Disc Medicine, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS DISC MEDICINE, INC. CONDENSED CONSOLID ATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) June 30, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 98,676 $ 91,145 Marketable securities 619,070 700,007 Prepaid expenses and other current assets 15,015 12,746 Total current assets 732,761 803,898 Property and equipment, net 980 1,159 Right-of-use assets, operating leases 834 1,096 Other assets 496 726 Total assets $ 735,071 $ 806,879 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,840 $ 9,018 Accrued external research and development expenses 14,324 11,451 Other accrued expenses 8,881 15,561 Operating lease liabilities, current 315 611 Total current liabilities 30,360 36,641 Long-term debt, net 59,340 29,159 Operating lease liabilities, non-current 1,207 1,253 Total liabilities 90,907 67,053 Commitments and contingencies (Note 14) Stockholders’ equity: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2026 and December 31, 2025 — — Common stock, $ 0.0001 par value; 100,000,000 shares authorized as of June 30, 2026 and December 31, 2025; 38,345,666 and 37,890,616 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 4 4 Additional paid-in capital 1,278,990 1,249,043 Accumulated other comprehensive (loss) income ( 1,608 ) 965 Accumulated deficit ( 633,222 ) ( 510,186 ) Total stockholders’ equity 644,164 739,826 Total liabilities and stockholders’ equity $ 735,071 $ 806,879 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 DISC MEDICINE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Operating expenses: Research and development $ 46,933 $ 46,319 $ 92,837 $ 74,082 Selling, general and administrative 18,142 15,091 41,762 27,274 Total operating expenses 65,075 61,410 134,599 101,356 Loss from operations ( 65,075 ) ( 61,410 ) ( 134,599 ) ( 101,356 ) Other income (expense), net: Interest income 6,532 7,057 13,425 13,937 Interest expense ( 908 ) ( 910 ) ( 1,752 ) ( 1,807 ) Other (expense) income ( 12 ) 68 10 65 Total other income (expense), net 5,612 6,215 11,683 12,195 Loss before income taxes ( 59,463 ) ( 55,195 ) ( 122,916 ) ( 89,161 ) Income tax expense ( 69 ) ( 52 ) ( 120 ) ( 171 ) Net loss $ ( 59,532 ) $ ( 55,247 ) $ ( 123,036 ) $ ( 89,332 ) Net loss per share, basic and diluted $ ( 1.54 ) $ ( 1.58 ) $ ( 3.19 ) $ ( 2.61 ) Weighted-average common shares outstanding, basic and diluted 38,685,565 35,024,592 38,589,035 34,179,364 Comprehensive loss: Net loss $ ( 59,532 ) $ ( 55,247 ) $ ( 123,036 ) $ ( 89,332 ) Other comprehensive loss: Foreign currency translation adjustments ( 2 ) ( 15 ) ( 12 ) ( 1 ) Unrealized loss on marketable securities ( 1,035 ) ( 247 ) ( 2,561 ) ( 15 ) Total other comprehensive loss ( 1,037 ) ( 262 ) ( 2,573 ) ( 16 ) Comprehensive loss $ ( 60,569 ) $ ( 55,509 ) $ ( 125,609 ) $ ( 89,348 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 6 DISC MEDICINE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except share and per share amounts) (Unaudited) Common Stock $0.0001 Par Value Additional Paid-In Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Capital Income (Loss) Deficit Equity Balance at December 31, 2025 37,890,616 4 1,249,043 965 ( 510,186 ) 739,826 Issuance of common stock upon exercise of stock options 67,811 — 1,010 — — 1,010 Issuance of common stock upon vesting of restricted stock units 218,322 — — — — — Issuance of common stock under employee stock purchase plan 13,715 — 687 — — 687 Stock-based compensation expense — — 11,946 — — 11,946 Foreign currency translation adjustments — — — ( 10 ) — ( 10 ) Unrealized loss on marketable securities — — — ( 1,526 ) — ( 1,526 ) Net loss — — — — ( 63,504 ) ( 63,504 ) Balance at March 31, 2026 38,190,464 $ 4 $ 1,262,686 $ ( 571 ) $ ( 573,690 ) $ 688,429 Issuance of common stock upon exercise of stock options 113,359 — 2,356 — — 2,356 Issuance of common stock upon vesting of restricted stock units 41,843 — — — — — Stock-based compensation expense — — 13,948 — — 13,948 Foreign currency translation adjustments — — — ( 2 ) — ( 2 ) Unrealized loss on marketable securities — — — ( 1,035 ) — ( 1,035 ) Net loss — — — — ( 59,532 ) ( 59,532 ) Balance at June 30, 2026 38,345,666 $ 4 $ 1,278,990 $ ( 1,608 ) $ ( 633,222 ) $ 644,164 Common Stock $0.0001 Par Value Additional Paid-In Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Capital Income Deficit Equity Balance at December 31, 2024 29,865,030 3 741,297 289 ( 298,002 ) $ 443,587 Issuance of common stock upon exercise of stock options 91,524 — 575 — — 575 Issuance of common stock upon vesting of restricted stock units 83,672 — — — — — Issuance of common stock under employee stock purchase plan 7,814 — 287 — — 287 Sale of common stock in underwritten offering, net of issuance costs of $ 15,321 4,533,182 — 234,003 — — 234,003 Sale of pre-funded warrants in underwritten offering, net of issuance costs of $ 615 — — 9,386 — — 9,386 Stock-based compensation expense — — 6,363 — — 6,363 Foreign currency translation adjustments — — — 14 — 14 Unrealized gain on marketable securities — — — 232 — 232 Net loss — — — — ( 34,085 ) ( 34,085 ) Balance at March 31, 2025 34,581,222 $ 3 $ 991,911 $ 535 $ ( 332,087 ) $ 660,362 Issuance of common stock upon exercise of stock options 110,230 — 892 — — 892 Issuance of common stock upon vesting of restricted stock units 3,430 — — — — — Stock-based compensation expense — — 8,420 — — 8,420 Foreign currency translation adjustments — — — ( 15 ) — ( 15 ) Unrealized loss on marketable securities — — — ( 247 ) — ( 247 ) Net loss — — — — ( 