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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-12 · 177 added, 115 removed, 148 unchanged (66% of the section changed)

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

Our proprietary product candidates, if approved, may have broad applications in cancers, immune mediated diseases and inflammatory diseases.

Our lead product candidate, soquelitinib (formerly CPI-818), binds specifically to a protein, interleukin 2 inducible T cell kinase (ITK), involved in T cell proliferation, differentiation and function.

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

In cancers, soquelitinib has been demonstrated to affect T cell differentiation leading to enhanced function of T cells involved in tumor cell killing.

Since the immune cells affected by our product candidates play a role in many diseases, our strategy is to leverage our research and development capabilities by evaluating our drugs 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 optimum chances for success.

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

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

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

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

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.

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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.

Soquelitinib (CPI-818), ITK Inhibitor

Soquelitinib is an investigational selective, orally bioavailable, covalent inhibitor of ITK.

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T cell lymphomas are malignancies of T cells that proliferate and spread throughout the body.

These lymphomas often have tonic signaling through the T cell receptor pathway, which involves ITK.

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.

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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 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, a process known as Th1 skewing.

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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 clinical trial, that soquelitinib can lead to reprogramming of normal immune responses that also could be beneficial for the treatment of certain autoimmune, inflammatory and allergic diseases.

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

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.

Soquelitinib for treatment of T cell lymphomas

Soquelitinib is currently being studied both in cancer and in immune mediated disease.

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The study is no longer enrolling new patients, however, some of the patients remain on therapy and are continuing to receive follow-up monitoring.

The study employs an adaptive, expansion cohort design, with an initial phase that evaluated escalating doses (100, 200, 400 or 600 mg taken twice a day) in successive cohorts of patients, followed by a second phase that is designed to evaluate safety and tumor response to the recommended dose of soquelitinib in disease-specific patient cohorts.

The study has enrolled patients from the United States, Australia, China and South Korea with several types of advanced, refractory T cell lymphomas.

The study employs an adaptive, expansion cohort design, with an initial phase that evaluated escalating doses (100, 200, 400 or 600 mg taken twice a day) in successive cohorts of patients, followed by a second phase that was designed to evaluate safety and tumor response to the recommended dose of soquelitinib in disease-specific patient cohorts.

The study enrolled patients from the United States, Australia, China and South Korea with several types of advanced, refractory T cell lymphomas.

No dose limiting toxicities were observed in any of the dose levels.

As of July 15, 2024, and in a safety population of 75 patients, no hematologic, renal or hepatic treatment-related adverse events were observed and the most common grade 3 to 4 adverse event was pruritus, seen in four patients with lymphoma involving skin.

As of November 27, 2024, and in a safety population of 75 patients, no hematologic, renal or hepatic treatment-related adverse events were observed and the most common grade 3 to 4 adverse event was pruritus, seen in four patients with lymphoma involving skin.

The optimum dose was determined to be 200 mg twice per day based on anti-tumor efficacy and pharmacodynamic studies which revealed full occupancy of the ITK active site by the drug.

This dose was also consistent with dose-response effects seen in preclinical experiments both in vitro and in vivo.

Soquelitinib is designed to induce a host anti-tumor cell mediated immune response that requires normal functioning T cells and an adequately functioning immune system.

Therapies for T cell lymphomas, such as chemotherapy, are frequently immunosuppressive.

Data from the Phase 1/1b clinical trial suggest that the number of prior therapies and immunocompetence were associated with tumor response to soquelitinib and are important patient eligibility requirements, with an optimum range of ≥1 to ≤3 prior therapies.

Interim data from the Phase 1/1b clinical trial were presented at the American Society of Hematology Annual Meeting (“ASH”) in December 2023.

At that time, we also announced interim data from the trial as of November 21, 2023 on 21 evaluable patients receiving a dose of 200 mg twice per day and revealed an objective response rate (“ORR”) of 33.3% with 3 complete responses (“CRs”) and 4 partial responses (“PRs”).

As of July 16, 2024, 25 patients were enrolled in the trial at the optimal dose, including 23 evaluable patients.

For the 23 evaluable patients, objective responses (complete response, CR plus partial response, PR) were seen in nine patients (39%), including six CRs (26%) and three PRs.

