Corvus Pharmaceuticals, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited condensed consolidated financial statements and notes for the year ended December 31, 2025, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 12, 2026. ​ This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors.” Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. ​ Overview ​ 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 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, hidradenitis suppurativa, 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 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. We believe this strategy has enabled us to move rapidly from preclinical to clinical trials in diverse disease areas, each with large unmet needs. We are enrolling patients in a potentially registrational Phase 3 clinical trial of soquelitinib for relapsed peripheral T cell lymphomas. Soquelitinib is also being evaluated in a randomized, placebo-controlled Phase 2 trial in patients with atopic dermatitis. We have two additional product candidates which are in clinical development for the treatment of various solid tumors, also based on modulation of immune function. 21 Table of Contents Product Candidate Pipeline Our product candidate pipeline and anticipated milestones include the following: ​ (1) A Phase 1b/2 clinical trial in atopic dermatitis is being conducted by Angel Pharmaceuticals, the Company’s partner in China. (2) The Company did not conduct Phase 1 studies for these specific indications, but is planning to initiate Phase 2 studies for these indications based on the Phase 1 Atopic Dermatitis study. ​ Soquelitinib (CPI-818), ITK Inhibitor. Soquelitinib is an investigational selective, orally bioavailable, covalent inhibitor of ITK. ITK, an enzyme that functions in T cell signaling and differentiation, is expressed predominantly in T cells, which are lymphocytes that play a vital role in immune responses. T cell lymphomas are malignancies of T cells that proliferate and spread throughout the body. These lymphomas often have uncontrolled tonic signaling through the T cell receptor pathway, which involves ITK. Inhibition of ITK with soquelitinib could result in blockade of this signaling pathway and control the growth of the malignancy. In addition, one of the key survival mechanisms of both lymphomas and solid tumors is believed to be the reprogramming of normal T cells to create an environment in the tissues that inhibits an anti-tumor immune response and favors tumor growth. We believe highly selective inhibitors of this enzyme will facilitate induction of normal T cell anti-tumor immunity and may be useful in the treatment of solid tumors as well as lymphomas. A normal functioning immune system maintains balance between inflammation, needed to fight infection or eliminate noxious agents, and suppression of inflammation necessary when the inflammatory signals are eliminated. This balance is restored through the action of T regulatory cells, which dampen inflammatory responses. ITK plays a vital role in the function of these regulatory T cells where it acts to modulate immune responses. In ITK genetic knockout mice, which completely lack expression of ITK, T cells exhibit defects in T helper cell differentiation and cytokine secretion but retain the ability to differentiate into cytotoxic T cells that secrete IL-2 and interferon gamma (“IFNg”), which are the cells responsible for tumor rejection. We believe that skewing T helper cell differentiation to favor cytotoxic T cells, known as Th1 skewing, may be beneficial in treating T cell lymphomas and many other types of cancer. Mice with genetic knock-out of ITK also demonstrate a reduction in Th2 and Th17 cells, which produce the cytokines that are often responsible for autoimmunity and allergy such as interleukin (Il) Il-4, Il-5, Il-13, Il-17 and many others. We have designed and developed soquelitinib to covalently target the cysteine amino acid residue at position 442 in the ITK protein. We believe this irreversible targeting of ITK has the potential to provide a potent, selective and prolonged duration of activity without the need for high systemic exposures and thereby improve the therapeutic window. This approach was previously used by our cofounders to generate ibrutinib. Selective inhibition of ITK can block the production and function of Th2 and Th17 helper T cells, potentially leading to a biasing toward the differentiation of naïve T cells into Th1 helper T cells. 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. We believe, based on our preclinical and Phase 1/1b data from our T cell lymphoma 22 Table of Contents 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. Overactive Th2 and Th17 cells are known to play a role in autoimmune, inflammatory and allergic diseases, which can potentially be ameliorated by selective ITK inhibition by blocking Th2 and Th17 function and their production of inflammatory cytokines such as IL4, IL5, IL13, IL17 and others. 