of December 31, 2025

The Company uses the Black-Scholes pricing model to determine the fair value of its warrant liabilities using Level 3 inputs.

The Company used the Black-Scholes pricing model to determine the fair value of its warrant liabilities using Level 3 inputs.

Inputs used to determine estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock.

The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants.

The key inputs into valuation models used to estimate the fair value of the warrant liabilities as of May 6, 2024, the issuance date, and as of December 31, 2024 were as follows:

The key inputs into valuation models used to estimate the fair value of the warrant liabilities as of December 31, 2024 were as follows:

Risk-free interest rate

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Further, the Company determined that as it has a significant influence over Angel, and, therefore, it shall account for its investment in Angel using the equity method starting in October 2020, the date it lost control over Angel.

At the date of loss of control, the Company derecognized all of

Angel’s assets and liabilities from its balance sheet, recognized the retained equity interest at its fair value of $ 37.5 million, and recognized a gain of $ 37.5 million, which is included in gain on deconsolidation of Angel Pharmaceuticals on the consolidated statement of operations for the year ended December 31, 2020.

As of December 31, 2024, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel’s Employee Stock Ownership Plan.

At the date of loss of control, the Company derecognized all of Angel’s assets and liabilities from its balance sheet, recognized the retained equity interest at its fair value of $ 37.5

million, and recognized a gain of $ 37.5 million, which is included in gain on deconsolidation of Angel Pharmaceuticals on the consolidated statement of operations for the year ended December 31, 2020.

As of December 31, 2025 and 2024, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel’s Employee Stock Ownership Plan.

The Company recognized its share of losses in Angel for the total amount of $ 2.0 million, $ 3.2 million and $ 5.3 million as loss from equity method investment on the consolidated statement of operations for the years ended December 31, 2025, 2024 and 2023, respectively.

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(in thousands)

Net income (loss)

Share of loss from investments accounted for using the equity method

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The one-time cash payment was recorded as research and development expense as technological feasibility of the asset had not been established and there was no alternative future use.

A minimum annual fee payment is due on each anniversary of the effective date of the agreement

for the term of the agreement.

The Company is also required to make performance-based cash payments upon successful completion of clinical and sales milestones.

The aggregate potential milestone payments are $ 2.5 million.

A minimum annual fee payment is due on each anniversary of the effective date of the agreement for the term of the agreement.

The Company is also required to make performance-based cash payments upon successful

completion of clinical and sales milestones.

The aggregate potential milestone payments are $ 2.5 million as of December 31, 2025.

The Company is also required to pay royalties on net sales of licensed products (including CPI-006) sold by it, its affiliates and its sublicensees at a rate in the low-single digits.

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The Company is also required to pay to Monash tiered royalties on net sales of licensed products sold by it, its affiliates and its sublicensees at a rate ranging in the low-single digits.

In addition, should the Company sublicense its rights under the agreement, the Company has agreed to pay a percentage of sublicense revenue received at specified rates that are currently at low double digit percentages and decrease to single digit percentages based on the achievement of development milestones.

In addition, should the Company sublicense its rights under the agreement, the Company has agreed to pay a percentage of sublicense revenue received at specified rates that are currently single digit percentages based on the achievement of development milestones.

The term of the Company’s agreement with Monash continues until the expiration of its obligation to pay royalties to Monash thereunder.

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In accordance with accounting guidance discussed in Note 2, the Company recorded $ 5.0 million to additional paid-in capital upon issuance of the pre-funded warrants on May 6, 2024.

As of December 31, 2024, none of the pre-funded warrants have been exercised.

The common warrants have an exercise price per share of common stock equal to $ 3.50 per share (or $ 3.4999 per pre-funded warrant).

The exercise price and the number of shares of common stock (or pre-funded warrants in lieu thereof) issuable upon exercise of the common warrants are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock.

The common warrants are exercisable at any time after the date of issuance and will expire on June 30, 2025.

In accordance with accounting guidance discussed in Note 2, the Company recorded $ 8.9 million to warrant liability upon issuance of the common warrants on May 6, 2024 and recorded a change in fair value of warrant liability of $ 33.4 million to other income in its consolidated statement of operations and comprehensive loss for the year ended December 31, 2024, respectively.

