What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 95 added, 90 removed, 235 unchanged (44% of the section changed)

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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.

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We believe this strategy has enabled us to move rapidly from preclinical to clinical trials in diverse disease areas, each with large unmet needs.

Soquelitinib entered a registrational, Phase 3 clinical trial for relapsed T cell lymphomas and is also being evaluated in a randomized, placebo controlled Phase 1 trial in patients with atopic dermatitis.

Soquelitinib entered a registrational, Phase 3 clinical trial for relapsed/refractory T cell lymphomas and is also being evaluated in a randomized, placebo controlled Phase 1 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.

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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.

Mice with genetic knock-out of ITK also demonstrate a reduction in both Th2 and Th17 cells, which are the cells that produce the cytokines that are often responsible for autoimmunity and allergy such as interleukin (Il) Il-4, Il-5, Il-13, Il-17, Il-31 and many others.

We have designed and developed soquelitinib to covalently target the cysteine amino acid residue at position 442 in the ITK protein.

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

A Phase 1/1b clinical trial is being 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.

A Phase 1/1b clinical trial is being conducted in patients with relapsed/refractory 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 no longer enrolling new patients, however, some of the patients remain on therapy and are continuing to receive follow-up monitoring.

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

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.

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3 with CRs and one with a PR.

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

In March 2025, updated interim 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

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

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

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

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 peripheral T cell lymphoma (“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.

We initiated this clinical trial in late 2024.

The clinical trial is designed to enroll a total of 150 patients with relapsed/refractory 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.

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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.

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.

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

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.

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.

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

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

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

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The novel mechanism is a result of ITK inhibition and blockade of formation of Th2 and Th17 cells.

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

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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.

The cohorts are sequentially enrolled and were planned to examine 100 mg oral twice per day, 200 mg oral once per day and 200 mg oral twice per day and 400 mg oral once per day.

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

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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.

On May 8, 2025, we reported interim data from the Phase 1 clinical trial at the Society of Investigative Dermatology annual meeting.

On June 4, 2025, we reported updated results as of a cutoff date of May 28, 2025, from cohorts 1,2 and 3 for a total of 48 patients and all patients (36 receiving soquelitinib and 12 placebos) had completed the 28-day treatment course.

Patients in cohort 3 had more advanced disease with a higher mean baseline EASI score compared to patients in cohorts 1 and 2.

At 28 days, the mean reduction in EASI for cohort 3 (n=12) was 64.8%, compared to 54.6% for cohort 1 and 2 combined (n=24) and 34.4% for placebo (n=12).

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

Mean percent change in EASI score over time is shown.

Treatment beginning is designated “Baseline” and days post-baseline are shown.

Screening to baseline data is shown and demonstrates relative disease stability.

The study blinding remains in effect for the entire 58-day period.

Numbers at the top of the graphs indicate numbers of patients evaluated at the various time points.

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

The data is displayed below with cohorts combined.

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

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.

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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.

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

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

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

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

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

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

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

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

The Company amended the clinical trial protocol to replace cohort 4 (400 mg once per day) with 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.

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

Treatment for this group is extended to 8 weeks with

additional 30-day follow-up with no treatment.

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

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

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

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.

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

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 determined the clinical trial has met the interim threshold for efficacy and therefore enrollment continued.

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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 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.

Angel Pharmaceuticals is continuing the development of mupadolimab in China.

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

Our net 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.

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

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

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

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 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.

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

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

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

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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 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.

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

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

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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.

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, debt financings and 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.

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

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.

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

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

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

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

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

There have been no material changes to our significant accounting policies during the six months ended June 30, 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 for soquelitinib in relapsed T cell lymphomas;

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

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

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● 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;

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

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

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

successful development of our product candidates is uncertain.

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

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Three Months Ended

Six Months Ended

Operating expenses:

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Income (loss) before equity method investment

Income (loss) from equity method investment

Loss from equity method investment

Net income (loss)

Research and Development Expenses

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):

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

Three Months Ended

Six Months Ended

Unallocated employee and overhead 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.

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

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

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

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

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

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

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

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

General and Administrative Expense

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.

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

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

Interest Income and Other Expense, net

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.

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

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

Change in fair value of warrant liabilities

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.

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

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

Income (loss) from equity method investment

For the three months ended 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.

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

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

Liquidity and Capital Resources

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.

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

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

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

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

Funding Requirements

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

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

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

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

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

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

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

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

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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.

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

Three Months Ended

Six Months Ended

Net cash provided by (used in):

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Cash Flows from Operating Activities

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;

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

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

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an increase of $1.3 million in accrued and other current liabilities;

and a decrease of $0.1 million in operating lease liability net of operating lease right-of-use assets amortization.

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

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

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

Cash Flows from Investing Activities

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.

During the six months ended June 30, 2025.

net cash flows used in investing activities was $16.1 million, which primarily consisted of purchases of marketable securities of $47.2 million and purchases of property and equipment of $0.2 million, which were partially offset by maturities of marketable securities of $31.3 million.

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

Cash Flows from Financing Activities

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.

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

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

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, 2025, as compared to those disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.

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

Critical Accounting Estimates

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.

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

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