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. Key results from the publication include that soquelitinib: ● 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 rejection. Th2 cytokines have been previously implicated in promoting tumor growth and are also involved in autoimmune and allergic diseases. ● Activated cytotoxic killer cells and increases infiltration of these cells into tumors. ● Reduced and reversed T cell exhaustion resulting in a more potent and prolonged immune response. T cell exhaustion is often a major reason for resistance to immune checkpoint therapy. ● Led to in vivo anti-tumor activity in several mouse tumor models, including colon, renal, melanoma, B cell and T cell tumor. Soquelitinib for treatment of T cell lymphomas. Soquelitinib is currently being studied both in cancer and in immune mediated diseases. A Phase 1/1b clinical trial was conducted in patients with relapsed T cell lymphomas that was designed to select the optimal dose of soquelitinib and evaluate its safety, pharmacokinetics (“PK”), target occupancy, immunologic effects, biomarkers and efficacy. The study is now complete, however, some of the patients remain on therapy and are continuing to receive follow-up monitoring. The trial enrolled 75 patients (27 in the dose escalation portion and 48 in dose expansion portion) with various T cell lymphomas, including peripheral T cell lymphoma (“PTCL”), T follicular helper cell lymphoma, natural killer cell T cell lymphoma, cutaneous T cell lymphoma, anaplastic large cell lymphoma and adult T cell lymphoma/leukemia. The median number of prior therapies was three (range 1-18), with only 31% achieving an objective response to their most recent prior therapy. In the dose escalation portion, patients received a twice-daily dose of soquelitinib of 100 mg, 200 mg, 400 mg or 600 mg, and the 200 mg twice-daily dose (“200 mg BID”) was selected for the dose expansion portion based on biomarker studies indicating that doses of 200 mg or higher achieved complete occupancy of the ITK target with the drug. Final data from the Phase 1/1b clinical trial were presented at the American Society of Hematology Annual Meeting (“ASH”) in December 2025. Key highlights from the data supporting the ongoing registration Phase 3 trial in relapsed/refractory PTCL include: ● No dose limiting toxicities or significant adverse events were observed in any patients in all dose cohorts up to 600 mg twice-daily, including no myelosuppression or immunosuppression; ● Objective and durable tumor responses were seen in the 200 mg twice-daily cohort (N=36) with 6 patients experiencing complete responses; ● In the 200 mg twice-daily cohort, it was determined that patients with between ≥1 and ≤3 prior therapies and an adequate peripheral blood lymphocyte count (N=24) were most likely to be responders to therapy. 23 Table of Contents In this patient population: o Objective responses were seen in 9 of 24 patients including 6 complete responses and 3 partial responses; o Median progression free survival (“PFS”) was 6.2 months, including an 18-month PFS of 30%; and o Median overall survival (“OS”) was 28.1 months, including a 24-month OS of 67% Key highlights from the data supporting soquelitinib’s proposed mechanism of action (Th1 skewing and blocking Th2 and Th17 differentiation) and development in immune and inflammatory diseases include: ● In vitro studies demonstrated that at appropriate doses, soquelitinib produced Th1 skewing, which is an immunologic property resulting from the blockade of Th2 differentiation and a shift to Th1; ● Biomarker studies evaluating blood samples and tumor biopsies showed an increase in Th1 in blood and tumor samples and a reduction in serum IL-5, consistent with inhibiting Th2 and Th17 cells; and ● For six patients, paired tumor biopsies were compared at baseline and day 8 and showed an increase in intratumor Th1 cells with treatment analyzed using RNA sequencing. 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 PTCL. The FDA provided feedback on our proposed registration trial, including the proposed endpoints. We initiated this clinical trial in the third quarter of 2024. The clinical trial is designed to enroll a total of 150 patients with relapsed PTCL that have received ≥ 1 prior therapy and≤3 prior therapies. Patients are being randomized 1:1 to soquelitinib 200 mg two-times a day or one of the standard of care chemotherapies. The standard of care agent is selected based on the physician’s choice of either belinostat or pralatrexate. The primary endpoint is progression-free survival. Secondary endpoints include objective response rate, overall survival and duration of response. Leading academic and private medical centers with significant experience in lymphoma research are participating in the trial, including investigators who have conducted other Phase 3 clinical trials in T cell lymphoma and authored many peer-reviewed articles on lymphomas. There are currently no FDA fully approved agents for the treatment of relapsed PTCL. The FDA has granted Fast Track designation to soquelitinib for the treatment of adult patients with relapsed or refractory PTCL after at least two lines of systemic therapy. In addition to Fast Track designation, soquelitinib has also been granted FDA orphan drug designation for the treatment of T cell lymphoma. Soquelitinib for treatment of atopic dermatitis. In November 2023, we