During the year ended December 31, 2025, an additional 4,131,828 pre-funded warrants were issued in connection with the exercise of common warrants.

As of December 31, 2025, none of the pre-funded warrants have been exercised and 8,275,913 pre-funded warrants remain outstanding.

The common warrants had an exercise price per share of common stock equal to $ 3.50 per share (or $ 3.4999 per pre-funded warrant).

The exercise price and the number of shares of common stock (or pre-funded warrants in lieu thereof) issuable upon exercise of the common warrants were subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock.

The common warrants were exercisable at any time after the date of issuance and had an expiration date of June 30, 2025.

In accordance with accounting guidance discussed in Note 2, the Company recorded $ 8.9 million to warrant liability upon issuance of the common warrants on May 6, 2024 and recorded other expense of $ 33.4 million and other income of $ 27.1 million from the change in fair value of warrant in its consolidated statement of operations and comprehensive loss for the years ended December 31, 2024 and 2025, respectively.

The value of the common warrants upon issuance on May 6, 2024 has been included within the consolidated statement of cash flows from financing activities.

During the year ended December 31, 2024, 5,311,198 of the common warrants were exercised, resulting in proceeds of $ 18.6 million.

As of December 31, 2024, 11,778,238 of the common warrants are outstanding and the Company’s warrant liability was $ 28.9 million.

As of December 31, 2025, all of the common warrants have been exercised, resulting in proceeds of $ 54.3 million.

As of December 31, 2025, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

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

On January 20, 2026, in connection with the January 2026 financing, as further described in Note 17, Subsequent Event, the Company suspended the offering of any shares of its common stock under the 2024 Sales Agreement.

The Company has reserved shares of common stock, for issuance as follows:

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(in thousands)

Vested (shares exercisable)

Expected to vest

In the table above, aggregate intrinsic value represents the difference between the exercise price of the options to purchase common stock and the fair value of the Company’s common stock of $ 7.70 per share as of December 31, 2025.

The aggregate intrinsic value of stock options exercised in the years ended December 31, 2024, 2023 and 2022, was less than $ 0.1 million, $ 1.0 million and $ 0.0 million, respectively.

The total fair value of options that vested in the year ended December 31, 2024, 2023 and 2022, was $ 2.6 million, $ 2.1 million, and $ 2.8 million, respectively.

The aggregate intrinsic value of stock options exercised in the years ended December 31, 2025, 2024 and 2023, was $ 1.7 million, less than $ 0.1 million and $ 1.0 million, respectively.

Stock-Based Compensation

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Treasury securities with maturity dates commensurate with the expected term of the equity award.

The expected volatility in 2024 and 2023 was determined based on the Company’s historical stock price volatility.

In 2022, the Company utilized the average historical stock price volatility of a peer group of publicly traded companies to represent its expected future stock price volatility, due to the insufficient trading history of the Company’s common stock.

For purposes of identifying these peer companies, the Company considered the industry, stage of development, size and financial leverage of potential comparable companies.

The expected volatility was determined based on the Company’s historical stock price volatility.

For each grant, the Company measured historical volatility over a period equivalent to the expected term.

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The Company has not paid and does not anticipate paying any dividends in the near future.

At December 31, 2024 and 2023, the unrecognized compensation expense associated with respect to options granted to employees was $ 11.8 million and $ 4.5 million, respectively, and is expected to be recognized on a straight-line basis over 2.71 and 2.27 years, respectively.

At December 31, 2025, the unrecognized compensation expense associated with outstanding and unvested

options was $ 25.7 million and is expected to be recognized on a straight-line basis over 2.42 years.

The components of loss before income tax is as follows (in thousands):

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Federal statutory rate is as follows:

December 31, 2025

(in thousands)

Federal tax benefit at statutory rate

State and local income tax, net of federal (national) income tax effect

Research and development tax credits

Orphan drug credits

Changes in valuation allowances

Nontaxable or nondeductible items

Share based compensation

162(m) covered employees compensation limitation

Investment in Angel

Warrant liability

Changes in unrecognized tax benefits.

Effective income tax rate

The effective tax rate is different from the federal statutory tax rate primarily due to a valuation allowance against deferred tax assets as a result of the Company's history of losses.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

Federal tax benefit at statutory rate

State tax, net of Federal benefit

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Effective income tax rate

The effective tax rate is different from the federal statutory tax rate primarily due to a foreign rate differential and a valuation allowance against deferred tax assets as a result of the Company’s history of losses.

