Contineum Therapeutics, Inc. 10-Q

Item 1. Financial Statements . CONTINEUM THERAPEUTICS, INC. CONDENSED BALANCE SHEETS (unaudited) (in thousands, except share and par value data) June 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 20,784 $ 21,943 Marketable securities 154,700 182,817 Prepaid expenses and other current assets 1,355 1,628 Total current assets 176,839 206,388 Property and equipment, net 856 989 Other long-term assets 186 3 Operating lease right-of-use assets 5,007 5,467 Total assets $ 182,888 $ 212,847 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,001 $ 1,811 Accrued expenses 3,747 6,711 Current portion of operating lease liabilities 1,466 1,452 Total current liabilities 7,214 9,974 Operating lease liabilities, net of current portion 4,284 4,807 Total liabilities 11,498 14,781 Commitments and contingencies (Note 8) Stockholders' equity: Class A common stock, $ 0.001 par value; authorized shares— 200,000,000 at June 30, 2025 and December 31, 2024; issued and outstanding shares— 19,190,723 and 19,125,377 at June 30, 2025 and December 31, 2024, respectively. 19 19 Class B common stock, $ 0.001 par value; authorized shares— 20,000,000 at June 30, 2025 and December 31, 2024; issued and outstanding shares— 6,729,172 at June 30, 2025 and December 31, 2024. 7 7 Preferred stock, $ 0.001 par value; authorized shares— 10,000,000 at June 30, 2025 and December 31, 2024; no shares issued or outstanding at June 30, 2025 and December 31, 2024. — — Additional paid-in-capital 320,649 315,371 Accumulated deficit ( 149,432 ) ( 117,402 ) Accumulated other comprehensive income 147 71 Total stockholders' equity 171,390 198,066 Total liabilities and stockholders' equity $ 182,888 $ 212,847 The accompanying notes are an integral part of these unaudited condensed financial statements. 1 Table of Contents CONTINEUM THERAPEUTICS, INC. CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) (in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Operating expenses: Research and development $ 14,063 $ 7,901 $ 27,775 $ 15,679 General and administrative 3,839 3,043 8,237 5,195 Total operating expenses 17,902 10,944 36,012 20,874 Loss from operations ( 17,902 ) ( 10,944 ) ( 36,012 ) ( 20,874 ) Other income (expense): Interest income 2,029 2,001 4,279 3,637 Change in fair value of warrant liability — 11 — ( 107 ) Other expense, net ( 167 ) ( 77 ) ( 297 ) ( 82 ) Total other income, net 1,862 1,935 3,982 3,448 Net loss $ ( 16,040 ) $ ( 9,009 ) $ ( 32,030 ) $ ( 17,426 ) Other comprehensive income (loss): Unrealized gain (loss) on marketable securities ( 23 ) ( 69 ) 76 ( 235 ) Comprehensive loss $ ( 16,063 ) $ ( 9,078 ) $ ( 31,954 ) $ ( 17,661 ) Net loss per share, basic and diluted (a) $ ( 0.62 ) $ ( 0.39 ) $ ( 1.24 ) $ ( 1.35 ) Weighted-average shares of common stock outstanding, basic and diluted 25,895,996 23,355,588 25,882,540 12,862,328 _____________ (a) Basic and diluted per share amounts are the same for Class A and Class B shares. The accompanying notes are an integral part of these unaudited condensed financial statements. 2 Table of Contents CONTINEUM THERAPEUTICS, INC. CONDENSED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS ’ EQUITY (DEFICIT) (unaudited) (in thousands, except share data) Class A and Class B Additional Accumulated Other Total Common Stock Paid-in Comprehensive Accumulated Stockholders' Shares Amount Capital Income Deficit Equity Balance at December 31, 2024 25,854,549 $ 26 $ 315,371 $ 71 $ ( 117,402 ) $ 198,066 Exercise of stock options 17,000 — 24 — — 24 Stock-based compensation — — 2,569 — — 2,569 Net loss — — — — ( 15,990 ) ( 15,990 ) Unrealized gain on marketable securities — — — 99 — 99 Balance at March 31, 2025 25,871,549 $ 26 $ 317,964 $ 170 $ ( 133,392 ) $ 184,768 Shares purchased through employee stock purchase plan 48,346 — 267 — — 267 Stock-based compensation — — 2,418 — — 2,418 Net loss — — — — ( 16,040 ) ( 16,040 ) Unrealized loss on marketable securities — — — ( 23 ) — ( 23 ) Balance at June 30, 2025 25,919,895 $ 26 $ 320,649 $ 147 $ ( 149,432 ) $ 171,390 Convertible Class A and Class B Additional Accumulated Other Total Preferred Stock Common Stock Paid-in Comprehensive Accumulated Stockholders' Shares Amount Shares Amount Capital Income (Loss) Deficit Equity (Deficit) Balance at December 31, 2023 15,906,236 $ 192,620 2,349,554 $ 2 $ 7,098 $ 108 $ ( 75,144 ) $ ( 67,936 ) Exercise of stock options — — 34,872 — 122 — — 122 Stock-based compensation — — — — 768 — — 768 Net loss — — — — — — ( 8,417 ) ( 8,417 ) Unrealized loss on marketable securities — — — — — ( 166 ) — ( 166 ) Balance at March 31, 2024 15,906,236 $ 192,620 2,384,426 $ 2 $ 7,988 $ ( 58 ) $ ( 83,561 ) $ ( 75,629 ) Issuance of common stock in connection with initial public offering, net of issuance costs of $ 10,912 — — 7,423,682 7 107,860 — — 107,867 Conversion of convertible preferred stock to common stock upon initial public offering ( 15,906,236 ) ( 192,620 ) 15,906,236 17 192,603 — — 192,620 Reclassification of warrant from liability to equity — — — — 216 — — 216 Exercise of stock options — — 8,932 — 13 — — 13 Stock-based compensation — — — — 1,494 — — 1,494 Net loss — — — — — — ( 9,009 ) ( 9,009 ) Unrealized loss on marketable securities — — — — — ( 69 ) — ( 69 ) Balance at June 30, 2024 — $ — 25,723,276 $ 26 $ 310,174 $ ( 127 ) $ ( 92,570 ) $ 217,503 The accompanying notes are an integral part of these unaudited condensed financial statements. 3 Table of Contents CONTINEUM THERAPEUTICS, INC. CONDENSED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Six Months Ended June 30, 2025 2024 Operating activities Net loss $ ( 32,030 ) $ ( 17,426 ) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 157 121 Non-cash operating lease expense 460 488 Stock-based compensation 4,987 2,262 Accretion of premiums/discounts on marketable securities, net ( 692 ) ( 2,092 ) Change in fair value of warrant liability — 107 Loss on disposal of property and equipment 67 — Gain on marketable securities ( 6 ) — Changes in operating assets and liabilities Prepaid expenses and other current assets 273 846 Other long-term assets ( 6 ) 936 Accounts payable 190 100 Accrued expenses ( 2,964 ) ( 1,841 ) Operating lease liabilities ( 509 ) 25 Net cash used in operating activities ( 30,073 ) ( 16,474 ) Investing activities Purchase of property and equipment ( 91 ) ( 266 ) Purchases of marketable securities ( 59,128 ) ( 99,649 ) Sales and maturities of marketable securities 88,018 69,747 Net cash provided by (used in) investing activities 28,799 ( 30,168 ) Financing activities Payments of deferred offering costs ( 176 ) — Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs — 108,211 Proceeds from exercise of stock options 24 135 Proceeds from employee stock purchase plan 267 — Net cash provided by financing activities 115 108,346 Net increase (decrease) in cash and cash equivalents ( 1,159 ) 61,704 Cash and cash equivalents at beginning of period 21,943 15,526 Cash and cash equivalents at end of period $ 20,784 $ 77,230 Supplemental disclosure of noncash investing and financing activities Conversion of convertible preferred stock to common stock upon initial public offering $ — $ 192,620 Reclassification of warrant from liability to equity $ — $ 216 Reclassification of deferred offering costs paid in prior year to equity $ — $ 343 The accompanying notes are an integral part of these unaudited condensed financial statements. 4 Table of Contents CONTINEUM THERAPEUTICS, INC. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation Organization and Nature of Operations Contineum Therapeutics, Inc. (the “Company”), is a clinical-stage biopharmaceutical company pioneering differentiated therapies for the treatment of neuroscience, inflammation and immunology (“NI&I”) indications with significant unmet need. The Company was incorporated in the state of Delaware in 2009, and in November 2023 changed its name from Pipeline Therapeutics, Inc. to Contineum Therapeutics, Inc. Reverse Stock Split On April 1, 2024, the Company filed an amendment to its fourth amended and restated certificate of incorporation as amended and effected a 1 -for- 5.5972 reverse stock split of its capital stock. All share and per-share amounts presented in the financial statements and related notes have been retroactively adjusted to reflect the reverse stock split as of the beginning of the first period presented. Initial Public Offering On April 9, 2024, the Company closed its initial public offering (the “IPO”), pursuant to which it issued and sold an aggregate of 6,875,000 shares of its common stock at a public offering price of $ 16.00 per share and on April 19, 2024, the Company issued and sold 548,682 additional shares of its common stock to the underwriters of the IPO pursuant to the partial exercise of their option to purchase additional shares, resulting in net proceeds of approximately $ 107.9 million, after