announced the posting of preclinical data on soquelitinib in bioRxiv that demonstrated that ITK’s selective inhibition produced therapeutic benefits in several autoimmune and allergy preclinical models, including psoriasis, asthma, pulmonary fibrosis, scleroderma and graft versus host disease. The mechanism of action involves the inhibition of Th2 and Th17 cells and their subsequent production of cytokines such as IL-4, IL-5, IL-17 and other cytokines involved in these diseases. The novel mechanism is a result of ITK inhibition and blockade of formation of Th2 and Th17 cells. In April 2024, we initiated a randomized, double-blind, placebo-controlled Phase 1 clinical trial with soquelitinib in patients with moderate to severe atopic dermatitis that previously failed one prior topical or systemic therapy. The clinical trial was planned to enroll 64 patients into one of four dosing cohorts in a 3:1 ratio (12 active and 4 placebo) to receive either soquelitinib or placebo. The cohorts were designed to sequentially enroll and to examine 100 mg oral twice per day, 200 mg oral once per day, 200 mg oral twice per day and 400 mg oral once per day. Patients would be treated for 28 days and are then followed for an additional 30 days with no therapy. The primary endpoints included safety and tolerability, and efficacy, measured by improvement in Eczema Area and Severity Index (“EASI”) 24 Table of Contents score, Investigator Global Assessment (“IGA”), reduction in itch and various cytokine biomarkers. EASI scores are also evaluated by the percent of patients that achieve a specified percent reduction in EASI score – EASI 50 for patients that achieved a 50% reduction; EASI 75 for a 75% reduction; and EASI 90 for a 90% reduction. As of May 6, 2025, enrollment into cohorts 1, 2 and 3 had been completed and we reported interim data for a total of 48 patients. These data covered 32 patients receiving soquelitinib and 12 receiving placebo with 28-day follow-up, and four additional patients receiving soquelitinib with 15-day follow-up from cohort 3. These four patients had not yet completed the 28-day treatment course. The percent reduction in mean EASI scores at 28 days for the combined cohort 1 and 2 group was 54.6% for patients receiving soquelitinib and 30.6% for patients receiving placebo. In cohort 3, the 200 mg BID cohort, the percent reduction in mean EASI score at 28 days was 71.1% for patients receiving soquelitinib and 42.1% for patients receiving placebo. On January 20, 2026, we announced positive results from cohort 4 of our randomized, blinded, placebo-controlled Phase 1 clinical trial evaluating soquelitinib in patients with moderate to severe atopic dermatitis. Based on the encouraging results from cohorts 1-3, cohort 4 was prospectively redesigned to support and potentially extend the clinical results obtained in the initial cohorts. Cohort 4 was expanded to enroll 24 patients randomized 1:1 to receive soquelitinib 200 mg BID (the same dose as cohort 3) or placebo, and the treatment period was extended to 56 days from the 28-day treatment period used for cohorts 1-3. The cohort 4 data demonstrated favorable safety and efficacy results consistent with results from cohorts 1-3, including a deepening of responses in cohort 4 over the 8-week treatment period compared to the 4-week treatment period. The results also showed clinical activity in patients who had received prior systemic therapies, including patients resistant to therapies like dupilumab and JAK inhibitors. We believe the data to-date also support the novel proposed mechanism of action with ITK inhibition, which is designed to act upstream and regulate multiple T cell functional pathways. We believe the immune rebalancing shown thus far by soquelitinib shows its potential in a wide range of inflammatory and immune diseases. Based on these positive results, we have initiated a Phase 2 trial evaluating soquelitinib in patients with moderate to severe atopic dermatitis that have failed at least one prior topical or systemic therapy. As of January 15, 2026, enrollment in cohort 4 was completed and all soquelitinib treated patients (n=12) had completed the 56-day treatment course. Of the 12 enrolled placebo patients, 10 were evaluable at day 56, as two patients were non-compliant and missed the day 56 visit; these two patients completed additional follow up at later time points. Patients in cohort 4 had similar baseline characteristics compared to patients in cohort 3, with patients in these cohorts having more advanced disease with a higher mean baseline EASI score compared to patients in cohorts 1 and 2. The mean baseline EASI in cohort 4 was 25.7 for the patients treated with soquelitinib and 21.9 for patients that received placebo. Across all four cohorts (n=72), 35% of patients had received prior systemic therapies (n=25), including 50% of patients (n=12) in cohort 4. Overall, all four cohorts showed meaningful responses in the soquelitinib treatment groups compared to placebo for clinically significant endpoints of EASI 75 and IGA 0 or 1. At day 56, the mean percent reduction in EASI for patients receiving soquelitinib in cohort 4 (n=12) was 72%, compared to 40% for patients receiving