At that time, we also announced interim data from the trial as of November 21, 2023 on 21 evaluable patients receiving a dose of 200 mg twice per day (“200 mg BID”) and revealed an objective response rate (“ORR”) of 33.3% with 3 complete responses (“CRs”) and 4 partial responses (“PRs”).

As of July 16, 2024, 25 patients (≤ 3 prior therapies) were enrolled in the trial at the 200 mg BID dose, including 23 evaluable patients.

For the 23 evaluable patients, objective responses (CR plus PR) were seen in nine patients (39%), including six CRs (26%) and three PRs.

The median progression free survival was 6.2 months.

As of October 1, 2024, four of the responding patients remain on therapy;

As of November 27, 2024, four of the responding patients remained on therapy;

3 with CRs and one with a PR.

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.

In March 2025, updated clinical results of the Phase 1/1b trial were presented at the T Cell Lymphoma Forum.

For the 23 evaluable patients:

● Objective responses (CRs plus PRs) were seen in nine patients (39%), including six CRs (26%) and three PRs.

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

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

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

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

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

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

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

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

The FDA provided feedback on our proposed registration trial, including the proposed endpoints.

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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.

The number of prior therapies in this range selects for immunocompetent patients.

Patients are being randomized 1:1 to soquelitinib 200 mg two-times a day or one of the standard of care chemotherapies.

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There are currently no FDA fully approved agents for the treatment of relapsed PTCL.

As recently announced, soquelitinib has received Fast Track designation for treatment of adult patients with relapsed or refractory peripheral T cell lymphoma after at least 2 lines of systemic therapy.

In addition to the clinical development of soquelitinib for the treatment of PTCL, we are also enrolling patients at multiple clinical sites in a randomized, placebo-controlled Phase 1 clinical trial of soquelitinib in patients with moderate to severe atopic dermatitis.

The trial is planned to enroll 64 patients that have failed at least one prior therapy across four different 28-day dosing regimens of soquelitinib compared to a placebo group.

The endpoints include safety and improvement in Eczema Area and Severity Index (“EASI”).

Patients and physicians are blinded to treatment assignment.

Initial results, as of July 31, 2024, from three evaluable patients in the first cohort of the trial that completed the 28-day dosing regimen and follow-up visit demonstrated signs of clinical activity and corresponding changes in serum cytokine levels that are consistent with soquelitinib’s mechanism of action.

Enrollment of patients in the first cohort of this trial has been completed.

These patients received a dose of 100 mg two-times a day, the lowest dose level planned for the trial.

We expect additional data from this clinical trial before year-end 2024.

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 the our ITK inhibitor programs and other programs.

In July 2024, soquelitinib received Fast Track designation for treatment of adult patients with relapsed or refractory peripheral T cell lymphoma after at least 2 lines of systemic therapy.

As reported at the International Conference of Malignant Lymphoma in June 2023, preclinical data suggest that ITK inhibition with soquelitinib has the potential to treat solid and hematological cancers based on its novel proposed mechanism of action.

Tumor immune responses were enhanced by the modulation of T cell differentiation resulting in increased T cell cytolytic capacity, increased migration of T cells into the tumor and reduced T cell exhaustion.

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

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

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.

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.

The FDA has granted Fast Track designation to soquelitinib for the treatment of adult patients with relapsed or refractory peripheral T cell lymphoma (“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 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 are sequentially enrolled and will examine 100 mg oral twice per day, 200 mg oral once per day and 200 mg oral twice per day and 400 mg oral oncer per day.

Patients are treated for 28 days and are then followed for an additional 30 days with no therapy.

The primary endpoints include safety and tolerability, and efficacy, measured by improvement in Eczema Area and Severity Index (“EASI”) 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.

Corvus and a data monitoring committee will be able to monitor the data from the trial as the trial progresses.

The doses in our Phase 1 atopic dermatitis clinical trial were selected based on the Company’s prior experience evaluating soquelitinib in T cell lymphoma patients.

The doses in the atopic dermatitis trial studied in cohorts 1 and 2 are lower than the 200 mg orally twice a day dosing regimen (same dose as cohort 3 of the atopic dermatitis trial), which is the level that has been shown to provide complete ITK occupancy and that is being evaluated in the Company’s ongoing registrational Phase 3 clinical trial of soquelitinib in peripheral T cell lymphoma.