deducting underwriting discounts, commissions and other offering expenses. Upon the closing of the IPO, the Company’s outstanding convertible preferred stock automatically converted into Class A common stock or Class B common stock, as applicable. Converted redeemable convertible preferred stock outstanding as of the date of the IPO consisted of 15,906,236 shares that were outstanding immediately prior to the closing of the IPO. Following the closing of the IPO, no shares of redeemable convertible preferred stock were authorized or outstanding. In connection with the closing of the IPO, on April 9, 2024, the Company’s certificate of incorporation was amended and restated to (i) authorize 220,000,000 shares of common stock of which 200,000,000 are designated as Class A common stock and 20,000,000 of which are designated as Class B common stock; (ii) eliminate all references to the previously existing series of preferred stock; and (iii) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Company’s board of directors in one or more series. Liquidity and Capital Resources Since its inception, the Company has devoted substantially all its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital to support and expand such activities and providing general and administrative support for these operations. The Company incurred a net loss of $ 16.0 million and $ 32.0 million for the three and six months ended June 30, 2025 , respectively. The Company had an accumulated deficit of $ 149.4 million as of June 30, 2025 . From its inception through June 30, 2025 , the Company has financed its operations primarily through issuance of convertible promissory notes, convertible preferred stock financings, a term loan, a global license and development agreement (the “J&J License Agreement”) the Company entered in February 2023 with Janssen Pharmaceutica NV, a Johnson & Johnson company, and net proceeds of approximately $ 107.9 million received in April 2024 from the IPO. As of June 30, 2025 , the Company had cash, cash equivalents and marketable securities of $ 175.5 million. Management believes the Company's existing cash, cash equivalents and marketable securities will be sufficient to support its operations for at least 12 months from the issuance date of these unaudited condensed financial statements. As the Company continues to pursue its business plan, it expects to finance its operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may need to delay, reduce or eliminate its product development or future commercialization efforts, which could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Further, if the Company raises funds through licensing or other similar arrangements with third parties, it may be required to relinquish valuable rights to its technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to it and/or may reduce the value of its common stock. Unaudited Interim Condensed Financial Statements The condensed balance sheet as of June 30, 2025 , condensed statements of operations and comprehensive loss and condensed statements of convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2025 and 2024, and condensed statements of cash flows for the six months ended June 30, 2025 and 2024, and related notes to condensed financial statements are unaudited. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the periods presented. The condensed results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. These interim unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10 -K, filed with the Securities and Exchange Commission (“SEC”) on March 6, 2025. 5 Table of Contents 2. Summary of Significant Accounting Policies During the six months ended June 30, 2025 , there were no significant changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10 -K for the year ended December 31, 2024, filed with the SEC on March 6, 2025. Basis of Presentation The Company has prepared the accompanying condensed financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The financial statements are presented in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Accounting estimates and management judgments reflected in the financial statements include: the accrual of research and development expenses; the incremental borrowing rate used to recognize the right-of-use assets and lease liabilities, the fair value of common stock and convertible preferred stock; and stock-based compensation. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ). This standard requires a public entity to disclose significant segment expenses and other segment items on an interim and annual basis. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker. ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company adopted ASU 2023 - 07 for the fiscal year ended December 31, 2024 and interim financial statements thereafter, on a retrospective basis for all prior periods presented in the financial statements. The adoption of ASU 2023 - 07 did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact on the Company’s financial position or results of operations. See Note 10 - Segment Reporting for further information. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures (“ASU 2023 - 09” ). This standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023 - 09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements. In November 2024, the FASB issued ASU No. 2024 - 03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses (“ASU 2024 - 03” ). This standard requires a public entity to disaggregate certain income statement expenses. ASU 2024 - 03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements. 3. Marketable Securities The Company invests its excess cash in marketable securities, including debt securities, commercial paper, asset-backed securities, yankee debt, certificate of deposit, and U.S. Government agency securities. The following table summarizes the amortized cost and fair value of the Company’s marketable securities by major investment category (in thousands): June 30, 2025 Unrealized Maturity in Years Amortized Cost Gains Losses Fair Value U.S. Government agency securities 3 years or less $ 55,740 $ 91 $ ( 27 ) $ 55,804 Certificate of deposit Less than 1 6,199 2 ( 1 ) 6,200 Corporate debt securities 2 years or less 67,326 57 ( 13 ) 67,370 Commercial paper Less than 1 10,609 4 ( 1 ) 10,612 Yankee debt Less than 1 2,336 1 ( 1 ) 2,336 Asset-backed securities 3 years or less 12,343 35 — 12,378 Total $ 154,553 $ 190 $ ( 43 ) $ 154,700 December 31, 2024 Unrealized Maturity in Years Amortized Cost Gains Losses Fair Value U.S. Government agency securities 3 years or less $ 57,232 $ 57 $ ( 134 ) $ 57,155 Certificate of deposit Less than 1 8,519 6 ( 1 ) 8,524 Corporate debt securities 2 years or less 80,751 110 ( 39 ) 80,822 Commercial paper Less than 1 22,265 11 ( 1 ) 22,275 Yankee debt Less than 1 2,145 1 — 2,146 Asset-backed securities 2 years or less 11,834 61 — 11,895 Total $ 182,746 $ 246 $ ( 175 ) $ 182,817 The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, current and expected future economic conditions. The Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. As of June 30, 2025 and December 31, 2024, the Company did not record an allowance for credit loss related to its investment portfolio. As of June 30, 2025 , 62 out of 237 of our available-for-sale debt securities were in an aggregate gross unrealized loss position. As of December 31, 2024, 86 out of 252 of our available-for-sale debt securities were in an aggregate gross unrealized loss position. As of June 30, 2025 and December 31, 2024, all of our available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded had continuous unrealized loss positions of less than 12 months. The following tables summarize our available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type (in thousands): June 30, 2025 Fair Value Unrealized Losses U.S. Government agency securities $ 18,818 $ ( 27 ) Certificate of deposit 3,806 ( 1 ) Corporate debt securities 25,129 ( 13 ) Commercial paper 4,590 ( 1 ) Yankee debt 1,516 ( 1 ) Total $ 53,859 $ ( 43 ) December 31, 2024 Fair Value Unrealized Losses U.S. Government agency securities $ 30,155 $ ( 134 ) Certificate of deposit 3,722 ( 1 ) Corporate debt securities 22,528 ( 39 ) Commercial paper 4,556 ( 1 ) Total $ 60,961 $ ( 175 ) 6 Table of Contents 4. Fair Value Measurements The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three -tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 —Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 —Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 —Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). Assets and liabilities measured at fair value on a recurring basis are as follows (in thousands): Fair Value Measurements Using Quoted Prices in Significant Other Significant Active Markets Observable Unobservable for Identical Inputs Inputs Total Assets (Level 1) (Level 2) (Level 3) As of June 30, 2025: Assets: Cash equivalents $ 19,848 $ 19,848 $ — $ — U.S. Government agency securities 55,804 55,804 — — Certificates of deposits 6,200 — 6,200 — Corporate debt securities 67,370 — 67,370 — Commercial paper 10,612 — 10,612 — Yankee debt 2,336 — 2,336 — Asset-backed securities 12,378 — 12,378 — Total financial assets $ 174,548 $ 75,652 $ 98,896 $ — As of December 31, 2024: Cash equivalents $ 21,042 $ 21,042 $ — $ — U.S. Government agency securities 57,155 57,155 — — Certificates of deposits 8,524 — 8,524 — Corporate debt securities 80,822 — 80,822 — Commercial paper 22,275 — 22,275 — Yankee debt 2,146 — 2,146 — Asset-backed securities 11,895 — 11,895 — Total financial assets $ 203,859 $ 78,197 $ 125,662 $ — The carrying amounts of the Company’s financial instruments, including cash, cash equivalents and marketable securities, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. Included in cash and cash equivalents at June 30, 2025 and December 31, 2024 are money market funds with a carrying value and fair value of $ 2.2 million and $ 3.9 million, respectively, based upon a Level 1 fair value assessment. 