The Company did no t make any income tax payments during the year ended December 31, 2025.

The principal components of the Company’s net deferred tax assets are as follows (in thousands):

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The Company recorded a valuation allowance against its deferred tax assets at December 31, 2025 and 2024 because Company management believed that it was more likely than not that these assets would not be fully realized in the future.

The valuation allowance increased by approximately $ 7.6 million, $ 6.6 million and $ 9.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The valuation allowance increased by approximately $ 11.6 million and $ 7.6 million for the years ended December 31, 2025 and 2024, respectively.

Changes in the valuation allowance for deferred tax assets relate primarily to the increase in the Company’s net operating loss carryforward.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law.

The OBBBA introduced multiple U.S.

federal income tax changes, including the deductibility of domestic research and development expenses, deductibility of certain property additions and limitations on interest expense deduction.

The Company has evaluated the enactment of the OBBBA and continues to assess the detailed impacts of its provision.

The effects of this provision have been reflected in the Company’s income tax provision.

As of December 31, 2025, the Company had federal NOL carryforwards of approximately $ 285.9 million and state NOL carryforwards of approximately $ 353.7 million which are available to reduce future taxable income.

The NOLs will begin to expire in 2035 , if not utilized.

Utilization of the net operating loss carryforwards are subject to various limitations due to the ownership change limitations provided by Internal Revenue Code (“IRC”) Section 382 and similar state provisions.

Utilization of the net operating loss carryforwards are subject to

various limitations due to the ownership change limitations provided by Internal Revenue Code (“IRC”) Section 382 and similar state provisions.

As of December 31, 2025, the Company also had $ 11.1 million of federal research and development tax credit, $ 1.5 million of federal orphan drug credit, and $ 5.8 million of state research and development tax credit carryforwards available to reduce future income taxes.

The federal research and development tax credits will begin to expire 2036 , if not utilized.

The federal research and development tax credits will begin to expire 2036 and orphan drug credits will begin to expire 2045 , if not utilized.

The state research and development tax credits have no expiration date.

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Unrecognized tax benefits, end of the period

The Company follows the provisions of ASC 740, Accounting for Income Taxes, and the accounting guidance

related to accounting for uncertainty in income taxes.

The Company follows the provisions of ASC 740, Accounting for Income Taxes, and the accounting guidance related to accounting for uncertainty in income taxes.

The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities.

None of the Company’s unrecognized tax benefits that, if recognized, would affect its effective tax rate.

The Company does not anticipate the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months.

The Company will recognize both accrued interest and penalties related to unrecognized benefits in income tax expense.

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Facility Leases

As of December 31, 2024, the Company had entered into two operating lease agreements and records rent expense on a straight-line basis over the effective term of each lease, including any free rent periods and incentives.

As the interest rate implicit in lease arrangements is typically not readily available, in calculating the present value of the lease payments, the Company has utilized its incremental borrowing rate, which is determined based on the prevailing market rates for collateralized debt with maturity dates commensurate with the term of its leases.

Burlingame Lease

In January 2015, the Company signed an initial operating lease (the “Burlingame Lease”), effective February 1, 2015 for 8,138 square feet of office and laboratory space with a one year term located at 863 Mitten Road, Burlingame, California.

Between January 2015 and September 2021, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the Burlingame Lease to January 2025.

The lease agreement includes annual rent escalations.

Under the Burlingame Lease and subsequent amendments, the landlord provided approximately $ 1.9 million in free rent and lease incentives.

The Burlingame Lease is a net lease, as the non-lease components (i.e.

common area maintenance) are paid separately from rent based on actual costs incurred.

Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

As of December 31, 2024, all noncancelable rent payments under the Burlingame Lease had been made and no right-of-use asset under this operating lease remained.

As of December 31, 2023, the right-of-use asset under operating lease was $ 1.1 million.