On January 13, 2025, we reported top-line results from 16 patients in Cohort 1 (12 patients in the soquelitinib group receiving 100 mg orally twice per day vs.

four receiving placebo) and 10 patients in Cohort 2 (seven patients in the soquelitinib group receiving 200 mg orally once per day vs.

three receiving placebo) for which 28 days of treatment had been completed.

For those 19 patients in the soquelitinib group, 26% achieved IGA 0 or 1 and 37% achieved EASI 75;

and of the seven in the placebo group, none achieved IGA 0 or 1 or EASI 75.

On May 8, 2025, we reported enrollment into cohorts 1, 2 and 3 has been completed for a total of 48 patients.

The data covers 32 patients receiving soquelitinib and 12 placebos with 28-day follow-up, and four additional patients receiving soquelitinib with 15-day follow-up from cohort 3.

These four patients have not yet completed the 28-day treatment course.

Patients enrolled in cohort 3 had more severe disease with higher mean baseline EASI scores compared to cohorts 1 and 2.

A higher proportion also failed prior systemic therapies.

Across all cohorts, the mean EASI scores are 22.3 and 21.2 for active and placebo, respectively.

Placebo (n=12) and active (n=36) treatment groups were well-balanced with regard to baseline characteristics.

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 percent reduction in mean EASI score at 28 days was 71.1% for patients receiving soquelitinib and 42.1% for patients receiving placebo.

Figure 1 below shows the percent of patients that achieved IGA 0 or 1 or EASI 75 at day 28 of treatment.

The placebo patients from cohort 1 (n=4), cohort 2 (n=4) and cohort 3 (n=4) are combined, with no placebo patients achieving IGA 0 or 1 or EASI 75.

IGA 0 or 1 and EASI 75 have been determined by the U.S.

Food and Drug Administration (FDA) to be clinically meaningful and approvable endpoints and have been the endpoints used in clinical trials for other FDA approved treatments for atopic dermatitis.

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

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

No interruption of drug dosing was seen in any of the cohorts.

Grade 1/2 adverse events (treatment related and unrelated) were seen in 33.3% of patients receiving soquelitinib and 25% receiving placebo.

Only one treatment related adverse event of grade 1 nausea was reported with soquelitinib treatment.

To date, over 100 patients have been treated with soquelitinib on our lymphoma and atopic dermatitis clinical trials.

Some of the lymphoma patients received continuous therapy for up to two years.

As reported previously, relationships between reductions in certain cytokines with improvement in EASI scores were observed.

Reductions in serum cytokine levels were seen for IL-5, IL-9, IL-17, IL-31, IL-33, TSLP and TARC.

Differences between responding and non-responding patients were found, while no such relationships were seen in the placebo group.

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

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

Treatment for this group will be extended to 8 weeks with additional 30-day follow-up with no treatment.

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

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 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 endpoint for the trial is deep response rate, defined as CR plus PRs of greater than 50% tumor volume reduction.

The clinical trial is expected to enroll up to 60 patients and as of September 30, 2024, a total of 46 patients were enrolled in the trial.

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 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.

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

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

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

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.

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

We believe the breadth and status of our pipeline demonstrates our management team’s expertise in understanding and developing immunology focused assets as well as in identifying product candidates that can be in-licensed and further developed internally to treat many types of cancer.

We hold worldwide rights to all of our product candidates (other than in greater China).

Our diverse and versatile product candidates also have enabled us to take steps to address markets in foreign countries.

In October 2020, we announced the formation and launch of Angel Pharmaceuticals, a China-based biopharmaceutical company with a mission to bring innovative quality medicines to Chinese patients for treatment of serious diseases including cancer, autoimmune diseases and infectious diseases.

We formed Angel Pharmaceuticals as a wholly owned subsidiary and it launched with a post-money valuation of approximately $106.0 million, based on an approximate $41.0 million cash investment from a Chinese investor group that includes funds associated with Tigermed and Betta Pharmaceuticals, Hisun Pharmaceuticals and Zhejiang Puissance Capital.

Such cash is not available for our use.

Contemporaneously with the financing, Angel Pharmaceuticals licensed the rights to develop and commercialize our three clinical-stage candidates – soquelitinib, ciforadenant and mupadolimab – in greater China and obtained global rights to our BTK inhibitor preclinical programs.