7 Table of Contents 5. Accrued Expenses Accrued expenses consisted of the following (in thousands): June 30, December 31, 2025 2024 Accrued compensation expenses $ 1,770 $ 3,338 Accrued research and development expenses 1,686 3,151 Accrued professional and consulting expenses 182 98 Other accrued expenses 109 124 Total accrued expenses $ 3,747 $ 6,711 6. Stockholders ’ Equity (Deficit) Sales Agreement In May 2025, the Company entered into a Sales Agreement (the “Agreement”) with Leerink Partners LLC (“Leerink Partners”) relating to the offer and sale of up to $ 75.0 million in shares of its Class A common stock, par value $ 0.001 per share (the “Shares”). The Company is not obligated to make any sales of Shares under the Agreement. Any sales under the Agreement will be made pursuant to an “at-the-market offering” (the “ATM Program”) in accordance with Rule 415 (a)( 4 ) under the Securities Act of 1933, as amended. The Company has not sold any shares of its Class A common stock under the Agreement during the three months ended June 30, 2025. Common Stock The Company has two classes of common stock: Class A common stock and Class B common stock. Class A common stock has one vote per share and Class B common stock has no votes per share. As of June 30, 2025 , of the authorized 200,000,000 shares of Class A common stock, 19,190,723 shares of Class A common stock were issued and outstanding, and of the authorized 20,000,000 shares of Class B common stock, 6,729,172 shares of Class B common stock were issued and outstanding. Class A common stock reserved for future issuance consisted of the following: 8 Table of Contents June 30, December 31, 2025 2024 Common stock options granted and outstanding 5,580,612 4,045,500 Shares available for issuance under the 2024 Equity Incentive Plan 1,700,924 1,674,309 Common stock warrant 15,764 15,764 Common stock reserved under the 2024 Employee Stock Purchase Plan 472,203 262,004 Total common stock reserved for future issuance 7,769,503 5,997,577 There are no shares of Class B common stock reserved for future issuance as of June 30, 2025 and December 31, 2024. 9 Table of Contents Stock Options In March 2024, the Company's board of directors and its stockholders adopted and approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan is the successor of the Company's 2012 Equity Incentive Plan (the “2012 Plan”). However, awards outstanding under the 2012 Plan will continue to be governed by their existing terms. The 2024 Plan allowed for the issuance of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted stock units, and other stock awards to the Company's employees, members of its board of directors, and consultants. The number of shares initially reserved for issuance under the 2024 Plan was 2,700,000 . As of June 30, 2025 , there were 1,700,924 shares of the Company’s Class A common stock available for issuance under the 2024 Plan. The aggregate number of shares reserved for issuance under the 2024 Plan will automatically increase on the first day of each fiscal year of the Company, commencing in 2025 and ending in (and including) 2034, by a number equal to the lesser of (a) 5 % of the aggregate shares of Class A common stock and Class B common stock issued and outstanding as of the last day of the prior fiscal year, or (b) a number of shares of Class A common stock determined by the Company's board of directors. Under the 2024 Plan, the exercise price for options granted under the 2024 Plan may not be less than 100 % of the fair market value of the Class A common stock on the grant date. Optionees will be permitted to pay the exercise price in cash or, with the consent of the compensation committee (i) with shares of common stock that the optionee already owns, (ii) by an immediate sale of shares through a broker approved by the Company, (iii) by instructing the Company to withhold a number of shares otherwise deliverable upon exercise having an aggregate fair market value that does not exceed the exercise price, or (iv) by other methods permitted by applicable law. The Company's board of directors (or a committee thereof to which the Company's board of directors has delegated authority) may amend or terminate the 2024 Plan at any time. If the Company's board of directors amends the 2024 Plan, it does not need stockholder approval of the amendment unless required by applicable law, regulation or rules. The 2024 Plan will terminate automatically ten years after the date when the Company's board of directors adopted the 2024 Plan. In April 2025, the Company granted inducement awards outside of the 2024 Plan to the Company's Chief Medical Officer and Head of Development in the form of an option to purchase 286,000 shares of the Company's Class A common stock with an exercise price per share equal to $ 4.50 . The option awards were granted as an inducement material to his commencement of employment with the Company in accordance with Nasdaq Listing Rule 5635 (c)( 4 ). These inducement awards are included in stock-based compensation and the following tables. Stock option activity is as follows: Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Balance at December 31, 2024 4,045,500 $ 9.91 7.52 $ 21,470 Options granted 1,559,542 8.12 — — Options exercised ( 17,000 ) 1.41 — — Options cancelled and forfeited ( 2,474 ) 12.42 — — Options expired ( 4,956 ) 9.67 — — Balance at June 30, 2025 5,580,612 $ 9.43 7.78 $ 2,908 Options vested and expected to vest as of June 30, 2025 5,554,612 $ 9.46 7.77 $ 2,908 Options exercisable as of June 30, 2025 2,622,801 $ 7.30 6.13 $ 2,908 The aggregate intrinsic value of options exercised during the six months ended June 30, 2025 and 2024 was $ 0.2 million and $ 0.4 million, respectively, determined as of the date of exercise. Options exercisable include options which are not vested but are available to be early exercised. As of June 30, 2025 , there were no options available to be early exercised. As of December 31, 2024, of the 2,114,772 options exercisable, 35,794 options were available to be early exercised. 10 Table of Contents The Company estimated the fair value of stock options using the Black-Scholes valuation model. The Company accounts for any forfeitures of options when they occur. Previously recognized compensation expense for an award is reversed in the period that the award is forfeited. The fair value of stock options expected to vest was estimated using the following weighted-average assumptions: Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Assumptions: Expected term (in years) 5.69 6.05 5.96 6.03 Expected volatility 95 % 110 % 94 % 110 % Risk free interest rate 3.91 % 4.49 % 4.26 % 4.44 % Dividend yield — — — — The weighted-average grant-date fair value per share of stock options granted and expected to vest as of their grant date during the three months ended June 30, 2025 and 2024 wa s $ 3.33 and $ 13.53 per share, respectively. The weighted-average grant-date fair value per share of stock options granted and expected to vest as of their grant date during the six months ended June 30, 2025 and 2024 wa s $ 6.37 and $ 13.55 per share, respectively. The Company recorded $ 1.3 million and $ 1.1 million in stock-based compensation in general and administrative and research and development, respectively, for the three months ended June 30, 2025 . The Company recorded $ 0.9 million and $ 0.6 million in stock-based compensation in general and administrative and research and development, respectively, for the three months ended June 30, 2024 . The Company recorded $ 2.8 million and $ 2.2 million in stock-based compensation in general and administrative and research and development, respectively, for the six months ended June 30, 2025 . The Company recorded $ 1.3 million and $ 1.0 million in stock-based compensation in general and administrative and research and development, respectively, for the six months ended June 30, 2024 . As of June 30, 2025 , there was approximately $ 25.4 million of total unrecognized stock-based compensation related to stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of approximately 2.9 years. Employee Stock Purchase Plan In March 2024, the Company's board of directors and its stockholders adopted and approved the 2024 Employee Stock Purchase Plan (the “2024 ESPP”). The 2024 ESPP became effective as of April 9, 2024. The purpose of the 2024 ESPP is to provide eligible employees with an opportunity to increase their interest in the success of the Company by purchasing shares of Class A common stock from the Company on favorable terms and to pay for such purchases through payroll deductions or other approved contributions. The new payroll deduction rate may be any whole percentage of the participant’s compensation, but not less than 1 % nor more than 15 %. The number of shares initially reserved for issuance under the 2024 ESPP was 280,000 . As of June 30, 2025 , there were 472,203 shares of the Company’s common stock reserved and available for issuance under the 2024 ESPP. The number of shares reserved for issuance under the 2024 ESPP will automatically increase on the first day of each fiscal year of the Company, commencing in 2025 and ending in (and including) 2044, by a number equal to the lesser of (i) 280,000 shares, (ii) 1 % of the aggregate shares of Class A common stock and Class B common stock issued and outstanding on the last day of the prior fiscal year, or (iii) a number of shares determined by the Company's board of directors. The number of shares reserved under the 2024 ESPP will automatically be adjusted in the event of a stock split, stock dividend or a reverse stock split (including an adjustment to the per-purchase period share limit). During the six months ended June 30, 2025 , there were 48,346 shares purchased under the 2024 ESPP and the recorded expense was $ 0.1 million. During the six months ended June 30, 2024 , there were no shares purchased under the 2024 ESPP and the recorded expense was not material. 7. License Agreement In February 2023, the Company entered into the J&J License Agreement, pursuant to which the Company granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE- 307 in all indications. The J&J License Agreement allows the Company to elect, at its sole discretion and cost, to conduct a Phase 2 trial of PIPE- 307 for patients with multiple sclerosis. After such trial, J&J may, at its sole discretion, further develop PIPE- 307 for patients with multiple sclerosis. Additionally, upon J&J deciding to conduct a first Phase 3 clinical trial for a product using PIPE- 307, the J&J License Agreement allows the Company the option to co-fund a portion of all Phase 3 and subsequent development costs for PIPE- 307, with such costs capped annually. If the Company opts to fund such development costs, then the royalties the Company is eligible to receive will increase. Pursuant to the terms of the J&J License Agreement, the Company received an upfront, non-refundable and non-creditable payment of $ 50.0 million upon transferring the license and know-how, existing inventory and manufacturing technology. The Company is also eligible to receive approximately $ 1.0 billion in non-refundable, non-creditable milestone payments. Additionally, the Company is eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE- 307. The Company sold approximately 1.7 million shares of series C convertible preferred stock to Johnson & Johnson Innovation - JJDC, Inc., an affiliate of J&J, at $ 15.00 per share, for an aggregate purchase price of approximately $ 25.0 million, in April 2023. The Company determined that this preferred stock purchase was at fair value as other new investors purchased shares of preferred stock at the same price. The Company concluded that J&J represented a customer and applied relevant guidance from ASC 606 to evaluate the appropriate accounting for the J&J License Agreement. The Company evaluated the J&J License Agreement and concluded that it had promises to transfer a license of functional intellectual property, know-how, existing inventory and manufacturing technology (each of which was determined to be a distinct performance obligation). Control of the promised goods was transferred to J&J in the second quarter of 2023, and the $ 50.0 million upfront payment was recognized in May 2023 upon satisfaction of the performance obligations. The remaining consideration consists of future contingent milestone-based payments and sales-based royalties. As of June 30, 2025 , all variable consideration under the J&J License Agreement was fully constrained. In August 2023, the Company elected to conduct a Phase 2 trial using PIPE- 307 for patients with multiple sclerosis, which was considered a contract modification under the accounting guidance that added promised goods or services that are distinct at a price that is below the standalone selling price. Therefore, the Company accounted for the modification as a termination of the existing contract and creation of a new contract. Accordingly, the amount of consideration to be allocated to the remaining performance obligations consists of future contingent milestone-based payments and sales-based royalties, all of which were constrained. The only remaining performance obligation is the promise to conduct the Phase 2 trial, as the other performance obligations had been satisfied prior to the modification date. Accordingly, the variable consideration allocated to the Phase 2 trial will be recognized as the study is completed using a cost-based measure of progress and when the amounts are no longer probable of a significant reversal. As of June 30, 2025 , no amounts had been recognized related to the Phase 2 trial as no additional variable consideration has been received subsequent to the contract modification. 8. Commitments and Contingencies Operating Lease The Company leases office and lab space in San Diego, California under a non-cancelable operating lease (“Science Center Drive Lease”). The lease commenced in March 2018 and has a 5 -year initial term. The lease includes a renewal option, which includes an option to renew for five additional years. During 2021, the Company amended the lease to include additional space in the building with the right to use the new space beginning in October 2021, for an additional 3 years. In October 2023, the Company executed a noncancelable operating lease for new premises to be used for office, research and development and laboratory purposes (“General Atomics Court Lease”), with the same landlord as the Science Center Drive Lease. The General Atomics Court Lease commenced for accounting purposes in October 2024 when the Company took control of the premises and has a 5 -year initial term from the commencement date. The General Atomics Court Lease has a five -year term with an option to extend for another three -year period subject to certain conditions, which the Company is not reasonably certain to exercise and therefore was not considered in determining the right-of-use (“ROU”) assets and lease liabilities balance. As a result of the new lease, the Company received rent abatement from January to October 2024 on the Science Center Drive Lease. This resulted in a modification of the Science Center Drive Lease and a remeasurement of the existing lease liability and the associated right-of-use asset in October 2023. As a result, $ 0.6 million from the payments of the new lease were allocated to the Science Center Drive Lease, based on a relative standalone selling price analysis. The Company’s operating lease ROU asset and the related lease liabilities are initially measured at the present value of future lease payments over the lease term. Upon commencement of the new lease, in October 2024, the Company recorded an ROU asset and lease liability of approximately $ 5.6 million. This includes the $ 0.6 million allocation, which led to a corresponding decrease in the ROU asset value for the new lease. The lease agreement includes variable payments which are not included in the measurement of the ROU assets and lease liability. Below is a summary of the Company’s operating lease right-of-use assets and lease liabilities (in thousands, except for years and %): June 30, December 31, 2025 2024 Operating lease right-of-use assets $ 5,007 $ 5,467 Operating lease liability obligations, current $ 1,466 $ 1,452 Operating lease liability obligations, less current portion 4,284 4,807 Total lease liability obligations $ 5,750 $ 6,259 Weighted-average remaining lease term 4.3 4.4 Weighted-average discount rate 9.0 % 9.0 % During the three months ended June 30, 2025 and 2024, the