55,247 ) ( 55,247 ) Balance at June 30, 2025 34,694,882 $ 3 $ 1,001,223 $ 273 $ ( 387,334 ) $ 614,165 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 DISC MEDICINE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2026 2025 Cash flows from operating activities Net loss $ ( 123,036 ) $ ( 89,332 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation and amortization 179 105 Stock-based compensation 25,894 14,783 Amortization/accretion of investment securities ( 1,558 ) ( 5,148 ) Loss from initial consolidation of variable interest entity — 852 Non-cash lease expense 262 229 Non-cash interest expense 427 415 Other non-cash items ( 14 ) — Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 2,264 ) ( 7,911 ) Accounts payable ( 2,178 ) ( 1,598 ) Accrued external research and development expenses 2,873 322 Other accrued expenses ( 6,680 ) ( 2,518 ) Operating lease liabilities ( 342 ) 507 Net cash used in operating activities ( 106,437 ) ( 89,294 ) Cash flows from investing activities Purchases of marketable securities ( 186,493 ) ( 405,876 ) Maturities of marketable securities 266,429 185,819 Purchases of property and equipment — ( 887 ) Net cash provided by (used in) investing activities 79,936 ( 220,944 ) Cash flows from financing activities Proceeds from sale of common stock in underwritten offering, net of issuance costs paid — 234,003 Proceeds from sale of pre-funded warrants in underwritten offering, net of issuance costs paid — 9,386 Proceeds from long-term debt, net of issuance costs paid 29,979 — Proceeds from stock option exercises 3,366 1,467 Contributions from employee stock purchase plan 687 287 Net cash provided by financing activities 34,032 245,143 Net increase (decrease) in cash, cash equivalents and restricted cash 7,531 ( 65,095 ) Cash, cash equivalents and restricted cash, beginning of period 91,387 192,672 Cash, cash equivalents and restricted cash, end of period $ 98,918 $ 127,577 Six Months Ended June 30, 2026 2025 Supplemental cash flow information Cash paid for interest $ 1,291 $ 1,407 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 DISC MEDICINE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Nature of the Business Disc Medicine, Inc. (together with its subsidiaries, the “Company”) is a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel treatments for patients suffering from serious hematologic diseases. The Company has assembled a portfolio of clinical and preclinical product candidates that aim to modify fundamental biological pathways associated with the formation and function of red blood cells, specifically heme biosynthesis and iron homeostasis. The Company’s current pipeline includes bitopertin for the treatment of erythropoietic porphyrias (“EPs”) including erythropoietic protoporphyria (“EPP”) and X-linked protoporphyria (“XLP”); selcodebart (DISC-0974) for the treatment of anemia of myelofibrosis (“MF”) and anemia of inflammatory bowel disease ("IBD"); and DISC-3405 for the treatment of polycythemia vera (“PV”), sickle cell disease ("SCD"), and other hematologic disorders. In addition, the Company’s preclinical programs include DISC-0998 for the treatment of anemia associated with inflammatory diseases. The Company’s approach to product development leverages well-understood molecular mechanisms that have been validated in humans. The Company believes that each of its product candidates, if approved, has the potential to improve the lives of patients suffering from hematologic diseases. The Company was founded in October 2017. The Company’s principal offices are located in Watertown, Massachusetts. The Company is subject to a number of risks and uncertainties common to the biotechnology industry, including, but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. The Company’s research and development programs require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales. Liquidity and Capital Resources The Company’s condensed consolidated financial statements have been prepared on the basis of the Company continuing as a going concern. The Company expects that its existing cash, cash equivalents and marketable securities as of June 30, 2026 of $ 717.7 million will enable the Company to fund its planned operating expense and capital expenditure requirements for at least twelve months from the date of issuance of these condensed consolidated financial statements. The Company has incurred recurring losses and negative cash flows from operations since inception. As of June 30, 2026, the Company had an accumulated deficit of $ 633.2 million. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future. The future viability of the Company is dependent on its ability to generate cash from operating activities or to raise additional capital to finance its operations. There can be no assurance that the Company will ever earn revenues or achieve profitability, or if achieved, that the revenues or profitability will be sustained on a continuing basis. In addition, the Company’s preclinical and clinical development activities, manufacturing and commercialization of the Company’s product candidates, if approved, may require significant additional financing. 2. Summary of Significant Accounting Policies Summary of Significant Accounting Policies The significant accounting policies used in preparation of the condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K. There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 . Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company’s condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States as found in the Accounting Standard Codification (“ASC”) and Accounting Standards Updates (“ASU”) of th e Financial Accounting Standards Board (“FASB”). Unaudited Interim Condensed Consolidated Financial Information The accompanying condensed consolidated financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 are unaudited. The financial data and other information contained in the notes hereto as of June 30, 2026 and for the 9 three and six months ended June 30, 2026 and 2025 are also unaudited. The condensed consolidated balance sheet data as of December 31, 2025 was derived from the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of June 30, 2026 and the results of its operations and cash flows for the three and six months ended June 30, 2026 and 2025. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025, and the notes thereto, included in the Company’s Annual Report on Form 10-K. The results for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of results to be expected for the full years, or any other interim periods, or any future year or period. Use of Estimates The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to accrued research and development expenses; stock-based compensation expense; the fair value of the common stock prior to the effective date of the reverse merger with Gemini Therapeutics, Inc. ("Gemini") in December 2022; and income taxes. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it has concluded to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ materially from those estimates or assumptions. Concentration of Credit Risk and of Significant Suppliers Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits and limits its exposure to cash risk by placing its cash with high credit quality accredited financial institutions. The Company has concluded that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company relies, and expects to continue to rely, on a small number of vendors to manufacture supplies and to process its product candidates for its development programs. These programs could be adversely affected by a significant interruption in the manufacturing process or supply chain. Recently Issued Accounting Pronouncements Not Yet Adopted Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption. 3. Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash consisted of the following (in thousands): June 30, December 31, 2026 2025 Cash and cash equivalents $ 98,676 $ 91,145 Restricted cash 242 242 Total cash, cash equivalents and restricted cash as shown on the condensed consolidated statements of cash flows $ 98,918 $ 91,387 The Company's restricted cash balance, which is classified within prepaid expenses and other current assets and other assets on the condensed consolidated balance sheets, consists of letters of credit related to leased and subleased office space in Watertown, Massachusetts. The Company is required to maintain a separate cash balance to secure its letters of credit. 10 4. Marketable Securities Marketable securities as of June 30, 2026 consisted of the following (in thousands): Gross Unrealized Amortized Cost Gains Losses Estimated Fair Value Marketable securities available-for-sale: U.S. treasury securities $ 441,097 $ 57 $ ( 1,119 ) $ 440,035 Corporate debt securities 89,493 — ( 89 ) 89,404 U.S. government agency securities 90,048 4 ( 421 ) 89,631 Total available-for-sale securities $ 620,638 $ 61 $ ( 1,629 ) $ 619,070 Marketable securities as of December 31, 2025 consisted of the following (in thousands): Gross Unrealized Amortized Cost Gains Losses Estimated Fair Value Marketable securities available-for-sale: U.S. treasury securities $ 484,670 $ 859 $ — $ 485,529 Corporate debt securities 132,913 44 ( 16 ) 132,941 U.S. government agency securities 81,431 110 ( 4 ) 81,537 Total available-for-sale securities $ 699,014 $ 1,013 $ ( 20 ) $ 700,007 As of June 30, 2026 , all of the Company’s marketable securities are available to the Company for use in current operations. As a result, the Company has classified all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date. The following table shows the fair value of the Company’s marketable securities, by contractual maturity, as of June 30, 2026 (in thousands): June 30, 2026 Due within one year $ 446,965 Due after one year through five years 172,105 Total available-for-sale securities $ 619,070 The aggregate fair value of marketable securities with unrealized losses w as $ 486.8 million and $ 41.3 million as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, seventy-two i nvestments and five investments were in an unrealized loss position, respectively. All such investments have been in an unrealized loss position for less than a year and these losses are considered temporary. The Company has the ability and intent to hold these investments until a recovery of their amortized cost, which may not occur until maturity. The Company expects that U.S. treasury, U.S. government agency, and corporate debt securities are subject to minimal credit risk. As a result, the Company did no t record any charges for credit-related impairments for its available-for-sale securities for the three and six months ended June 30, 2026 and 2025 . 