Under the collaboration, we currently have a 49.7% equity interest in Angel Pharmaceuticals, excluding 7% of Angel’s equity reserved for issuance under the Employee Stock Ownership Plan (“ESOP”), and are entitled to designate three individuals on Angel’s five-person board of directors.

Angel Pharmaceuticals is continuing the development of mupadolimab in China.

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

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

Our net loss for the three and nine months ended September 30, 2024 was $40.2 million and $50.2 million, respectively.

As of September 30, 2024, we had an accumulated deficit of $384.9 million.

Our net income for the three months ended March 31, 2025 was $15.2 million, which includes $25.1 million in non-operating income from the change in fair value of warrant liability.

Our net loss for the three months ended March 31, 2024 was $5.7 million.

As of March 31, 2025, we had an accumulated deficit of $381.8 million.

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

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

Since our inception and through September 30, 2024, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our initial public offering (“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 in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

Since our inception and through March 31, 2025, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016, in which we raised net proceeds of $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

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

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

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

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

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

Except for Greater China, we own the world-wide rights to our product candidates.

As a result of our ongoing development efforts, we anticipate needing to spend substantial resources for the foreseeable future.

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

For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of factors such as the impacts of pandemics, such as COVID-19, and increases in inflation rates or interest rates.

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.

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

As of September 30, 2024, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $41.7 million.

On October 29, 2024, we received approximately $5.9 million in cash from the early exercise of common stock warrants.

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 2026.

In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least the next 12 months after 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.

As of March 31, 2025, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $44.2 million.

On May 7, 2025, we received approximately $31.3 million in cash from the early exercise of common stock warrants.

We believe that our cash, cash equivalents and marketable securities as of March 31, 2025 with the addition of approximately $31.3 million in cash received from the early exercise of common stock warrants on May 7, 2025, will be sufficient to fund our planned operations for a period of at least 12 months from the date these condensed consolidated financial statements are issued.

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

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

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

We currently have no manufacturing capabilities and do not intend to establish any such capabilities.

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Significant Accounting Policies

Our significant accounting policies are described in Note 2 to our condensed consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2024 from those discussed in our Form 10-K.

Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the SEC on March 24, 2025.

There have been no material changes to our significant accounting policies during the three months ended March 31, 2025 from those discussed in our Annual Report on Form 10-K.

Components of Results of Operations

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Our current planned research and development activities include the following:

● completion of our ongoing Phase 1/1b clinical trial of soquelitinib in PTCL;

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

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

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

● a potential clinical trial of soquelitinib in solid tumors;

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

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

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

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

● a potential clinical trial for soquelitinib in solid tumors

● a potential clinical trial for soquelitinib in asthma;

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

● 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, including our preclinical next-generation ITK inhibitors, to build the value of our product candidate pipeline and our business.

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

The risks and uncertainties associated with our research and development projects are discussed more fully in “Part II, Item 1A—Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval.

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

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

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Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Change in fair value of warrant liability

Sublease income - related party

Loss before equity method investment

Loss from equity method investment

Income (loss) before equity method investment

Income (loss) from equity method investment

Net income (loss)

Research and Development Expenses

Research and development expenses for the three and nine months ended September 30, 2024 and 2023 consisted of the following costs by program as well as unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Research and development expenses for the three months ended March 31, 2025 and 2024 consisted of the following costs by program as well as unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Unallocated employee and overhead costs

For the three months ended September 30, 2024, the increase in soquelitinib costs of $1.2 million as compared to the three months ended September 30, 2023, primarily consisted of an increase of $0.9 million in clinical trial expenses and an increase of $0.4 million in drug manufacturing costs, which were partially offset by a decrease of $0.1 million in other outside service costs.

For the nine months ended September 30, 2024, the increase in soquelitinib costs of $1.3 million as compared to the nine months ended September 30, 2023, primarily consisted of an increase of $1.3 million in clinical trial expenses and an increase of $0.6 million in other outside service costs, which were partially offset by a decrease of $0.6 million in drug manufacturing costs.

For the three months ended September 30, 2024, the decrease in ciforadenant costs of $0.1 million as compared to the three months ended September 30, 2023, primarily consisted of a decrease in other outside service costs.