Company recognized $ 0.4 million and $ 0.3 million, respectively, in operating lease expenses, which are included in operating expenses in the Company's statements of operations and comprehensive loss. During the six months ended June 30, 2025 and 2024, the Company recognized $ 0.8 million and $ 0.6 million, respectively, in operating lease expenses, which are included in operating expenses in the Company's statements of operations and comprehensive loss. Supplemental cash flow information related to operating leases are as follows (in thousands): Six Months Ended June 30, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities $ 756 $ — Future minimum lease payments for the Company’s operating lease liabilities as of June 30, 2025 are as follows (in thousands): 2025 $ 763 2026 1,564 2027 1,611 2028 1,660 2029 1,292 Total minimum lease payments 6,890 Less: Amount representing interest 1,140 Total lease liability obligations 5,750 Less: Current portion of operating lease liabilities 1,466 Operating lease liabilities, net of current portion $ 4,284 Litigation From time to time, the Company may become involved in various legal proceedings and claims that arise in the ordinary course of our business activities. As of June 30, 2025 , the Company was not currently a party to any material legal proceedings. Other Commitments The Company has various manufacturing, clinical, research and other contracts with vendors in the conduct of the normal course of its business. Such contracts are generally terminable with advanced written notice and payment for any products or services received by the Company through the effective time of termination and any non-cancelable and non-refundable obligations incurred by the vendor at the effective time of the termination. In the case of terminating a clinical trial agreement at a particular site, the Company would also be obligated to provide continued support for appropriate medical procedures at that site until completion or termination. 9. Net Loss Per Share The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Numerator: Net loss applicable to common stockholders $ ( 16,040 ) $ ( 9,009 ) $ ( 32,030 ) $ ( 17,426 ) Denominator: Weighted average shares used to compute net loss per common share, basic and diluted 25,895,996 23,355,588 25,882,540 12,862,328 Net loss per share: Basic and diluted $ ( 0.62 ) $ ( 0.39 ) $ ( 1.24 ) $ ( 1.35 ) 11 Table of Contents For the three and six months ended June 30, 2025 and 2024, net loss is attributable equally to each share of Class A common stock and Class B common stock and is determined based on the weighted-average number of the respective class of common stock outstanding. Weighted-average common shares include shares of the Company's Class A common stock and Class B common stock. The basic and diluted net loss per share amounts are the same for Class A common stock and Class B common stock. The Company’s potentially dilutive securities, which include common stock options and a common stock warrant have been excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2025 and 2024 , as the effect would reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The following potentially dilutive securities have been excluded from the diluted per share calculation for the periods presented as they would be anti-dilutive: June 30, June 30, 2025 2024 Common stock options 5,580,612 4,090,030 Common stock warrant 15,764 15,764 Total potentially dilutive securities 5,596,376 4,105,794 10. Segment Reporting The Company operates in one reportable segment, pioneering differentiated therapies for the treatment of NI&I indications with significant unmet need. Our chief operating decision maker (“CODM”) is our President and Chief Executive Officer, Carmine Stengone. The CODM uses operating expenses, as reported on our statements of operations and comprehensive loss. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results of the Company as a whole using operating expenses. Net loss is also a measure that is considered in monitoring budget versus actual results. The CODM does not review assets in evaluating the results of the Company, and therefore, such information is not presented. Significant segment expenses within net loss include research and development related to PIPE- 791, PIPE- 307, CTX- 343, discovery programs and unallocated internal costs, general and administrative and interest income. The following table provides the operating financial results of our single reportable segment (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Significant and other segment expenses Research and development PIPE-791 $ 6,178 $ 2,028 $ 11,732 $ 4,889 PIPE-307 2,160 2,258 4,775 4,333 CTX-343 1,059 574 2,437 886 Discovery programs 1,328 1,244 2,710 2,348 Unallocated internal costs (1) 3,338 1,797 6,121 3,223 General and administrative 3,839 3,043 8,237 5,195 Interest income 2,029 2,001 4,279 3,637 Other segment items (2) ( 167 ) ( 66 ) ( 297 ) ( 189 ) Net loss $ ( 16,040 ) $ ( 9,009 ) $ ( 32,030 ) $ ( 17,426 ) ______________________ ( 1 ) Unallocated internal research and development costs include employee-related expenses that cannot be directly attributable to a specific research project, stock-based compensation for employees engaged in research and development functions, facilities, depreciation and other related expenses. ( 2 ) Other segment items primarily include change in fair value of warrant liability and other expense, net. 11. Subsequent Events In July 2025, the Company closed an at-the-market (“ATM”) offering of 2,122,000 shares of its Class A common stock. The shares of Class A common stock were sold at a weighted average price of $ 4.03 per share, resulting in gross proceeds of $ 8.6 million. The Company raised $ 8.4 million in net proceeds after deducting sales agent commissions of $ 0.2 million. 12 Table of Contents Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto as of and for the year ended December 31, 2024 and the related Management ’ s Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025. This Quarterly Report on Form 10-Q may contain “ forward-looking statements ” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ” ). Such forward-looking statements, which represent our intent, belief, or current expectations, involve risks and uncertainties. We use words such as “ may, ” “ will, ” “ expect, ” “ anticipate, ” “ estimate, ” “ intend, ” “ plan, ” “ predict, ” “ potential, ” “ believe, ” “ should ” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements may include, but are not limited to, statements concerning projections about our accounting and finances, our clinical trial and product development plans and timelines, the indications, anticipated benefits of, and market opportunities for our drug candidates, our operating runway, our business strategies and plans, and other statements regarding future performance. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. As a result of many factors, including without limitation those set forth under “ Risk Factors ” under Item 1A of Part II below, and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes. Overview We are a clinical-stage biopharmaceutical company pioneering differentiated therapies for the treatment of NI&I indications with significant unmet need. We target biological pathways associated with specific clinical impairments that we believe, once modulated, will demonstrably alter the course of disease. We have focused our efforts on developing selective compounds targeting challenging molecular pathways and have built a portfolio of small molecule drug candidates. We believe our two clinical stage, internally-discovered drug candidates, PIPE-791 and PIPE-307, will have broad applicability across multiple NI&I indications. We are developing PIPE-307 in collaboration with J&J. Our wholly-owned lead asset, PIPE-791, is a novel, brain penetrant, small molecule inhibitor of the lysophosphatidic acid 1 receptor (“LPA1R”) in development for idiopathic pulmonary fibrosis (“IPF”), progressive multiple sclerosis (“PrMS”), and chronic pain. LPA1R antagonism is a clinically validated mechanism in IPF, and we believe that our preclinical studies and Phase 1 healthy volunteer data support the development of PIPE-791 for IPF, as well as PrMS and chronic pain. Specifically, based on its high bioavailability, low plasma protein binding, and long receptor occupancy time in our preclinical studies compared to the preclinical data of other LPA1R antagonists, we believe PIPE-791 has the potential to be a differentiated LPA1R therapy. We have completed a Phase 1 clinical trial of PIPE-791 in healthy volunteers in support of clinical development in IPF, PrMS and chronic pain. In December 2024, we commenced a Phase 1b open-label trial to measure the relationship of pharmacokinetics to lung and brain receptor occupancy by positron emission