5. Fair Value Measurements The following tables present information about the Company’s assets and liabilities that are measured and carried at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, which is described further within Note 2 - Summary of Significant Accounting Policies to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 are summarized as follows (in thousands): June 30, 2026 Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 89,133 $ — $ — Total cash equivalents 89,133 — — Marketable securities: U.S. treasury securities — 440,035 — Corporate debt securities — 89,404 — U.S. government agency securities — 89,631 — Total marketable securities — 619,070 — Total assets $ 89,133 $ 619,070 $ — 11 Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 are summarized as follows (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 72,932 $ — $ — Corporate debt securities — 9,981 — Total cash equivalents 72,932 9,981 — Marketable securities: U.S. treasury securities — 485,529 — Corporate debt securities — 132,941 — U.S. government agency securities — 81,537 — Total marketable securities — 700,007 — Total assets $ 72,932 $ 709,988 $ — The fair value of the Company’s Level 1 cash equivalents, consisting of money market funds, is based on quoted market prices in active markets with no valuation adjustment. The fair value of the Company’s Level 2 cash equivalents consisting of corporate debt securities with original maturities of three months or less and marketable securities consisting of U.S. treasury, U.S. government agency, and corporate debt securities with original maturities 24 months or less, are determined through third-party pricing services. There have been no impairments of the Company’s assets measured and carried at fair value during the three and six months ended June 30, 2026 and 2025. There were no changes in valuation techniques or transfers between Level 1, Level 2, and Level 3 financial assets during the three and six months ended June 30, 2026 and 2025. The Company did not have any non-recurring fair value measurements on any assets or liabilities during the three and six months ended June 30, 2026 and 2025 . 6. Other Accrued Expenses Other accrued expenses consisted of the following (in thousands): June 30, December 31, 2026 2025 Accrued employee-related expenses $ 6,363 $ 12,642 Accrued professional fees 1,777 2,214 Accrued other 741 705 Total other accrued expenses $ 8,881 $ 15,561 7. Licensing Activities and Business Development License and Stock Purchase Agreement with AbbVie Deutschland GmbH & Co. KG (“AbbVie”) In September 2019, the Company entered into an agreement with AbbVie, pursuant to which AbbVie granted the Company an exclusive license, with the right to grant sublicenses, to certain AbbVie intellectual property. Under this agreement, the Company paid a non-refundable, non-creditable upfront fee of $ 0.6 million. The Company is also obligated to make aggregate payments upon the achievement of certain development, commercialization and sales-based milestones up to $ 18.0 million, $ 45.0 million and $ 87.5 million, respectiv ely on a licensed product-by-licensed product basis. In addition, the Company is also obligated to pay royalties based on net sales of the licensed products on a licensed product-by-licensed product and country-by-country basis. The Company’s royalty obligation expires on a licensed product-by-licensed product and country-by-country basis upon the expiration of the last-to-expire valid claim under the licensed intellectual property rights in such country. Unless terminated earlier, the agreement expires upon the expiration of the Company’s royalty obligation for all licensed products. AbbVie can terminate the agreement if the Company fails to make any payments within a specified period after receiving written notice of such failure, or in the event of a material breach by the Company and failure to cure such breach within a certain period of time. In January 2025, the Company made a milestone payment of $ 3.0 million upon the first administration to a patient in the Phase 2 clinical trial of selcodebart (DISC-0974) which was recorded within research and development in the Company’s condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2025. As of June 30, 2026 , no additional milestones were deemed probable of achievement. 12 License Agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively “Roche”) In connection with a license agreement with Roche, (the "Roche Agreement"), the Company paid Roche an upfront, non-refundable exclusivity payment of $ 0.5 million in March 2021. Upon execution of the Roche Agreement in May 2021, the Company paid Roche an additional upfront, non-refundable payment of $ 4.0 million. The Company is obligated to make contingent payments to Roche up to an aggregate of $ 50.0 million in development and regulatory milestone payments for development and approval in a first indication and up to an aggregate of $ 35.0 million in development and regulatory milestone payments for development and approval in a second indication. The Company is also obligated to make contingent payments to Roche up to an aggregate of $ 120.0 million based on achievement of certain thresholds for annual net sales of licensed products. Roche is also eligible to receive tiered royalties on net sales of commercialized products, at rates ranging from high single-digits to high teens. Pursuant to the terms of the Roche Agreement and in connection with the Company's reverse merger with Gemini, the Company issued 482,313 shares of the Company to Roche for no consideration. In June 2025, the Company made a milestone payment of $ 10.0 million upon the initiation of the first Phase 3 clinical trial with a licensed product in a first indication which was recorded within research and