For the nine months ended September 30, 2024, the decrease in ciforadenant costs of $0.2 million as compared to the nine months ended September 30, 2023, primarily consisted of a decrease of $0.3 million in other outside service costs, which was partially offset by an increase of $0.1 million in clinical trial expenses.

For the three months ended September 30, 2024, the decrease in mupadolimab costs of $0.2 million as compared to the three months ended September 30, 2023, primarily consisted of a decrease of $0.1 million in manufacturing costs and a decrease of $0.1 million in clinical trial expenses.

For the nine months ended September 30, 2024, the decrease in mupadolimab costs of $0.6 million as compared to the months ended September 30, 2023, primarily consisted of a decrease of $0.4 million in clinical trial expenses and a decrease of $0.3 million in manufacturing costs, which were partially offset by an increase of $0.1 million in other outside service costs.

For the three months ended September 30, 2024, the increase in unallocated costs of $0.4 million as compared to the three months ended September 30, 2023, primarily consisted of an increase in personnel and related costs.

For the nine months ended September 30, 2024, the increase in unallocated costs of $0.4 million as compared to the three months ended September 30, 2023, primarily consisted of an increase of $0.5 million in personnel and related costs, which were partially offset by a decrease of $0.1 million in outside service costs.

For the three months ended March 31, 2025, the increase in soquelitinib costs of $2.9 million as compared to the three months ended March 31, 2024, primarily consisted of an increase of $1.6 million in drug manufacturing costs and an increase of $1.4 million in clinical trial expenses, which were partially offset by a decrease of $0.1 million in other outside service costs.

For the three months ended March 31, 2025, the decrease in ciforadenant costs of $0.1 million as compared to the three months ended March 31, 2024, primarily consisted of a decrease in clinical trial expenses.

For the three months ended March 31, 2025, the decrease in mupadolimab costs of $0.1 million as compared to the three months ended March 31, 2024, primarily consisted of a decrease in clinical trial expenses.

For the three months ended March 31, 2025, the increase in unallocated costs of $0.7 million as compared to the three months ended March 31, 2024, primarily consisted of an increase of $0.6 million in personnel and related costs and an increase of $0.1 million in other outside service costs.

General and Administrative Expense

For the three months ended September 30, 2024, the increase in general and administrative expenses of $0.4 million as compared to the three months ended September 30, 2023, primarily consisted of an increase of $0.2 million in personnel and related costs and an increase of $0.2 million in outside service costs.

For the nine months ended September 30, 2024, the increase in general and administrative expenses of $0.8 million as compared to the nine months ended September 30, 2023, primarily consisted of an increase of $0.6 million in personnel and related costs and an increase of $0.2 million in outside service costs.

For the three months ended March 31, 2025, the increase in general and administrative expenses of $0.3 million as compared to the three months ended March 31, 2024, primarily consisted of an increase in personnel and related costs.

Interest Income and Other Expense, net

For the three and nine months ended September 30, 2024, the increase in interest income and other expense, net of $0.1 million primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

For the three months ended March 31, 2025, the increase in interest income and other expense, net of $0.2 million 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 September 30, 2024, the change in fair value of warrant liability of $32.8 million represents an increase in the fair value of common warrants from June 30, 2024 to September 30, 2024, which was primarily due to an increase in the market price of the Company’s common stock.

For the nine months ended September 30, 2024, the change in fair value of warrant liability of $31.0 million represents an increase in the fair value of common warrants from the issuance date of May 6, 2024 to September 30, 2024, which was primarily due to an increase in the market price of the Company’s common stock.

Sublease Income – Related Party

For the three months ended September 30, 2024 and 2023, there was no sublease income.

For the nine months ended September 30, 2024, the decrease in sublease income of $0.1 million as compared to the nine months ended September 30, 2023, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals in January 2023

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.

Income (loss) from equity method investment

For the three months ended September 30, 2024, the decrease in loss from equity method investment of $0.2 million as compared to the three months ended September 30, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended September 30, 2024.

For the nine months ended September 30, 2024, the decrease in loss from equity method investment of $2.9 million as compared to the nine months ended September 30, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the nine months ended September 30, 2024.