placebo (n=10). The kinetics of response demonstrated continuous improvement from day 28 to day 56 with widening separation of the response curve compared to the placebo. Two placebo patients experienced disease flares requiring therapy during the 56-day treatment period compared to none in the soquelitinib group. Figure 1 below summarizes the efficacy results for cohorts 1 through 4 evaluating EASI 75, EASI 90 and IGA 0 or 1. Cohort 3 and 4 results appear similar, with cohort 4 exhibiting higher frequency of EASI 75 and 90. EASI 75, EASI 90 and IGA 0 or 1 for cohort 4 was achieved in 75%, 25% and 33% of patients receiving soquelitinib, respectively, compared to 20%, 0% and 0%, respectively, for the placebo group. ​ 25 Table of Contents Figure 1: Percent Patients Achieving Endpoints EASI 75, EASI 90 and IGA 0 or 1 at Day 28 (cohorts 1-3) or at Day 56 (cohort 4) of Treatment. ​ Figure 2 below shows the kinetics of response for cohort 4 patients receiving soquelitinib and placebo. Separation of the curves was seen at the first visit on day 15 and continuously increased out to day 56. At day 56, the difference in the curves is statistically significant, p=0.035. The disease control continued in the 30-day post treatment follow up period. ​ 26 Table of Contents Figure 2: Percent Reduction in Mean EASI for Cohort 4. Mean percent change in EASI over time is shown. Treatment beginning is designated “Baseline” and days post-baseline are shown. Screening to baseline data are shown and demonstrate relative disease stability. The study blinding remained in effect for the entire 86-day period. Numbers at the top of the graphs indicate numbers of patients evaluated at the various time points. As of January 15, 2026, not all patients had completed the 30-day post treatment follow up. ​ ​ Figure 3A and 3B below show the response curves for soquelitinib and placebo patients across all patients in cohorts 1-4 and in patients in cohorts 3-4 only, also segmented into sub-groups by those who had or had not received prior systemic therapies. Across all four cohorts, 25 patients (35% of all patients) received prior systemic therapies with dupilumab being the most common prior systemic therapy (n=11). Other prior systemic therapies included JAK inhibitors, corticosteroids and investigational agents. The response curves are nearly identical for soquelitinib treated patients, regardless of their history of prior systemic therapy. Placebo patients who had prior systemic therapy had a lesser reduction in EASI compared to placebo patients who had not received prior systemic therapy. These Phase 1 results show separation of the curves for patients receiving soquelitinib compared to placebo and demonstrate that soquelitinib was similarly active in both systemic treatment naïve or experienced patients. Also, prior systemic therapy experienced patients appeared to have worse disease. The two placebo patients who achieved EASI 75 had not received prior systemic therapy. None of the seven placebo patients who had received prior systemic therapy achieved EASI 75 or EASI 50; whereas, three of the five soquelitinib treated patients who received prior systemic therapy achieved EASI 75. ​ 27 Table of Contents Figure 3A, 3B: Percent Reduction in Mean EASI for Cohorts 1-4– Breakout of Patients with or without Prior Systemic Therapy . In Figure 3A, mean percent change in EASI over time is shown for all patients in Cohort 1-4 (left) and for those who received prior therapy (right). In Figure 3B, similar analysis is shown for patients in cohort 3 and 4; these patients received the 200 mg twice daily dose. In all charts, treatment beginning is designated “Baseline” and weeks post-baseline are shown. Placebo patients include cohorts 1-4. Soquelitinib cohorts 3 and 4 are combined (200 mg twice daily doses used in both of these cohorts). ​ ​ ​ Figure 4 below shows longer follow up from cohort 3 patients, who also received the 200 mg twice-daily dose. The data show maintenance or improvement in EASI out to 3 months beyond the treatment period and an increase of circulating Treg cells. ​ 28 Table of Contents Figure 4: Percent Reduction in Mean EASI for Cohort 3 and percent change in Treg cells for cohorts 1-3. ​ ​ Reduction in serum IL-4 cytokine was observed in cohorts 3 and 4, both during the treatment period and in the post treatment period, including a dose dependent response with cohort 4 patients showing the largest reductions in IL-4 out to day 86. Biomarker data from cohorts 1 through 3 shows a reduction in serum IL-5 cytokine for cohorts 1 through 3 compared to placebo, including a dose dependent response with cohort 3 patients showing the largest reductions in IL-5 compared to placebo. The reduction in serum IL-5 occurred as early as day 8 of therapy. Serum IL-17 and TARC levels also were lower. Circulating Th2 cells were measured (n=6 cohorts 1 and 2) by scRNA seq technology and demonstrated a reduction in these cells with treatment. As noted above, circulating Tregs cells increased in patients in cohort 3 and were associated with a prolonged treatment effect. These results are consistent with soquelitinib’s observed ability to block Th2 and Th17 cells and their secreted cytokines, such as IL-4, IL-5, IL-17 and the effects on T reg cells. This biomarker data suggest that soquelitinib induced an immune system rebalancing involving Th1, Th2, Th17 and Treg cells. ​ As of January 15, 2026, no new safety signals had been observed. Reported adverse events occurred in 41.7% of soquelitinib patients and 50% of placebo patients; all were Grade 1-2 and did not result in any dose modifications or interruptions. No severe or serious adverse events were reported. No significant lab abnormalities were seen. In March 2026, we initiated a Phase 2 clinical trial of soquelitinib for the treatment of atopic dermatitis. The trial is 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. Angel Pharmaceuticals, our partner in China, is enrolling a Phase 1b/2 clinical trial evaluating soquelitinib in patients with moderate-to-severe atopic dermatitis. This is a blinded, placebo-controlled trial that is planned to evaluate a 12-week treatment regimen in 48 patients utilizing soquelitinib doses of 100 mg twice per day, 200 mg once per day, 200 mg twice per day and 400 mg once per day. The patient eligibility and endpoints are similar to those used previously in our Phase 1 clinical trial. Depending on the results from the Phase 1b portion of the study, an additional 60-90 patients will be enrolled in the Phase 2 portion of the study. The trial is open at several leading dermatology centers in China who 29 Table of Contents have been involved in global registration trials. The study is being conducted in close collaboration with Corvus. Results from the initial cohorts are anticipated late this year. 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. The next-generation ITK inhibitor candidates are part of our ongoing business development efforts to maximize the potential of our ITK inhibitor programs and other programs. We have issued patents covering composition of matter and uses of our ITK inhibitors and hold exclusive worldwide rights (except for greater China) for all indications. Ciforadenant Adenosine A2A Receptor Antagonist. Our second product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine designed to disable a tumor’s ability to subvert attack by the immune system by blocking the binding of immunosuppressive adenosine in the tumor microenvironment to the A2A receptor. In 2018, we published preclinical findings in animal tumor models demonstrating that treatment with anti-CTLA4 antibody combined with ciforadenant provided synergistic anti-tumor activity based on a novel proposed mechanism of action. 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). The efficacy endpoints for the trial are deep response rate, defined as CR plus PRs of greater than 50% tumor volume reduction as well as progression free survival. The clinical trial is planned to enroll up to 60 patients. The protocol defined pre-specified statistical threshold for efficacy is a 50% increase above the 32% deep response rate seen with previous ipilimumab/nivolumab combination trials in RCC conducted by investigators at the Kidney Cancer Research Consortium. Interim results from this trial were reported at the European Society of Clinical Oncology meeting in October 2025. The deep response rate was 34%, demonstrating an improvement compared to historical data for the combination of ipilimumab and nivolumab alone, though not statistically significant at this point in time. Patients with stable or responding disease continue to be followed. No further trials are planned. Mupadolimab, B Cell Activating Anti-CD73 Antibody. Our third product candidate is mupadolimab, a humanized monoclonal antibody that is designed to react with a specific site on CD73. In both preclinical and in vivo studies, mupadolimab has demonstrated binding to various immune cells and the enhancement of immune responses by activating B cells. While we believe mupadolimab has the potential to be an important new therapeutic agent with a novel proposed mechanism of action to support its development 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 two lead product candidates 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 March 31, 2026 was $13.7 million, and net income for the three months ended March 31, 2025 was $15.2 million, which includes non-operating income of $25.1 million associated with a change in fair value of warrant liability. As of March 31, 2026, we had an accumulated deficit of $426.0 million. We expect our losses will increase as we continue our development of, seek regulatory approval for and, if approved, 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 March 31, 2026, 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, including a follow-on public offering of common stock which was completed on January 23, 2026 and resulted in aggregate net proceeds of approximately $189.4 million. On August 6, 2024, we entered into an Open Market Sale Agreement SM (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 30 Table of Contents up to $100.0 million, through an at-the-market equity offering program under which Jefferies will act as our sales agent. 