The elements of lease expense under the Burlingame Lease were as follows (in thousands):

Statements of operations and

comprehensive loss location

Costs of operating lease

Operating lease costs

Research and development,

General and administrative

Costs of non-lease components (previously common area maintenance)

Research and development,

General and administrative

Total operating lease cost

Other Information

Operating cash flows used for operating lease

Remaining lease term

Discount rate

As of December 31, 2023, minimum rental commitments under the Burlingame Lease were as follows (in thousands):

Year Ended December 31 (in thousands)

Total lease payments

imputed interest

South San Francisco Lease

On October 22, 2024, the Company entered into a sub-sublease agreement (the “South San Francisco Lease”), pursuant to which the Company sub-leased approximately 20,916 square feet of office and lab space.

The sub-sublease has a term of three years commencing on February 21, 2025 with an option to extend at fair market value for an

additional 27 months .

On October 22, 2024, the Company entered into an operating sub-sublease agreement, pursuant to which the Company sub-leased approximately 20,916 square feet of office and lab space.

The sub-sublease has a term of three years commencing on February 21, 2025 with an option to extend at fair market value for an additional 27 months.

The Company records rent expense on a straight-line basis over the effective term of the lease, including any free rent periods and incentives.

The Company’s obligation for the payment of base rent for the premises begins on the commencement date and will initially be $ 33,833 per month, up to monthly base rent of $ 47,200 during the third year of the sub-sublease.

In addition to base rent, the Company is obligated to pay its proportionate share of taxes, insurance and operating expenses.

In November 2024, the Company paid the Sublandlord $ 231,235 in prepaid rent, which shall be applied to the monthly base rent and the Company’s proportionate share of additional expenses for the first three months of the term of the sub-sublease.

Although the non-cancellable lease term commences on February 1, 2025, for purposes of determining the right-of-use asset balance, in accordance with ASC Topic 842, the Company used November 25, 2024 as the commencement date, the date on which the sublandlord granted the Company access to the premises.

The sub-sublease is a net lease, as the non-lease components (i.e.

common area maintenance) are paid separately from rent based on actual costs incurred.

In November 2024, the Company paid the sublandlord $ 231,235 in prepaid rent, which was applied to the monthly base rent and the Company’s proportionate share of additional expenses for the first three months of the term of the sub-sublease.

Although the non-cancellable lease term commenced on February 21, 2025, for purposes of determining the right-of-use asset balance, in accordance with ASC Topic 842, the Company used November 25, 2024 as the commencement date, the date on which the sublandlord granted the Company access to the premises.

The sub-sublease is a net lease, as the non-lease components (i.e., common area maintenance) are paid separately from rent based on actual costs incurred.

Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

As of December 31, 2024, the right-of-use asset under South San Francisco Lease was $ 1.1 million.

The elements of lease expense under the South San Francisco Lease were as follows (in thousands):

As of December 31, 2025 and 2024, the right-of-use asset under the operating lease was $ 0.8 million and $ 1.2 million, respectively.

The elements of lease expense under the operating lease were as follows (in thousands):

Statements of operations and

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Discount rate

As of December 31, 2024, minimum rental commitments under the South San Francisco Lease were as follows (in thousands):

As of December 31, 2025, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)

2 unchanged sentences

Commitments and Contingencies

In August 2015, the Company entered into an agreement for a line of credit of $ 0.1 million for the purpose of issuing its landlord a letter of credit of $ 0.1 million as a security deposit under the Burlingame Lease.

The Company pledged money market funds and marketable securities as collateral for the line of credit.

For further discussion of the Company’s facility lease agreement, see Note 14.

Pursuant to the Company’s license agreements with each of Vernalis, Scripps and Monash, it has obligations to make future milestone and royalty payments to these parties, respectively.

However, because these amounts are

contingent, they have not been included on the Company’s balance sheet until probable.

However, because these amounts are contingent, they have not been included on the Company’s balance sheet until probable.

For further discussion of the Vernalis, Scripps and Monash licensing agreements, see Note 7.

7 unchanged sentences

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 Delaware law.

There have been no claims to date and the Company has a directors and officers insurance policy that may enable it to recover a portion of any amounts paid for future claims.

There have been no

claims to date and the Company has a directors and officers insurance policy that may enable it to recover a portion of any amounts paid for future claims.

Legal Proceedings

8 unchanged sentences

Puissance Capital Management (2)

(2) Peter Thompson, M.D., a member of our Board of Directors since November 2014, is a Member of OrbiMed Advisors, LLC.

(3) Ted Wang, Ph.D., a Co-Founder, General Manager and Director of Angel Pharmaceuticals, of which the Company holds a 49.7 % ownership interest, is the founder of Puissance Capital Management.

(1) Peter Thompson, M.D., a member of our Board of Directors since November 2014, is a Private Equity Partner at OrbiMed Advisors, LLC.

(2) Ted Wang, Ph.D., a Co-Founder, General Manager and Director of Angel, of which the Company holds a 49.7 % ownership interest, is the founder of Puissance Capital Management.

(3) Richard A.

2 unchanged sentences

is the Company’s Senior Vice President, Pharmaceutical Development.

The Company holds a 49.7 % ownership in Angel and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides operational support and clinical

drug supplies to Angel.

Third-party and internal personnel costs incurred by the Company are billed to Angel in the period incurred and recorded as an offset to expenses.

During the years ended December 31, 2024 and 2023, there were no internal personnel costs billed to Angel and during the year ended December 31, 2022, the Company billed Angel for approximately $ 0.1 million in internal personnel costs.

During the years ended December 31, 2024, 2023 and 2022 the Company billed Angel for approximately $ 0.0 million, $ 0.1 million and $ 1.3 million in third-party costs, respectively.

Of the third-party costs billed to Angel in the year ending December 31, 2022, approximately $ 0.5 million were associated with clinical drug supply manufactured and expensed in prior years.

The remaining $ 0.1 million and $ 0.8 million in third-party costs were primarily associated with clinical drug supply passthrough costs incurred during the years ended December 31, 2023 and 2022, respectively, and did not have an impact on the Company’s consolidated statements of operations.

In addition to the provision of clinical supplies to Angel, Angel may provide clinical supplies and research services to the Company on an as needed basis.

During the year ended December 31, 2025, all of the common warrants sold to related parties as part of the Company’s May 2024 registered direct offering were exercised.

The details of these exercises are as follows:

Common Shares

Common Warrants

Proceeds Received

Upon Exercise

OrbiMed Advisors LLC (1)

Puissance Capital Management

(1) OrbiMed Advisors LLC paid the exercise price of $ 3.50 per common stock warrant on a cashless basis, resulting in the Company withholding 1,176,332 of the warrant shares to pay the exercise price and issuing to OrbiMed Advisors LLC the remaining 221,352 shares.

This transaction is considered a non-cash financing activity.

The Company holds a 49.7 % ownership in Angel and, in connection with intellectual property licensing agreements between the Company and Angel, Angel may provide clinical supplies and research services to the Company on an as needed basis.

These transactions are recorded as research and development expense.

During the years ended December 31, 2023 and 2022, Angel billed the Company for approximately $ 0.2 million and $ 0.2 million, respectively, associated with clinical drug supply and research services provided to the Company.

There were no clinical supplies or research services billed by Angel to the Company during the year ended December 31, 2024.

In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel.

Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel is responsible for certain operating expenses and taxes throughout the life of the sublease.

The sublease expired in January 2023.

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the years ended December 31, 2023 and 2022, the Company recognized $ 0.1 million and $ 0.6 million of sublease income, respectively.

During the year ended December 31, 2023, Angel billed the Company for approximately $ 0.2 million associated with clinical drug supply and research services provided to the Company.

There were no clinical supplies or research services billed by Angel to the Company during the years ended December 31, 2025 and 2024.

In July 2021, Linda S.

2 unchanged sentences

During the years ended December 31, 2025, 2024 and 2023, the Company recorded approximately $ 481,000 , $ 351,000 and $ 254,000 , respectively, in clinical trial expenses under its agreements with ICON.

Subsequent Event

On January 23, 2026, the Company completed a follow-on public offering in which the Company sold 9,085,778 shares of common stock at a price of $ 22.15 per share, which included 1,185,101 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.

The aggregate net proceeds received by the Company from the offering were approximately $ 189.4 million, net of underwriting discounts and commissions and offering expenses.

As part of this follow-on public offering, 30,000 shares of common stock, at the public offering price of $ 22.15 per share, were sold to Puissance Capital Management, a related party.

Ted Wang, Ph.D., a Co-Founder, General Manager and Director of Angel, of which the Company holds a 49.7 % ownership interest, is the founder of Puissance Capital Management.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data