tomography (“PET”) imaging. We expect the topline data from this trial will be available in the third quarter of 2025. This Phase 1b PET trial, along with our preclinical studies data, will inform dose selection in our future Phase 2 trials of PIPE-791. We plan to initiate a Phase 2 global proof-of-concept clinical trial in IPF in the fourth quarter of 2025. In March 2025, we announced the initiation of patient dosing in an exploratory PIPE-791 Phase 1b, randomized, double-blind, placebo-controlled, crossover, chronic pain trial for the treatment of chronic pain associated with two separate indications, chronic osteoarthritis and chronic low back pain. We expect to enroll approximately 40 patients at up to five sites in the U.S., and a treatment duration of 28 days. We anticipate topline data from this trial in the first half of 2026. Our second drug candidate, PIPE-307, is a novel, small molecule selective inhibitor of the muscarinic type 1 receptor (“M1R”), in development for depression and relapse-remitting multiple sclerosis (“RRMS”). We have completed two Phase 1 trials of PIPE-307 in healthy volunteers. In 2023, we initiated a Phase 2 VISTA trial of PIPE-307 for the potential treatment of RRMS. In January 2025, we announced that we have fully enrolled our Phase 2 VISTA trial. We expect the topline data from this trial will be available in the fourth quarter of 2025. In December 2024, J&J began recruiting an estimated 124 adult participants for a Phase 2 trial of PIPE-307/JNJ-89495120 for the potential treatment of major depressive disorder (“MDD”). This trial is a randomized, double-blind, multi-center, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety and tolerability of PIPE-307/JNJ-89495120 as monotherapy in adult participants with MDD. We believe PIPE-307 is the most advanced selective M1R antagonist in clinical development. In addition, we are leveraging our drug discovery capabilities to expand our clinical portfolio. In January 2024, we nominated and commenced preclinical studies for CTX-343, a peripherally-restricted (unable to access the central nervous system) LPA1R antagonist. In parallel, we are actively conducting preclinical and discovery-phase experiments targeting other NI&I indications where our internally-discovered molecules may have therapeutic potential. 13 Table of Contents We have a portfolio of novel and proprietary small molecule programs that we believe can modulate innate pathways to restore function in NI&I indications. We retain worldwide rights to our LPA1R programs and discovery portfolio, and we have partnered with J&J for the development and potential commercialization efforts of PIPE-307. We expect our operating expenses to significantly increase as we continue to develop, conduct clinical trials, and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand the indications for our existing drug candidates and develop a pipeline of additional drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. We also expect to incur additional operating expenses as we continue operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing and scope of our clinical trials and our expenditures on other research and development activities. As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Collaboration In February 2023, we entered into a license agreement with J&J (the “J&J License Agreement”), pursuant to which we granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications. J&J is generally responsible for all development, manufacturing and commercialization activities for PIPE-307. Upon J&J conducting a first Phase 3 clinical trial for a product using PIPE-307, we have an opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307. If we opt to fund such development costs, then the royalties we are eligible to receive will increase by one to two percentage points. We are conducting, at our own expense, a Phase 2 clinical trial of PIPE-307 in patients with RRMS. We completed enrollment of our Phase 2 clinical trial in December 2024, and expect the topline data from this trial will be available in the third quarter of 2025. J&J has the right to discontinue our clinical trial if it has good faith concerns that this trial presents safety risks or could have a material adverse effect on its development or commercialization of PIPE-307. In addition, J&J has the right, in its sole discretion, to further develop or to elect not to develop PIPE-307 for this indication. In December 2024, J&J began recruiting an estimated 124 adult participants for a Phase 2 trial of PIPE-307/JNJ-89495120 for the potential treatment of MDD. This trial is a randomized, double-blind, multi-center, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety and tolerability of PIPE-307/JNJ-89495120 as monotherapy in adult participants with MDD. The J&J License Agreement expires on a licensed product-by-product and country-by-country basis upon the last to occur of: (i) the expiration of the last-to-expire licensed patent claim covering the composition of matter of the licensed compound in such licensed product in such country; (ii) the expiration of exclusive marketing rights conferred by a regulatory authority or applicable law (other than patent exclusivity) for such licensed product in such country; or (iii) ten years after the first commercial sale of such licensed product in such country. Either party may terminate the J&J License Agreement in the event of an uncured material breach by the other party or a bankruptcy or insolvency of the other party. J&J may terminate the J&J License Agreement without cause upon prior written notice to us. Upon any termination, all license rights granted to J&J terminate. 14 Table of Contents Financial Operations Overview Revenue We recognize license revenues as identified performance obligations are satisfied or other events occur, specifically related to our J&J License Agreement. Pursuant to the terms of the J&J License Agreement, we received an upfront payment of $50.0 million in May 2023. We are also eligible to receive approximately $1.0 billion in non-refundable, non-creditable milestone payments, pursuant to the terms of the J&J License Agreement. Additionally, we are eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE-307. We do not have any products approved for sale and we have not yet generated any revenue from product sales. We did not recognize any revenue for the three and six months ended June 30, 2025 or 2024. Operating Expenses Research and Development Research and development expenses consist primarily of costs incurred for our internal research and development activities. Direct costs include: • employee-related expenses, including salaries, related benefits, and travel that can be directly attributable to each research project; • expenses incurred in connection with research, laboratory consumables and preclinical studies; • expenses incurred in connection with conducting clinical trials, including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations (“CROs”), other vendors or central laboratories and service providers engaged to conduct our trials; • the cost of consultants engaged in research and development related services; • the cost to manufacture drug products for use in our preclinical studies and clinical trials; and • costs related to regulatory compliance. Unallocated internal research and development costs include: • employee-related expenses, including salaries, related benefits, and travel that cannot be directly attributable to a specific research project; • stock-based compensation for employees engaged in research and development functions; and • facilities, depreciation and other related expenses. We expense our research and development costs as they are incurred. We record advance payments for goods or services to be received in the future for use in research and development as prepaid expenses. We then expense the prepaid amounts as the related goods are delivered or the services are performed. We track outsourced development costs, consultant costs and other external research and development costs such as third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities to specific programs. We allocate employee related costs including salaries and related benefits based upon the level of effort for each specific project. Certain employee activities that cannot be allocated to any one specific project or management related activities are considered indirect costs. The following tables summarize our research and development expenses for the three and six months ended June 30, 2025 and 2024. The direct external development program expenses reflect external costs attributable to our clinical development and preclinical programs and personnel costs that can be directly attributed to a development program. The unallocated internal research and development costs include unallocated personnel costs, facility costs, stock-based compensation, laboratory consumables and discovery and research related activities. Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (in thousands) (in thousands) Direct external development program expense PIPE-791 $ 6,178 $ 2,028 $ 11,732 $ 4,889 PIPE-307 2,160 2,258 4,775 4,333 CTX-343 1,059 574 2,437 886 Discovery programs 1,328 1,244 2,710 2,348 Unallocated internal research and development costs Personnel related 1,207 484 1,835 852 Stock-based compensation 1,094 620 2,177 1,009 Facilities costs 482 236 986 455 Others 555 457 1,123 907 Total research and development costs $ 14,063 $ 7,901 $ 27,775 $ 15,679 15 Table of Contents Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future clinical trial design and various regulatory requirements, many of which we cannot determine with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates and our costs may increase if we exercise our opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307 pursuant to the J&J License Agreement. However, we expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and for the foreseeable future. The successful development of our drug candidates is highly uncertain. This is due to numerous risks and uncertainties, including the following: • successful completion of preclinical studies and clinical trials; • delays in regulators or institutional review boards authorizing us or our investigators to commence or continue our clinical trials; • our ability to negotiate agreements with clinical trial sites or CROs; • the number of clinical sites included in our clinical trials; • raising additional funds necessary to complete clinical development of our drug candidates; • obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our drug candidates; • establishing and qualifying manufacturing capabilities for clinical supplies of our drug candidates, whether directly or through qualified third party manufacturers; • our ability to receive necessary regulatory approvals from the U.S. Food and Drug Administration and comparable governmental bodies outside the United States; • our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307; • coverage for our products by governmental and third party payors; • protecting and enforcing our rights in our intellectual property portfolio; • our ability to successfully compete with our competitors and their product offerings; and • maintaining a continued acceptable safety profile of the products following approval. A change in the outcome of any of these variables with respect to the development of our drug candidates may significantly impact the costs and timing associated with the development of our drug candidates. We may never succeed in obtaining regulatory approval for any of our drug candidates or successfully commercialize our products, even if approved. General and Administrative General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions. Other significant costs include legal fees relating to intellectual property, patent applications, and corporate matters, professional fees for accounting and consulting services and facility-related costs. We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, the growth of our business operations and headcount and to reflect increased operating expenses as we continue operating as a public company. These increased costs will likely include increased expenses related to audit, legal, regulatory services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs. Other Income (Expense) Interest Income Interest income consists of interest earned on our cash, cash equivalents and marketable securities. 16 Table of Contents Results of Operations Comparison of the Three Months Ended June 30, 2025 and 2024 The following table summarizes our results of operations (in thousands) for the periods indicated: Three Months Ended June 30, 2025 2024 Change Operating expenses: Research and development $ 14,063 $ 7,901 $ 6,162 General and administrative 3,839 3,043 796 Total operating expenses 17,902 10,944 6,958 Loss from operations (17,902 ) (10,944 ) (6,958 ) Other income (expense): Interest income 2,029 2,001 28 Change in fair value of warrant liability — 11 (11 ) Other expense, net (167 ) (77 ) (90 ) Total other income, net 1,862 1,935 (73 ) Net loss $ (16,040 ) $ (9,009 ) $ (7,031 ) Research and development expenses . Research and development expenses were $14.1 million and $7.9 million for the three months ended June 30, 2025 and 2024, respectively. The increase of $6.1 million from period to period was due to the following: • $4.3 million increase in contract research organization costs due to a $2.6 million increase in startup costs related to the Phase 2 trial for PIPE-791 for the treatment of IPF, a $1.0 million increase in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, and a $0.7 million increase in costs related to the Phase 1b PET trial for PIPE-791; • $1.5 million increase in personnel-related expense related to an overall increase in personnel from period to period; • $0.5 million increase in non-cash stock-based compensation; and • $0.2 million increase in facilities costs. Partially offsetting these increases was a $0.3 million decrease in manufacturing expenses for PIPE-791 and CTX-343. General and administrative expenses . General and administrative expenses were $3.8 million and $3.0 million for the three months ended June 30, 2025 and 2024, respectively. The increase of $0.8 million was due to a $0.5 million increase in non-cash stock-based compensation, a $0.5 million increase in personnel-related expenses related to an overall increase in personnel from period to period, and a $0.1 million increase in facilities costs. Partially offsetting these increases was a $0.3 million decrease in market research costs. Comparison of the Six Months Ended June 30, 2025 and 2024 The following table summarizes our results of operations (in thousands) for the periods indicated: Six Months Ended June 30, 2025 2024 Change Operating expenses: Research and development $ 27,775 $ 15,679 $ 12,096 General and administrative 8,237 5,195 3,042 Total operating expenses 36,012 20,874 15,138 Loss from operations (36,012 ) (20,874 ) (15,138 ) Other income (expense): Interest income 4,279 3,637 642 Change in fair value of warrant liability — (107 ) 107 Other expense, net (297 ) (82 ) (215 ) Total other income, net 3,982 3,448 534 Net loss $ (32,030 ) $ (17,426 ) $ (14,604 ) Research and development expenses . Research and development expenses were $27.8 million and $15.7 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $12.1 million from period to period was due to the following: • $8.1 million increase in contract research organization costs due to a $3.7 million increase in startup costs related to the Phase 2 trial for PIPE-791 for the treatment of IPF, a $2.1 million increase in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, a $1.5 million increase in costs related to the Phase 1b PET trial for PIPE-791, and a $0.8 million increase in costs related to the VISTA Phase 2 clinical trial for PIPE-307 for the potential treatment of RRMS; • $2.3 million increase in personnel-related expense related to an overall increase in personnel from period to period; • $1.2 million increase in non-cash stock-based compensation; and • $0.5 million increase in facilities costs. General and administrative expenses . General and administrative expenses were $8.2 million and $5.2 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $3.0 million was primarily due to a $1.6 million increase in non-cash stock-based compensation, a $1.2 million increase in personnel-related expenses, and a $0.2 million increase in facilities costs. Interest income . Interest income was $4.3 million and $3.6 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $0.6 million was due to an increase in funds invested in marketable securities and an increase in the yields earned on our marketable securities from the six months ended June 30, 2024 to the six months ended June 30, 2025. Liquidity and Capital Resources Sources of Liquidity We have incurred net losses and negative cash flows from operations in nearly every reporting period since our inception and anticipate that we will continue to incur net losses for the foreseeable future. We expect to incur substantial expenditures as we advance our drug candidates through clinical development, undergo the regulatory approval process, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio and, if we obtain approval for one or more of our drug candidates, launch commercial activities. Through June 30, 2025, we have funded our operations primarily through the issuance of convertible promissory notes, private placements of our convertible preferred stock, the J&J License Agreement, and net proceeds from the IPO. Through June 30, 2025, we have raised gross proceeds of approximately $312.8 million from the issuance of our convertible preferred stock, promissory notes, and Class A common stock in our IPO. In addition, we received an upfront payment from the J&J License Agreement of $50.0 million and borrowed $5.0 million at the inception of the loan and security agreement with First Citizens Bank. Upon the closing of the IPO, our outstanding convertible preferred stock automatically converted into Class A common stock or Class B common stock, as applicable. In April 2024, we raised approximately $107.9 million in net proceeds from the IPO. As of June 30, 2025, we had an accumulated deficit of $149.4 million. As of June 30, 2025, we had cash, cash equivalents and marketable securities of $175.5 million. Based on our current operating plan, we believe that our existing cash and cash equivalents and short-term investments, will be sufficient to meet our anticipated operating expenses and capital expenditure requirements through at least the next 12 months, following the date of this Quarterly Report on Form 10-Q. In May 2025, we entered into a Sales Agreement (the “Agreement”) with Leerink Partners LLC (“Leerink Partners”) relating to the offer and sale of up to $75.0 million in shares of our Class A common stock, par value $0.001 per share (the “Shares”). We are not obligated to make any sales of Shares under the Agreement. Any sales under the Agreement will be made pursuant to an “at-the-market offering” (the “ATM Program”) in accordance with Rule 415(a)(4) under the Securities Act of 1933, as amended. We did not sell any shares of our Class A common stock under the Agreement during the three months ended June 30, 2025. In July 2025, the Company closed an ATM offering of 2,122,000 shares of its Class A common stock. The shares of Class A common stock were sold at a weighted average price of $4.03 per share, resulting in gross proceeds of $8.6 million. The Company raised $8.4 million in net proceeds after deducting sales agent commissions of $0.2 million. 17 Table of Contents As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include milestone payments from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Cash Flows The following table sets forth a summary of our cash flows for the periods indicated (in thousands): Six Months Ended June 30, 2025 2024 Net cash used in operating activities $ (30,073 ) $ (16,474 ) Net cash provided by (used in) investing activities 28,799 (30,168 ) Net cash provided by financing activities 115 108,346 Net increase (decrease) in cash and cash equivalents $ (1,159 ) $ 61,704 Operating Activities Net cash used in operating activities was $30.1 million for the six months ended June 30, 2025, which related to our net loss of $32.0 million and a $3.0 million change in operating assets and liabilities, partially offset by $4.9 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense. Net cash used in operating activities was $16.5 million for the six months ended June 30, 2024, which primarily related to our net loss of $17.4 million, partially offset by $0.8 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense, and $0.1 million change in operating assets and liabilities. Investing Activities Net cash provided by investing activities was $28.8 million for the six months ended June 30, 2025, which related to $88.0 million of sales and maturities of marketable securities, partially offset by $59.1 million of purchases of marketable securities and $0.1 million or purchases of property and equipment. Net cash used in investing activities was $30.2 million for the six months ended June 30, 2024, which primarily related to $99.6 million of purchases of marketable securities and $0.3 million of purchases of property and equipment, partially offset by $69.7 million of sales and maturities of marketable securities. Financing Activities Net cash provided by financing activities was approximately $0.1 million for the six months ended June 30, 2025, which was primarily related to $0.3 million of proceeds from employee stock purchase plan, partially offset by $0.2 million in payments of deferred offering costs. Net cash provided by financing activities was $108.3 million for the six months ended June 30, 2024, which primarily related to $108.2 million of net proceeds from the issuance of common stock in the Company's IPO and $0.1 million of proceeds from the exercise of stock options. Funding Requirements We expect our operating expenses to significantly increase as we continue to develop and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. 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 our actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing our drug candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain. Our future capital requirements will depend on many factors, including: • the type, number, scope, progress, expansions, results, costs and timing of, our clinical trials and preclinical studies for our drug candidates or other potential drug candidates or indications which we are pursuing or may choose to pursue in the future; • the outcome, timing and costs of regulatory review of our drug candidates; • the costs and timing of manufacturing for our drug candidates; • our efforts to enhance our operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting; • the costs associated with hiring additional personnel and consultants as our preclinical and clinical activities expand; • the costs and timing of establishing or securing manufacturing facilities for our drug candidates; 18 Table of Contents • the costs and timing of establishing sales and marketing capabilities if any of our drug candidates are approved; • our ability to establish and maintain strategic collaborations, licensing or other arrangements; • the financial terms of any such agreements that we may enter into; • our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307; • the costs of obtaining, maintaining and enforcing our patent and other intellectual property rights; and • costs associated with any drug candidates, products or technologies that we may in-license or acquire. Until such time as we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our cash needs through public or private equity or debt financings or other commercial arrangements, including collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. We may be unable to raise additional funds or enter into such commercial arrangements when needed, on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may be required to relinquish valuable rights to our drug candidates, future revenue streams or research programs or may be required to grant licenses on terms that may not be favorable to us and may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings or through commercial arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves. Contractual Obligations and Commitments Our contractual obligations and commitments relate to our operating leases that relate primarily to our leases of office and laboratory space in San Diego, California. Our total contractual commitments for our lease agreements amount to approximately $6.9 million as of June 30, 2025. We enter into contracts in the normal course of business for contract research services, contract manufacturing services, professional services and other services and products for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts and not included in the table above. Off-Balance Sheet Arrangements During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of the SEC. Critical Accounting Policies and Significant Judgments and Estimates Management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments, including those related to the accrual of research and development expenses; the incremental borrowing rate used to recognize the right-of-use assets and lease liabilities, the fair value of common stock and convertible preferred stock; and stock-based compensation We base our estimates and assumptions on historical experience, known trends and events, and various other factors that we believe are reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. There have been no material changes to our critical accounting estimates from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgements and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2024. Emerging growth company and smaller reporting company status We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We will remain an emerging growth company until the earlier of (i) December 31, 2029, the last day of the fiscal year following the fifth anniversary of the completion of the IPO, (ii) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.235 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our voting and non-voting common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. 19 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.