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 In connection with the January 2026 follow-on public offering, we suspended the at-the-market offering with respect to the 2024 Sales Agreement and, on March 13, 2026, entered into an Amended and Restated Open Market Sale Agreement SM (the “Amended Sales Agreement”), with Jefferies, which amends and restates the 2024 Sales Agreement to increase the maximum aggregate offering price of shares of our common stock from $100.0 million to $200.0 million. During the three months ended March 31, 2026, we did not sell any shares of common stock under our at-the-market offering program. As of March 31, 2026, $200.0 million remained available for sale under the Amended Sales Agreement. Our three product candidates, soquelitinib, ciforadenant and mupadolimab, are in clinical development by us and/or our partner, Angel Pharmaceuticals. Except for Greater China, we own the world-wide rights to these product candidates. As a result of our ongoing development efforts, we anticipate needing to spend substantial resources for the foreseeable future. Consequently, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. Such financing could result in dilution to stockholders and may include the imposition of debt covenants and repayment obligations or other restrictions that may affect our business. If we raise additional capital through strategic collaboration agreements, we may have to relinquish valuable rights to our product candidates, including potential future revenue streams. 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 or the broad imposition of tariffs and other trade controls. As a result, we may face difficulties raising capital through sales of our common stock and any such sales may be on unfavorable terms. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so. As of March 31, 2026, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $236.7 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 condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and concluded that our existing cash, cash equivalents and marketable securities are sufficient to fund our operations for at least the next 12 months from issuance of the condensed 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.” We currently have no manufacturing capabilities and do not intend to establish any such capabilities. 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. 31 Table of Contents Significant Accounting Policies ​ Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2025 included in our Annual Report on Form 10-K filed with the SEC on March 12, 2026. There have been no material changes to our significant accounting policies during the three months ended March 31, 2026 from those discussed in our Annual Report on Form 10-K. Components of Results of Operations ​ Revenue ​ To date, we have not generated any revenues. We do not expect to receive any revenues from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our products or enter into revenue-generating collaboration agreements with third parties. Research and Development Expenses ​ Our research and development expenses consist primarily of costs incurred to conduct research and development of our product candidates. We record research and development expenses as incurred. Research and development expenses include: ​ ● employee-related expenses, including salaries, benefits, travel and non-cash stock-based compensation expense; ​ ● external research and development expenses incurred under arrangements with third parties, such as contract research organizations, preclinical testing organizations, contract manufacturing organizations, academic and non-profit institutions and consultants; ​ ● costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use; ​ ● license fees; and ​ ● other expenses, which include direct and allocated expenses for laboratory, facilities and other costs. ​ We plan to increase our research and development expenses substantially as we continue the development and potential commercialization of our product candidates. Our current planned research and development activities include the following: ● enrollment and completion of our ongoing Phase 3 potentially registrational clinical trial for soquelitinib in PTCL; ● 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; ● enrollment and completion of our Phase 2 clinical trial for soquelitinib in atopic dermatitis; ● a potential clinical trial for soquelitinib in asthma; ● a potential clinical trial for soquelitinib in hidradenitis suppurativa; 32 Table of Contents ● process development and manufacturing of drug supply of soquelitinib; and ● preclinical studies under our other programs in order to select development product candidates. In addition to our product candidates that are in clinical development, we believe it is important to continue substantial investment in potential new product candidates to build the value of our product candidate pipeline and our business. Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties related to timing and cost to completion. 