For the three months ended March 31, 2025, the increase in loss from equity method investment of $0.8 million as compared to the three months ended March 31, 2024, primarily consisted of an increase in Angel Pharmaceuticals’ loss for the three months ended March 31, 2025.

Liquidity and Capital Resources

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $41.7 million, and an accumulated deficit of $384.9 million, compared to cash and cash equivalents and marketable securities of $27.1 million and an accumulated deficit of $334.7 million as of December 31, 2023.

Since our inception and through September 30, 2024, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net

proceeds of approximately $64.9 million, a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of approximately $30.3 million.

During the nine months ended September 30, 2024, we did not sell any shares of common stock under our at-the-market offering program.

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

As of March 31, 2025, we had cash, cash equivalents and marketable securities of $44.2 million, and an accumulated deficit of $381.8 million.

Since our inception and through March 31, 2025, we have funded our operations primarily through the sale and issuance of preferred and common stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million, a follow on offering of our common stock in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of approximately $30.3 million.

During the three months ended March 31, 2025, we did not sell any shares of common stock under our at-the-market offering program.

As of March 31, 2025, $100 million remained available for sale under the 2024 Sales Agreement.

Funding Requirements

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

We have an accumulated deficit of $384.9 million through September 30, 2024.

We have an accumulated deficit of $381.8 million through March 31, 2025.

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

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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 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.

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 and the proceeds from the recent early exercise of common stock warrants will be sufficient to enable us to advance our programs into 2026.

However, our forecast of the period of time through which our financial resources will be adequate to support our

operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially based on a number of factors.

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

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially based on a number of factors.

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

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Our future capital requirements depend on many factors, including:

● the progress, timing, costs and results of clinical trials for soquelitinib, including the ongoing Phase 3 registrational clinical trial for soquelitinib for the treatment of PTCL, and to a lesser extent, the timing, costs and results of the clinical trials for ciforadenant and mupadolimab;

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

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● 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;

● other factors described in the section of this report entitled “Risk Factors.”

● 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):

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by (used in):

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Financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash Flows from Operating Activities

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

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

Cash used in operating activities during the nine months ended September 30, 2023 was $18.8 million, which primarily consisted of a net loss of $20.4 million, adjusted by non-cash charges of $4.8 million, that primarily consisted of $1.6 million of stock compensation expense and $3.9 million of loss from equity method investment;

an increase of $0.1 million in prepaid and other current assets, a decrease of $0.6 million in accounts payable, a decrease of $3.0

million in accrued and other current liabilities, a decrease of $0.6 million in accounts receivable – related party and a decrease of $0.1 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash used in operating activities during the 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 used in operating activities during the three months ended March 31, 2024 was $5.2 million, which primarily consisted of a net loss of $5.7 million, adjusted by non-cash charges of $0.4 million, that primarily consisted of $0.7 million of stock-based compensation expense and $0.2 million of income from equity method investment;

a decrease of $0.1 million in prepaid and other current assets;

an increase of $0.1 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 nine months ended September 30, 2024, net cash flows used in investing activities was $21.4 million, which primarily consisted of purchases of marketable securities of $49.8 million, which were partially offset by maturities of marketable securities of $28.4 million.

During the nine months ended September 30, 2023, cash provided by investing activities was $17.9 million, which primarily consisted of proceeds from maturities of marketable securities of $53.5 million, which were partially offset by purchases of marketable securities of $35.6 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.

During the three months ended March 31, 2024, net cash flows from investing activities was negligible and primarily consisted of proceeds from maturities of marketable securities of $4.6 million, which were offset by purchases of marketable securities of $4.6 million.

Cash Flows from Financing Activities

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

During the nine months ended September 30, 2023, the cash provided by financing activities of $7.9 million primarily consisted of net proceeds from the issuance of common stock through our at-the-market offering program.

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 .

During the three months ended March 31, 2024, there were no cash flows from financing activities.

Contractual Obligations

There have been no material changes outside the ordinary course of our business to our contractual obligations during the nine months ended September 30, 2024, as compared to those disclosed in our Annual Report on Form 10-K.

There have been no material changes outside the ordinary course of our business to our contractual obligations during the three months ended March 31, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates during the nine months ended September 30, 2024, as compared to those disclosed in our Annual Report on Form 10-K

There have been no changes to our critical accounting estimates during the three months ended March 31, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis