What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-14 · 109 added, 86 removed, 187 unchanged (51% of the section changed)

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Our primary goal is to advance EQ504, our novel aryl hydrocarbon receptor modulator, into and through clinical development.

As of June 30, 2025, we had $11.5 million in cash and cash equivalents.

From inception through June 30, 2025, substantially all of our efforts have been focused on research, development and the advancement of our clinical and pre-clinical product candidates.

During the second quarter of 2025, we paused our research and development activities for all programs pending our ability to raise capital in the immediate term.

As of September 30, 2025, we had $33.1 million in cash and cash equivalents.

From inception through September 30, 2025, substantially all of our efforts have been focused on research, development and the advancement of our clinical and pre-clinical product candidates.

We have not yet generated product sales and as a result have incurred significant operating losses and negative cash flows from operations.

As a result, we had an accumulated deficit of $208.2 million as of June 30, 2025.

As a result, we had an accumulated deficit of $212.4 million as of September 30, 2025.

The Company expects to incur additional losses in the future to conduct research and development for which we will need to raise additional capital to implement.

On August 10, 2025, we entered into a Securities Purchase Agreement, the Purchase Agreement, with certain institutional and accredited investors, the Investors, pursuant to which we agreed to sell and issue shares of our common stock, par value $0.0001, and pre-funded warrants to purchase shares of common stock, in up to two closings in a private placement transaction, the Private Placement.

On August 10, 2025, we entered into a Securities Purchase Agreement, the Purchase Agreement, with certain institutional and accredited investors, the Investors, pursuant to which we agreed to sell and issue shares of our common stock, par value $0.0001 per share, and pre-funded warrants to purchase shares of common stock, in up to two closings in a private placement transaction, the Private Placement.

The initial closing of the Private Placement occurred on August 12, 2025.

At the Initial Closing, we issued and sold 21,814,874 shares at a purchase price of $0.57 per share and pre-funded warrants to purchase up to 30,816,705 warrant shares at a purchase price of $0.5699 per warrant share, the Warrant Price, to the Investors for gross proceeds to us of approximately $30.0 million.

At the Initial Closing, we issued and sold 21,814,874 shares of common stock at a purchase price of $0.57 per share and pre-funded warrants to purchase up to 30,816,705 shares of common stock at a purchase price of $0.5699 per warrant share, the Warrant Price, to the Investors for gross proceeds to us of approximately $30.0 million.

The Purchase Agreement also provides for a potential second closing for up to approximately $20.0 million in gross proceeds in exchange for up to approximately 35,087,717 shares of common stock, subject to achieving certain specified milestones related to clinical study initiation and stock price conditions or waiver thereof.

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We intend to use the net proceeds from the Private Placement to fund the further development of EQ504, working capital and general corporate purposes.

The Company has not initiated its recently announced cryptocurrency treasury reserve strategy and is instead prioritizing development of EQ504.

We expect net proceeds from the Initial Closing of the Private Placement will extend our cash runway through 2027.

We intend to commence a Phase 1 proof-of-mechanism study for EQ504, a novel aryl hydrocarbon receptor, or AhR, modulator, by mid-2026, with data expected to follow approximately six months thereafter;

provided, however, we cannot provide any assurances that we will be able to obtain data within those time frames or that the data which may be obtained will be favorable to the further clinical development of EQ504.

Modulation of AhR has been shown to have a beneficial impact on tissue barrier function, inflammation, cell development and tumor suppression.

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We acquired the exclusive worldwide rights to EQ504 through the acquisition of Ariagen, Inc., or Ariagen, in October 2024.

Ariagen was majority owned by Decheng Capital, who is the largest stockholder of Equillium.

Itolizumab (EQ001), our most advanced clinical-stage product candidate, is a first-in-class anti-CD6 immune-modifying monoclonal antibody, or mAb, that selectively targets the CD6-ALCAM signaling pathway.

We acquired our rights to itolizumab (EQ001) pursuant to a collaboration and license agreement with Biocon SA (subsequently assigned to Biocon Limited, or together, Biocon) in May 2017, which has been subsequently amended, or Biocon License.

In March 2025, we announced topline results from our Phase 3 EQUATOR study of itolizumab (EQ001) in patients with acute graft-versus-host disease, or aGVHD, where itolizumab (EQ001) did not meet the Day 29 outcomes of complete response, or CR, a primary outcome, and overall response rate, or ORR, a key secondary outcome, but there was a clinically meaningful improvement in durable CR from Day 29 to 99, a key secondary outcome, and statistically significant evidence of clinical benefit was also observed on pre-specified secondary endpoints of duration of CR and failure free survival.

Additionally, overall survival showed positive trends in favor of itolizumab (EQ001).

Post-hoc analyses of CR at Day 99 and durable CR evaluating Day 29 complete responders also showed statistically significant benefit favoring itolizumab (EQ001).

Itolizumab (EQ001) was observed to be generally well-tolerated with an adverse event profile consistent with prior clinical experience and consistent with this severe aGVHD patient population.

In totality, we believe these outcomes, particularly longer-term maintenance of achieved response, may offer a meaningful benefit for patients suffering from aGVHD where high rates of mortality and disease recurrence persist with current treatments.

In April 2025 we conducted a Type D meeting with the FDA, at which time the FDA declined to grant our request for Breakthrough Therapy Designation, or BTD, or support an accelerated approval pathway based on the EQUATOR study data.

The FDA highlighted its attention to achieving response outcomes at Day 29, per existing FDA guidance;

however, the FDA did indicate openness to evaluating other endpoints, including longer term outcomes, provided independent data supports the validity of such endpoints.

Based on this feedback, we accelerated the closure of the EQUATOR study in the second quarter of 2025.

We do not have any plans to conduct further clinical development with itolizumab at this time and may consider terminating our exclusive license agreement with Biocon or seeking alternative means to monetize our rights under the license agreement.

Ariagen was majority owned by Decheng Capital, a stockholder of Equillium.

On September 30, 2025, the Termination Date, we entered into a termination agreement with Biocon Limited, Biocon and the agreement, the Termination Agreement, pursuant to which we terminated that certain (i) collaboration and license agreement with Biocon, dated May 22, 2017, as amended September 28, 2018, April 22, 2019, December 10, 2019, and April 14, 2021 (the Biocon License), (ii) the Memorandum of Understanding dated April 7, 2022, the MoU, and (iii) certain other corresponding agreements, collectively with the Biocon License and MoU, the Biocon Agreements, with all licenses granted by Biocon to us under the Biocon Agreements, including with respect to itolizumab, terminating and reverting to Biocon.

As consideration for certain technical services that we are obligated to provide to Biocon following the Termination Date, Biocon agreed to pay us a technical service fee of $363,000.

In lieu of Biocon paying the technical service fee to us, Biocon will set off amounts which we owe to Biocon under or in connection with the Biocon Agreements through the Termination Date, with the amount of such set-off to equal such technical service fee, plus any other amount that have been or may be invoiced by us to Biocon for work performed by us with respect to itolizumab through the Termination Date, and to be limited to the aggregate amounts that have been or may be invoiced by Biocon to us, or are or may be otherwise owed to Biocon, under or in connection with the Biocon Agreements through the Termination Date.

We acquired the exclusive worldwide rights to EQ302 and a proprietary platform for discovering additional, novel multi-cytokine targeting product candidates, such as EQ302, through the acquisition of Bioniz Therapeutics, Inc., or Bioniz, in February 2022.

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Currently we are not expending internal resources to advance EQ302 and are exploring partnering opportunities that would support further development of the program.

Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing product rights, conducting preclinical development, filing Investigational New Drug applications, or INDs, conducting clinical development, conducting chemistry, manufacturing and controls, or CMC, and formulation development activities, conducting business development activities such as the acquisitions of Bioniz and Ariagen and the Asset Purchase Agreement with Ono Pharmaceutical Co., Ltd., or Ono, and other transactions not completed, and the general and administrative activities associated with operating a public biotech company focused on advancing novel therapeutics.

Furthermore, in connection with our acquisitions, we expanded our pipeline to multiple product candidates, all at various stages of development.

This expansion may accelerate the rate at which our operating losses increase as we incur costs to further the development and seek regulatory approval for these product candidates.

Since our inception, substantially all of our efforts have been focused on organizing and staffing our company, business planning, raising capital, in-licensing product rights, conducting preclinical development, filing Investigational New Drug applications, or INDs, conducting clinical development, conducting chemistry, manufacturing and controls, or CMC, and formulation development activities, conducting business development activities and the general and administrative activities associated with operating a public biotech company focused on advancing novel therapeutics.

We have generated revenue from our Asset Purchase Agreement with Ono, related to a one-time, upfront payment from Ono in exchange for an exclusive option to acquire our rights to itolizumab (EQ001), or the Option, as well as from itolizumab (EQ001) development funding from Ono.

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We have incurred losses since our inception.

For the six months ended June 30, 2025 and 2024, our net losses were $14.4 million and $2.3 million, respectively.

As of June 30, 2025, we had an accumulated deficit of $208.2 million.

Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, preclinical and clinical activities, acquired in-process research and development, and general and administrative costs associated with our operations.

For the nine months ended September 30, 2025 and 2024, our net losses were $18.6 million and $2.3 million, respectively.

As of September 30, 2025, we had an accumulated deficit of $212.4 million.

Substantially all of our operating losses resulted from expenses incurred in connection with our research and development activities, preclinical and clinical activities and general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and operating losses into the foreseeable future.

We anticipate our expenses will increase substantially as we advance our research and development activities for EQ504, including any future development of EQ302, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs.

We expect that our existing cash and cash equivalents as of June 30, 2025, with the net proceeds from the Initial Closing of the Private Placement, will enable us to fund our operations through 2027.

We do not expect to generate any revenues from product sales unless and until we successfully resume and complete development and obtain regulatory approval for EQ504 and EQ302, or any future product candidate, which is unlikely to happen within the next 12 months, if ever.

We anticipate our expenses will increase substantially as we advance our research and development activities for EQ504, potentially pursue any future development of EQ302, potentially expand the indications for which we conduct clinical development of our product candidates, potentially acquire or develop new product candidates, including preclinical drug candidates identified through our multi-cytokine targeting drug discovery platform, seek regulatory approval for and potentially commercialize any approved product candidates, hire additional personnel, protect our intellectual property, and incur general corporate costs.

We expect that our existing cash and cash equivalents as of September 30, 2025 will enable us to fund our operations through 2027.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for EQ504, EQ302, or any future product candidate, which is unlikely to happen within the next 12 months, if ever.

Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through a combination of equity offerings, debt financings, and collaboration and license agreements.

However, we may not be able to secure additional financing or enter into such other arrangements in a timely manner or on favorable terms, if at all.

As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.

If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, potential government shutdowns, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including from diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.

If equity and

credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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• costs of services performed by third parties, such as contract research organizations, or CROs, that conduct research and development activities on our behalf;

• costs related to preparing and filing three INDs with the FDA and other regulatory interactions and submissions;

• costs related to preparing and filing INDs with the FDA and other regulatory interactions and submissions;

• pharmacovigilance costs related to global drug safety monitoring and reporting;

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Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our non-clinical research and clinical development.

Equillium Australia Pty Ltd, or Equillium Australia, a wholly-owned subsidiary of Equillium, Inc., is eligible under the Australian Research and Development Tax Incentive Program, or the Tax Incentive, to obtain a cash refund from the Australian Taxation Office, or ATO, for eligible research and development expenditures.

or ATO, for eligible research and development expenditures.

The cash refund is received by Equillium Australia, upon filing of a claim in connection with Equillium Australia’s annual income tax return.

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Completion of planned or future clinical studies may take several years or more, and the length of time generally varies according to the type, complexity, novelty, and intended use of a product candidate.

The cost of planned or future clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

The cost of any planned or potential future clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

• per patient clinical study costs;

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Interest income consists primarily of interest income earned on cash, cash equivalents and short-term investments, and is recognized when earned.

Other Income (Expense), net

Other income (expense), net consists primarily of net foreign currency transaction gains and losses related to our Australian subsidiary.

Other Income, net

Other income, net consists primarily of net foreign currency transaction gains and losses related to our Australian subsidiary.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table sets forth our results of operations for the three and six months ended June 30, 2025 and 2024 (in thousands):

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

The following table sets forth our results of operations for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

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Interest income

Other income (expense), net

During the three and six months ended June 30, 2025, there was no revenue recognized under our Asset Purchase Agreement with Ono.

During the three and six months ended June 30, 2024, we recognized revenue of $13.9 million and $24.5 million, respectively, under our Asset Purchase Agreement with Ono.

For the three months ended June 30, 2024, development funding represented $9.2 million and amortization of the upfront payment represented $4.7 million.

For the six months ended June 30, 2024, development funding represented $17.2 million and amortization of the upfront payment represented $7.3 million.

Other income, net

During the three and nine months ended September 30, 2025, there was no revenue recognized under our Asset Purchase Agreement with Ono.

During the three and nine months ended September 30, 2024, we recognized revenue of $12.2 million and $36.7 million, respectively, under our Asset Purchase Agreement with Ono.

For the three months ended September 30, 2024, development funding represented $8.1 million and amortization of the upfront payment represented $4.1 million.

For the nine months ended September 30, 2024, development funding represented $25.2 million and amortization of the upfront payment represented $11.5 million.

Ono made a strategic business decision to allow its Option to expire on October 30, 2024 and, as a result, the Asset Purchase Agreement automatically terminated on that date pursuant to its terms.

Research and Development Expenses

Research and development expenses were $4.1 million and $10.0 million for the three and six months ended June 30, 2025, respectively, compared to $10.8 million and $20.6 million for the three and six months ended June 30, 2024, respectively.

The decrease of $6.7 million and $10.6 million in research and development expenses for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily related to a decrease in clinical development expenses due to the wind down of our clinical studies and CMC activities as well as a decrease in employee compensation and benefits, consulting and non-clinical expenses.

The following table sets forth our direct external research and development expenses by product candidate and clinical study as well as indirect research and development expenses for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Direct external expenses:

Itolizumab (EQ001) - EQUATOR

Itolizumab (EQ001) - EQUALISE

Itolizumab - Biocon ulcerative colitis study - related party

EQ101 - alopecia areata

EQ102 - celiac disease

Other programs

Indirect expenses:

Employee compensation and benefits (including stock-based compensation)

Total research and development

Research and development activities are central to our business model.

Product 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.

We separate our research and development costs into two broad categories:

direct and indirect.

Additionally, with respect to direct research and development expenses, we further divide expenses into the following product

candidate categories:

Itolizumab (EQ001), EQ101, EQ102 and other programs, which include EQ504 and EQ302.

Itolizumab (EQ001) includes sub-categories for the clinical studies associated with itolizumab (EQ001) including our EQUATOR, EQUALISE and ulcerative colitis study with Biocon.

For direct research and development expenses, we track specific project research and development expenses that are directly attributable to our preclinical and clinical development product candidates that have been selected for further development.

Such direct research and development expenses include non-clinical and clinical trial activities, external expenses related to CMC and supply of drug product and consulting expenses.

All remaining research and development expenses are categorized as indirect research and development expenses.

Such indirect research and development expenses include employee compensation and benefits (including stock-based compensation expenses) and general overhead costs such as costs associated with our facilities and lab supplies.

These expenses are not directly tied to any individual product candidate or clinical study and are generally deployed across multiple studies.

As such, we do not maintain information regarding those costs incurred on an individual product candidate or clinical study basis.

Research and development expenses were $1.3 million and $11.3 million for the three and nine months ended September 30, 2025, respectively, compared to $9.6 million and $30.1 million for the three and nine months ended September 30, 2024, respectively.

Research and development expenses decreased by $8.3 million and $18.8 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024.

Direct external expenses decreased significantly for the three and nine months ended September 30, 2025 compared to the same periods in 2024 due to the wind down of our clinical studies in 2025 including lower clinical development expenses, lower CMC activities with Biocon and lower consulting expenses primarily related to the wind down of our EQUATOR study.

In addition, we negotiated discounts with our clinical vendors on outstanding accounts payable which were recorded as a reduction to research and development expense during the three months ended September 30, 2025.

Indirect expenses decreased for the three and nine months ended September 30, 2025 compared to the same periods in 2024 driven by lower employee compensation and benefits due to lower headcount caused by the wind down of our clinical studies.

We expect research and development expenses in future periods to increase primarily due to the advancement of EQ504, our novel aryl hydrocarbon receptor modulator, into and through clinical development.

General and Administrative Expenses

General and administrative expenses were $2.1 million and $5.1 million for the three and six months ended June 30, 2025, respectively, compared to $3.1 million and $6.9 million for the three and six months ended June 30, 2024, respectively.

The decrease of $1.0 million and $1.8 million in general and administrative expenses for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily due to a decrease in employee compensation and benefits.

General and administrative expenses were $3.3 million and $8.4 million for the three and nine months ended September 30, 2025, respectively, compared to $3.3 million and $10.2 million for the three and nine months ended September 30, 2024, respectively.

There was an immaterial change for the three months ended September 30, 2025, compared to the same period in 2024.

The decrease of $1.8 million in general and administrative expenses for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily related to decreases of (i) $0.8 million in employee compensation and benefits driven by reduced headcount, (ii) $0.4 million in overhead primarily due to lower franchise taxes, directors and officers insurance costs and travel, (ii) $0.3 million in legal expenses and (iii) $0.3 million in consulting expenses.

Interest Income

Interest income was $0.1 million and $0.3 million for the three and six months ended June 30, 2025, respectively, compared to $0.4 million and $0.8 million for the three and six months ended June 30, 2024, respectively.

The decrease in interest income for the three and six months ended June 30, 2025 compared to the same periods in 2024, was primarily due to lower average cash, cash equivalents and short-term investment balances.

Other Income (Expense), net

Other income (expense), net was other income of $0.4 million for each of the three and six months ended June 30, 2025, respectively, compared to other income of $0.2 million and other expense of $0.2 million for the three and six months ended June 30, 2024, respectively.

The change in other income (expense), net for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily due to fluctuations in net foreign currency transaction unrealized gains and losses.

Interest income was $0.2 million and $0.5 million for the three and nine months ended September 30, 2025, respectively, compared to $0.3 million and $1.1 million for the three and nine months ended September 30, 2024, respectively.

The decrease in interest income for the three and nine months ended September 30, 2025 compared to the same periods in 2024, was primarily due to lower average cash, cash equivalents and short-term investment balances.

Other Income, net

Other income, net was other income of $0.1 million and $0.5 million for the three and nine months ended September 30, 2025, respectively, compared to other income of $0.3 million and $0.2 million for the three and nine months ended September 30, 2024, respectively.

The change in other income, net for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily due to fluctuations in net foreign currency transaction unrealized gains and losses.

Liquidity and Capital Resources

From inception through June 30, 2025, we have financed our operations primarily through the sale of equity and debt securities and income generated from our Asset Purchase Agreement with Ono as described in more detail in the Sources of Liquidity section below.

As of June 30, 2025, we had an accumulated deficit of $208.2 million and anticipate that we will continue to incur net losses for the foreseeable future.

As of June 30, 2025, we had $11.5 million in cash and cash equivalents.

From inception through September 30, 2025, we have financed our operations primarily through the sale of equity and debt securities and income generated from our Asset Purchase Agreement with Ono as described in more detail in the Sources of Liquidity section below.

As of September 30, 2025, we had an accumulated deficit of $212.4 million and anticipate that we will continue to incur net losses for the foreseeable future.

As of September 30, 2025, we had $33.1 million in cash and cash equivalents.

Sources of Liquidity

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The Initial Closing of the Private Placement occurred on August 12, 2025.

Net proceeds from the Private Placement were $27.9 million, after deducting placement agent fees and offering expenses totaling $2.1 million.

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There were no shares sold under the 2023 ATM Facility from October 2023 through December 31, 2024.

During the three months ended June 30, 2025, there were no shares sold under the 2023 ATM Facility.

During the six months ended June 30, 2025, there were 109,410 shares of common stock sold under the 2023 ATM Facility for gross proceeds of approximately $55,000.

Issuance costs related to the 2023 ATM totaled $0.5 million.

In March 2025, there were 109,410 shares sold under the 2023 ATM Facility for gross proceeds of $55,000.

Issuance costs related to the 2023 ATM Facility totaled $0.5 million through March 31, 2025.

On August 3, 2025, we entered into Amendment No.

1 to the 2023 ATM Facility pursuant to which Jefferies was replaced by LifeSci Capital LLC as the sales agent under the 2023 ATM Facility.

Since June 30, 2025 and through the date of the filing of this Quarterly Report on Form 10-Q, there were an additional 1,610,075 shares sold under the 2023 ATM Facility, as amended, for gross proceeds of approximately $0.9 million.

For additional information, see Note 8 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

During the three months ended September 30, 2025, there were 1,610,075 shares of common stock sold under the 2023 ATM Facility, as amended, for gross proceeds of approximately $0.9 million.

Issuance costs related to the 2023 ATM, as amended, totaled $0.2 million.

On September 19, 2025, we filed a prospectus supplement with the SEC under which we may offer and sell shares of our common stock having an aggregate offering price of up to $75.0 million, pursuant to the 2023 ATM Facility, as amended.

As of September 30, 2025 and through the date of the filing of this Quarterly Report on Form 10-Q, there were no additional shares of common stock sold under the 2023 ATM Facility, as amended.

Funding Requirements

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We expect that our primary uses of capital will be for non-clinical research, clinical development, CMC activities, formulation development, product supply, potential acquisition of new products, legal and other regulatory compliance expenses, employee compensation and related expenses, insurance premiums, working capital and other general overhead costs.

We believe that the net proceeds from the Initial Closing of the Private Placement with our cash and cash equivalents as of June 30, 2025 can fund operations through 2027.

We believe that our cash and cash equivalents as of September 30, 2025 can fund operations through 2027.

We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

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The incurrence of debt financing would result in debt service obligations and the governing documents would likely include operating and financing covenants that would restrict our operations.

As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.

As a result of the conflict between Russia and Ukraine, the conflict in the Middle East, potential government shutdowns, bank failures, tariffs, inflationary pressures on the economy and monetary policy responses taken by government agencies and other macroeconomic factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth and uncertainty about economic stability.

There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.

If equity and credit markets deteriorate, it may make any

necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

If we raise additional funds through collaboration or license agreements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our common stock.

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We have experienced net losses and negative cash flows from operating activities since our inception and expect to continue to incur net losses into the foreseeable future.

We had an accumulated deficit of $208.2 million as of June 30, 2025.

We expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of EQ504 and EQ302 and any of our other product candidates.

We had an accumulated deficit of $212.4 million as of September 30, 2025.

We expect operating losses and negative cash flows to continue for at least the next several years as we incur costs related to the development of EQ504, EQ302 and any of our other product candidates.

Material Cash Requirements

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We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.

Our expected material cash requirements do not include potential contingent payments upon the achievement by us of regulatory and commercial milestones that we may be required to make under the terms of the merger agreement pursuant to which we acquired Bioniz or potential contingent payments upon the achievement by us of regulatory milestones that we may be required to make under the terms of our stock purchase agreement with Ariagen, nor do they include potential contingent payments upon the achievement by us of regulatory and commercial milestones or royalty payments that we may be required to make under license agreements we have entered into or may enter into with various entities pursuant to which we have in-licensed certain intellectual property, including the Biocon License.

The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in thousands):

Six Months Ended

Net cash (used in) provided by:

Nine Months Ended

September 30,

Net cash provided by (used in):

Operating activities

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Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Operating Activities

During the six months ended June 30, 2025, cash used in operating activities was $11.2 million compared to $8.1 million during the six months ended June 30, 2024.

Cash used in operating activities during the six months ended June 30, 2025 primarily related to our net loss of $14.4 million, adjusted for non-cash items of $0.8 million, primarily consisting of non-cash stock-based compensation expenses, and net cash inflows from changes in other operating assets and liabilities of $2.4 million.

Cash used in operating activities during six months ended June 30, 2024 primarily related to our net loss of $2.3 million, adjusted for non-cash items of $1.6 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in deferred revenue and other operating assets and liabilities of $7.4 million.

During the nine months ended September 30, 2025, cash used in operating activities was $19.6 million compared to $15.7 million during the nine months ended September 30, 2024.

Cash used in operating activities during the nine months ended September 30, 2025 primarily related to our net loss of $18.6 million, adjusted for non-cash items of $1.1 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in other operating assets and liabilities of $2.1 million.

Cash used in operating activities during nine months ended September 30, 2024 primarily related to our net loss of $2.3 million, adjusted for non-cash items of $2.2 million, primarily consisting of non-cash stock-based compensation expenses, and net cash outflows from changes in deferred revenue and other operating assets and liabilities of $15.6 million.

Investing Activities

Net cash provided by investing activities was $4.5 million during the six months ended June 30, 2025 and primarily consisted of maturities of our short-term investments.

Net cash used in investing activities was $4.2 million during the six months ended June 30, 2024.

Purchases of our short-term investments totaled $17.6 million, which was offset by maturities of short-term investments totaling $13.5 million.

Net cash provided by investing activities was $4.5 million during the nine months ended September 30, 2025 and primarily consisted of maturities of our short-term investments.

Net cash provided by investing activities was $7.8 million during the nine months ended September 30, 2024 and primarily consisted of maturities of our short-term investments totaling $25.5 million offset by purchases of our short-term investments totaling $17.6 million as well as $0.1 million of purchases of property and equipment.

Financing Activities

Net cash provided by financing activities totaled $0.1 million during the six months ended June 30, 2025.

We received net proceeds from the sale of shares under our 2023 ATM Facility totaling approximately $37,000.

There were no sales of shares under the 2023 ATM Facility until March 2025.

During the six months ended June 30, 2025, we received proceeds totaling $38,000 from the exercise of stock options.

Net cash provided by financing activities totaled $0.1 million during the six months ended June 30, 2024 and was attributed to cash received from employee stock purchases related to our Employee Stock Purchase Plan.

Net cash provided by financing activities totaled $30.1 million during the nine months ended September 30, 2025 and primarily consisted of net proceeds from the sale of shares under the Private Placement transaction totaling $28.1 million, proceeds totaling $1.2 million from the exercise of stock options and net proceeds from the sale of shares under our 2023 ATM Facility totaling approximately $0.8 million.

Net cash provided by financing activities totaled $0.1 million during the nine months ended September 30, 2024 and was attributed to cash received from employee stock purchases related to our Employee Stock Purchase Plan.

Off-Balance Sheet Arrangements

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Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of June 30, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on this evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025.

As of September 30, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on this evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2025.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2 unchanged sentences

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