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 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. We may never succeed in achieving regulatory approval for any of our product candidates. ​ General and Administrative Expenses ​ General and administrative expenses include personnel costs, expenses for outside professional services and allocated expenses. Personnel costs consist of salaries, benefits and stock-based compensation. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent expense related to our office and research and development facility. We expect that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and potential commercialization of one or more of our product candidates. Results of Operations ​ Comparison of the periods below as indicated (in thousands) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ 2025 ​ Change ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ $ 11,175 ​ $ 7,453 ​ $ 3,722 ​ General and administrative ​ ​ 3,702 ​ 2,469 ​ 1,233 ​ Total operating expenses ​ ​ 14,877 ​ 9,922 ​ 4,955 ​ Loss from operations ​ ​ (14,877) ​ (9,922) ​ (4,955) ​ Interest income and other expense, net ​ ​ 1,784 ​ 525 ​ 1,259 ​ Change in fair value of warrant liability ​ ​ — ​ 25,129 ​ (25,129) ​ Income (loss) before equity method investment ​ ​ ​ (13,093) ​ ​ 15,732 ​ ​ (28,825) ​ Loss from equity method investment ​ ​ (599) ​ (539) ​ (60) ​ Net income (loss) ​ ​ $ (13,692) ​ $ 15,193 ​ $ (28,885) ​ ​ 33 Table of Contents Research and Development Expenses ​ Research and development expenses for the three months ended March 31, 2026 and 2025 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 ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Change ​ Soquelitinib ​ $ 6,696 ​ $ 4,249 ​ $ 2,447 ​ Other programs ​ 51 ​ 50 ​ 1 ​ Unallocated employee and overhead costs ​ 4,428 ​ 3,154 ​ 1,274 ​ ​ ​ $ 11,175 ​ $ 7,453 ​ $ 3,722 ​ ​ For the three months ended March 31, 2026, the increase in soquelitinib costs of $2.4 million as compared to the three months ended March 31, 2025, primarily consisted of an increase of $3.0 million in clinical trial expenses and an increase of $0.7 million in other outside service costs, which were partially offset by a decrease of $1.3 million in drug manufacturing costs. For the three months ended March 31, 2026, the increase other programs costs were negligible. For the three months ended March 31, 2026, the increase in unallocated costs of $1.3 million as compared to the three months ended March 31, 2025, primarily consisted of an increase of $1.3 million in personnel and related costs and an increase of $0.1 million in other outside service costs, which were partially offset by a decrease of $0.1 million in facilities related costs. General and Administrative Expense For the three months ended March 31, 2026, the increase in general and administrative expenses of $1.2 million as compared to the three months ended March 31, 2025, primarily consisted of an increase of $1.0 million in personnel and related costs and an increase of $0.2 million in outside service costs. Interest Income and Other Expense, net For the three months ended March 31, 2026, the increase in interest income and other expense, net of $1.3 million as compared to the three months ended March 31, 2025, 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 March 31, 2026, the change in fair value of warrant liability was zero as all common warrants had been exercised as of June 30, 2025. For the three months ended March 31, 2025, the change in fair value of warrant liability of $25.1 million represents a decrease in the fair value of common warrants from December 31, 2024 to March 31, 2025, which was primarily due to a decrease in the market price of the Company’s common stock. Loss from equity method investment For the three months ended March 31, 2026, the increase in loss from equity method investment of $0.1 million as compared to the three months ended March 31, 2025, primarily consisted of an increase in Angel Pharmaceuticals’ loss for the three months ended March 31, 2026. 34 Table of Contents Liquidity and Capital Resources ​ As of March 31, 2026, we had cash, cash equivalents and marketable securities of $236.7 million, and an accumulated deficit of $426.0 million. Since our inception and through March 31, 2026, 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. 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 January 2026 follow-on offering, we suspended the at-the-market offering with respect to the 2024 Sales Agreement and, on March 13, 2026, entered into the Amended Sales Agreement, with Jefferies, which amends and restates the 2024 Sales Agreement to increase the maximum aggregate offering price of shares of our common stock from $100.0 million to $200.0 million. During the three months ended March 31, 2026, we did not sell any shares of common stock under our at-the-market offering program. As of March 31, 2026, $200.0 million remained available for sale under the Amended Sales Agreement. Funding Requirements Since our inception, we have incurred significant losses and negative cash flows from operations. We have an accumulated deficit of $426.0 million through March 31, 2026. 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 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 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 and potential future collaboration, license and development agreements. Adequate funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be required to significantly reduce our operating expenses and may have to significantly delay, scale back or discontinue the development of one or more of our current or future product candidates. If we raise additional funds by issuing equity or convertible debt securities, it could result in dilution to our existing stockholders and increased fixed payment obligations. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our 35 Table of Contents ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third parties may provide capital in the near term, but we may have to relinquish valuable rights to our product candidates or grant licenses on terms that are not favorable to us. Any of the foregoing could significantly harm our business, financial condition and prospects. 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 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. 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. Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our operating capital requirements. Our future capital requirements depend on many factors, including: ● the progress, timing, costs and results of clinical trials for soquelitinib, including the potentially registrational clinical trial for soquelitinib, and to a lesser extent, the timing, costs and results of the clinical trials for ciforadenant and mupadolimab; ​ ● the timing, progress, costs and results of preclinical and clinical development activities for our other product candidates; ​ ● the number and scope of preclinical and clinical programs we decide to pursue; ​ ● the costs involved in prosecuting, maintaining and enforcing patent and other intellectual property rights; ​ ● the cost and timing of regulatory approvals; ​ ● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company; and ​ ● other factors described in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.” ​ Summary of Statement of Cash Flows ​ The following table summarizes our cash flows for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ ​ March 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Net cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ (10,374) ​ $ (8,263) ​ Investing activities ​ (144,846) ​ 4,243 ​ Financing activities ​ 190,746 ​ 279 ​ Net increase (decrease) in cash and cash equivalents ​ $ 35,526 ​ $ (3,741) ​ ​ Cash Flows from Operating Activities ​ Cash used in operating activities during the three months ended March 31, 2026 was $10.4 million, which primarily consisted of a net loss of $13.7 million, adjusted by net non-cash transactions of $3.3 million, that primarily 36 Table of Contents consisted of $2.7 million of stock-based compensation expense and $0.6 million of loss from equity method investment; an increase of $1.8 million in prepaid and other current assets; an increase of $0.9 million in other assets; an increase of $2.2 million in accounts payable; and an increase of $0.5 million in accrued and other current liabilities. Cash used in operating activities during the three months ended March 31, 2025 was $8.3 million, which primarily consisted of a net income of $15.2 million, adjusted by net non-cash transactions of $23.6 million, that primarily consisted of $1.3 million of stock-based compensation expense, $0.5 million of loss from equity method investment and a decrease of $25.1 million in the fair value of warrant liability; an increase of $1.2 million in prepaid and other current assets; a decrease of $1.3 million in accounts payable; an increase of $0.1 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 Flows from Investing Activities ​ During the three months ended March 31, 2026. net cash flows used in investing activities was $144.8 million, which primarily consisted of purchases of marketable securities of $161.7 million and purchases of property and equipment of $0.1 million, which were partially offset by maturities of marketable securities of $17.0 million. During the three months ended March 31, 2025. net cash flows provided by investing activities was $4.2 million, which primarily consisted of maturities of marketable securities of $12.0 million, which were partially offset by purchases of marketable securities of $7.7 million. Cash Flows from Financing Activities ​ During the three months ended March 31, 2026, cash provided by financing activities was $190.7 million, which primarily consisted of net proceeds of $189.4 million from the January 2026 follow-on public offering and proceeds of $1.3 million from the exercise of stock options. During the three months ended March 31, 2025, cash provided by financing activities was $0.3 million, which primarily consisted of proceeds from the exercise of stock options. Contractual Obligations ​ There have been no material changes outside the ordinary course of our business to our contractual obligations during the three months ended March 31, 2026, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 12, 2026. Critical Accounting Estimates ​ There have been no changes to our critical accounting estimates during the three months ended March 31, 2026, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 12, 2026.