development in the Company’s condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2025 . The next potential milestone payment is $ 15.0 million due upon regulatory approval in the United States with a licensed product in a first indication. As of June 30, 2026 , this milestone was no t deemed probable of achievement. License Agreement with Mabwell Therapeutics, Inc. ("Mabwell") In January 2023, the Company entered into an exclusive license agreement with Mabwell pursuant to which Mabwell granted the Company an exclusive and sublicensable license to certain Mabwell intellectual property. In connection with the agreement, the Company paid Mabwell an upfront payment of $ 10.0 million in March 2023. In addition, the Company is obligated to pay certain development and regulatory milestone payments for the licensed products, for up to three indications, up to a maximum aggregate amount of $ 127.5 million, as well as certain commercial milestone payments for certain licensed product net sales achievements, up to a maximum aggregate amount of $ 275.0 million. The Company is further obligated to pay a tiered percentage of revenue that the Company receives from its sublicensees ranging from a low third decile percentage to a low first decile percentage. In addition, the Company is obligated to pay Mabwell a royalty on annual net sales of all licensed products at a tiered rate ranging from low single-digits to high single-di gits. In October 2023, the Company made a milestone payment of $ 5.0 million upon the first administration to a patient in a Phase 1 clinical trial for DISC-3405. In September 2025, the Company made a milestone payment of $ 10.0 million upon the first administration to a patient in a Phase 2 clinical trial for DISC-3405. In April 2026, the Company made a milestone payment of $ 5.0 million upon the first administration to a patient in a Phase 1b clinical trial with a licensed product in a second indication which was recorded within research and development in the Company’s condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2026. As of June 30, 2026 , no additional milestones were deemed probable of achievement. License Agreement with Oak Bay Biosciences, Inc. (“OBB”) In December 2024, the Company entered into an out-license agreement with OBB pursuant to which the Company granted an exclusive license, with the right to grant sublicenses, to certain Gemini intellectual property. Under the terms of the agreement, the Company received an upfront payment of $ 0.2 million with additional consideration receivable upon the achievement of certain clinical, regulatory and sales milestones up to $ 7.0 million, $ 35.0 million, an d $ 160.0 million, respectively. As of June 30, 2026 , none of the milestones had been achieved nor were they considered probable of achievement. Merger Agreement In May 2025, the Company acquired a privately held company with a clinic-ready program for myelodysplastic syndromes and similar hematologic conditions. The transaction included no upfront cash payment and up to $ 50.0 million in late-stage contingent development and sales-based milestone payments (“Contingent Consideration”). The acquired entity’s primary asset was in-process research and development (“IPR&D”) with no alternative future use. The fair value of the Contingent Consideration was determined using Level 3 unobservable inputs including management's estimates of milestone achievement probabilities and the application of an appropriate discount rate. Because the milestone payments were not accounted for as derivatives under ASC Topic 815, they were initially measured at fair value as of the acquisition date and are not remeasured each reporting period. The Contingent Consideration will be adjusted when it is determined that achievement of the contingent milestone is probable, which is generally upon achievement of the milestone event. As part of the transaction, the Company also obtained an exclusive license to certain intellectual property. Under the terms of the license, the Company is obligated to make certain development and sales-based milestone payments of up to $ 5.6 million and $ 20.0 million, respectively, for each compound. Additionally, the Company is required to pay royalties on net sales of licensed products 13 at rates in the low single-digits. As of June 30, 2026 , none of the milestones had been achieved, nor were they considered probable of achievement. 8. Long-Term Debt In November 2024, the Company entered into a Loan and Security Agreement (the “Hercules Loan Agreement”), with the lenders party thereto (the “Lenders”) and Hercules Capital, Inc., as administrative agent and collateral agent (the “Agent”). The Hercules Loan Agreement provides for up to $ 200.0 million of senior secured term loans available to the Company in multiple tranches (the “Term Loan Facility”). Upon execution, the Company borrowed an initial amount of $ 30.0 million. In June 2026, the Company entered into the first amendment to the Hercules Loan Agreement (the “Hercules First Amendment”) which modified certain terms of the agreement, including, among other things, extending the availability period for the remaining undrawn tranches and revising the minimum cash covenant requirements. Upon execution of the Hercules First Amendment, the Company drew an additional principal amount of $ 30.0 million, increasing the cumulative amount drawn to $ 60.0 million. The Company may, at its sole discretion, draw an additional $ 50.0 million on or prior to April 30, 2027. The Company may also access additional term loan advances in an aggregate principal amount of up to $ 65.0 million during the term of the Term Loan Facility subject to achievement of specified performance milestones, and one additional term loan advance up to an aggregate principal amount of $ 25.0 million subject to certain terms and conditions. The Company intends to use the proceeds of the Term Loan Facility for working capital and general corporate purposes. The Term Loan Facility will mature on December 1, 2029 (the “Maturity Date”). The outstanding principal balance of the Term Loan Facility bears cash interest at a floating annual rate equal to the greater of (i) 8.25 % and (ii) the sum of the Prime Rate and 1.75 %. Accrued interest is payable monthly following the funding of each term loan advance. Borrowings under the Hercules Loan Agreement are repayable in monthly interest-only payments through November 2028. At the end of the interest-only payment period, borrowings under the Hercules Loan Agreement are repayable in equal monthly payments of principal and accrued interest until the Maturity Date. At the Company's option, the Company may prepay all or a portion of the outstanding borrowings, subject to a prepayment fee of 3.0 % of the principal amount if prepayment occurs during the 18 months following the Closing Date, 2.0 % after 18 months following the Closing Date but prior to 36 months following the Closing Date, and 1.0 % thereafter. The obligations under the Hercules Loan Agreement are secured, subject to customary permitted liens and other agreed-upon exceptions, by a first-priority perfected security interest in all of the tangible and intangible assets of the Company, other than intellectual property. The Hercules Loan Agreement includes customary repayment and prepayment terms, events of default, affirmative and negative covenants and representations and warranties. Additionally, the Hercules Loan Agreement contains a minimum cash covenant that requires the Company to maintain certain levels of cash in accounts subject to a control agreement in favor of the Agent at all times beginning on the first day on or after July 1, 2028 (or July 1, 2029, if the Company achieves a certain milestone) on which the aggregate principal amount of the term loan advances is then more than $ 50.0 million; provided, however, the minimum cash covenant will be waived during all times that the Company's market capitalization is greater than or equal to $ 1.0 billion. The Hercules Loan Agreement also includes a subjective acceleration clause for circumstances which could be reasonably expected to have a material adverse effect on the Company. The Hercules Loan Agreement provides for a final payment ("End of Term Charge"), payable upon maturity or the repayment of the obligations in full or in part (on a pro rata basis), equal to 6.75 % of the aggregate principal amount of term loans advanced to the Company and repaid on such date, which is being accrued on the Company's condensed consolidated balance sheets. The Company has recorded debt discount and debt issuance costs of $ 2.1 million related to borrowings under the Hercules Loan Agreement. Debt discount and unamortized debt issuance costs were recorded as a reduction of the carrying amount on the term loan and are amortized as interest expense using the effective-interest method. In addition, unamortized deferred financing costs of $ 0.4 million and $ 0.6 million were recorded in other assets as of June 30, 2026 and December 31, 2025, respectively, related to the Company's right to borrow additional amounts in the future. Interest expense related to the Term Loan Facility for the three and six months ended June 30, 2026 was $ 0.9 million and $ 1.8 million, respectively. Interest expense related to the Term Loan Facility for the three and six months ended June 30, 2025 was $ 0.9 million and $ 1.8 million, respectively. A s of June 30, 2026 and December 31, 2025, the carrying value of the Term Loan Facility approximated its fair value. The obligations under the Term Loan Facility as of June 30, 2026 and December 31, 2025 consisted of the following (in thousands): June 30, December 31, 2026 2025 Principal term loan balance $ 60,000 $ 30,000 Unamortized debt discount and issuance costs ( 1,400 ) ( 1,351 ) Accrued end of term fee 740 510 Long-term debt, net $ 59,340 $ 29,159 14 The annual principal payments due under the Term Loan Facility as of June 30, 2026 were as follows (in thousands): Remainder of 2026 $ — 2027 — 2028 4,422 2029 55,578 Total $ 60,000 The table of future principal payments excludes the End of Term Charge of $ 4.1 million, which is due upon the maturity of the loan. 9. Stockholders' Equity Preferred Stock The Company was authorized to issue up to 10,000,000 shares of preferred stock, $ 0.0001 par value per share . As of June 30, 2026, no shares of preferred stock were issued or outstanding. Common Stock The Company was auth orized to issue up to 100,000,000 shares of common stock, $ 0.0001 par value per share. As of June 30, 2026 , 38,345,666 shares of common stock were issued and outstanding. Underwritten Offerings October 2025 Offering In October 2025, in connection with an underwriting agreement with Jefferies LLC, Leerink Partners LLC, Morgan Stanley & Co. LLC, and Cantor Fitzgerald & Co., the Company sold 2,619,049 shares of its common stock, at a public offering price of $ 84.00 per share. The Company also sold pre-funded warrants to purchase an aggregate of 59,523 shares of common stock at a price of $ 83.9999 per pre-funded warrant. The Company received aggregate net proceeds of $ 211.0 million, after deducting offering expenses of $ 14.0 million. As of June 30, 2026 , none of the 59,523 pre-funded warrants had been exercised. January 2025 Offering In January 2025, in connection with an underwriting agreement with Jeffries LLC, Leerink Partners LLC, Stifel, Nicolaus & Company, Incorporated and Cantor Fitzgerald & Co., the Company sold 4,533,182 shares of its common stock, which included the exercise in full by the underwriters of their option to purchase up to 615,000 additional shares of common stock, at a public offering price of $ 55.00 per share. The Company also sold pre-funded warrants to purchase an aggregate of 181,818 shares of common stock at a pri ce of $ 54.9999 per pre-funded warrant. The Company received aggregate net proceeds of $ 243.4 million, after deducting offering expenses of $ 15.9 million. As of June 30, 2026 , none of the 181,818 pre-funded warrants had been exercised. June 2024 Offering In June 2024, the Company entered into an underwriting agreement with Leerink Partners LLC related to an underwritten offering. Pursuant to the agreement, the Company sold 4,944,000 shares of common stock of the Company, par value $ 0.0001 per share, at a price to the public of $ 36.00 per share. The Company received net proceeds of $ 172.5 million, after deducting the underwriting discount and offering expenses of $ 5.5 million. June 2023 Offering In June 2023, the Company sold 3,015,919 shares of its common stock upon the completion of its public follow-on offering, which included the exercise in full by the underwriters of their option to purchase up to 420,000 additional shares of common stock, at a public offering price of $ 49.00 per share. The Company also sold, in lieu of shares of the Company’s common stock, pre-funded warrants to purchase an aggregate of 204,081 shares of common stock at a price of $ 48.9999 per pre-funded warrant. The Company received aggregate net proceeds of $ 147.9 million, after deducting offering expenses of $ 9.9 million. As of June 30, 2026 , none of the 204,081 pre-funded warrants had been exercised. February 2023 Offering In February 2023, the Company entered into a securities purchase agreement, with certain investors. Pursuant to the securities purchase agreement, the Company sold an aggregate of 1,488,166 shares of the Company’s common stock, at a purchase price of $ 23.00 per share, and with respect to a certain investor, in lieu of shares of the Company’s common stock, pre-funded warrants to purchase an aggregate of 1,229,224 shares of the Company’s common stock, at a purchase price of $ 22.9999 per pre-funded warrant, for aggregate net proceeds of $ 62.4 million, after deducting offering expenses of $ 0.1 million. In September 2023, all of the pre-funded warrants were exercised in a cashless transaction which resulted in 1,229,221 shares of common stock being issued to the investor. 15 At-the-Market ("ATM") Program Cantor Fitzgerald & Co. (“Cantor”) On November 15, 2024, the Company entered into a Controlled Equity Offering Sales Agreement (the “Cantor ATM Agreement”) with Cantor, pursuant to which the Company may, from time to time in its sole discretion, issue and sell to or through Cantor, acting as sales agent, shares of the Company’s common stock, par value $ 0.0001 per share having an aggregate offering price of up to $ 200.0 million. This offering was made pursuant to the Company's effective registration statement on Form S-3 filed in August 2024 (the "August 2024 Shelf"). As of June 30, 2026 , the Company had sold an aggregate of 162,457 shares of common stock in Cantor ATM offerings under the August 2024 Shelf and pursuant to the Cantor ATM Agreement. Aggregate gross proceeds from the transaction were $ 10.1 million and the Company received $ 9.8 million in net proceeds, after deducting placement agent fees and offering expenses. There were no sales under the Cantor ATM Agreement during the three and six months ended June 30, 2026 and 2025 . 10. Stock-Based Compensation Equity Plans The Company grants stock-based awards under its 2021 Stock Option and Incentive Plan (the “2021 Plan”), which was approved by its stockholders in February 2021 and amended and restated in January 2023. The Company also has outstanding stock option awards under its 2017 Stock Option and Grant Plan (the “Private Disc Plan”) but is no longer granting awards under this plan or its 2021 Inducement Plan. The Company also grants awards under its 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which was approved by the Company's stockholders in July 2021 and amended and restated in January 2023. Out-of-Plan Inducement Grants From time to time, the Company grants equity awards to newly hired executives as a material inducement to enter into employment with the Company. These grants are made in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and are issued outside the 2021 Plan, the 2021 Inducement Plan and each of the other stock incentive plans described above. Stock-Based Compensation Expense Total stock-based compensation expense recorded as research and development and selling, general and administrative expenses, respectively, for employees, directors and non-employees is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Research and development $ 6,995 $ 3,862 $ 12,786 $ 6,821 Selling, general and administrative 6,953 4,558 13,108 7,962 Total stock-based compensation expense $ 13,948 $ 8,420 $ 25,894 $ 14,783 11. Income Taxes The Company did no t record a provision or benefit for federal income taxes during the three and six months ended June 30, 2026 and 2025. The Company recorded state income tax expense of $ 0.1 million and $ 0.2 million for the six months ended June 30, 2026 and 2025, respectively, due to interest income. The Company continues to maintain a full valuation allowance against all of its deferred tax assets. The Company has evaluated the positive and negative evidence involving its ability to realize its deferred tax assets and has considered its history of cumulative net losses incurred since inception and its lack of any commercially ready products. The Company has concluded that it is more likely than not that it will not realize the benefits of its deferred tax assets. The Company reevaluates the positive and negative evidence at each reporting period. The Company has never been examined by the Internal Revenue Service or any other jurisdiction for any tax years and, as such, all years within the applicable statutes of limitations are potentially subject to audit. 12. Net Loss Pe r Share Basic and diluted net loss per share is computed by dividing net loss by the weighted-average common shares outstanding. The weighted-average common shares outstanding used in the basic and diluted net loss per share calculation includes pre-funded 16 warrants issued in connection with the Company’s underwritten offerings. As of June 30, 2026 and June 30, 2025 , 445,422 and 385,899 pre-funded warrants were outstanding, respectively. The following table sets forth the computation of the Company’s basic and diluted net loss per share (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Numerator: Net loss $ ( 59,532 ) $ ( 55,247 ) $ ( 123,036 ) $ ( 89,332 ) Denominator: Weighted-average common shares outstanding, basic and diluted 38,685,565 35,024,592 38,589,035 34,179,364 Net loss per share, basic and diluted $ ( 1.54 ) $ ( 1.58 ) $ ( 3.19 ) $ ( 2.61 ) The Company has generated a net loss in all periods presented, so the basic and diluted net loss per share are the same, as the inclusion of the potentially dilutive securities would be anti-dilutive. As of June 30, 2026 and June 30, 2025 , the C ompany excluded the following potential common shares from the computation of diluted net loss per share because including them would have had an anti-dilutive effect: As of June 30, 2026 2025 Options to purchase common stock 3,706,349 3,452,796 Restricted stock units 1,348,329 997,737 Employee stock purchase program 8,767 6,657 13. Segment Information The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions, resulting in a single reportable segment. The Company has determined that its Chief Operating Decision Maker ("CODM") is its Chief Executive Officer . The Company’s CODM reviews the Company’s financial information on a consolidated basis for the purpose of allocating resources and assessing financial performance. The key measure of segment profit or loss that the CODM uses to allocate resources and assess performance is the Company’s consolidated net loss, as reported on the condensed consolidated statements of operations and comprehensive loss. In addition, the CODM is regularly provided the significant segment expense categories included in the table below (in thousands), which are reviewed against budgeted expectations to assist in resource allocation decision-making. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Bitopertin program external expense $ ( 8,666 ) $ ( 23,686 ) $ ( 18,006 ) $ ( 32,121 ) Selcodebart (DISC-0974) program external expense ( 12,354 ) ( 4,615 ) ( 20,463 ) ( 10,736 ) DISC-3405 program external expense ( 4,960 ) ( 1,908 ) ( 14,147 ) ( 3,576 ) Other external research and development expense ( 2,697 ) ( 3,103 ) ( 4,862 ) ( 4,935 ) Internal and other research and development expense ( 11,261 ) ( 9,145 ) ( 22,573 ) ( 15,893 ) Commercial expense $ ( 3,083 ) $ ( 2,660 ) $ ( 11,517 ) $ ( 4,581 ) General and administrative expense $ ( 8,106 ) $ ( 7,873 ) $ ( 17,137 ) $ ( 14,731 ) Stock-based compensation expense $ ( 13,948 ) $ ( 8,420 ) $ ( 25,894 ) $ ( 14,783 ) Other segment items* $ 5,543 $ 6,163 $ 11,563 $ 12,024 Net loss $ ( 59,532 ) $ ( 55,247 ) $ ( 123,036 ) $ ( 89,332 ) 17 * Other segment items include interest income, interest expense, other (expense) income, and income tax expense as reported on the condensed consolidated statements of operations and comprehensive loss. Assets regularly provided to the CODM are consistent with those reported on the condensed consolidated balance sheets with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents and marketable securities balances. All of the Company’s tangible assets are held in the United States. 14. Commitments and Contingencies Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to its vendors, lessors, contract research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims. Legal Proceedings The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the six months ended June 30, 2026 and 2025 and, to the best of its knowledge, no material legal proceedings are currently pending or threatened. Payments Upon Termination The Company enters into contracts in the normal course of business with contract research organizations ("CROs"), contract development and manufacturing organizations ("CDMOs") and other third parties for preclinical studies, clinical trials and manufacturing services. These contracts typically do not contain minimum purchase commitments and are generally cancelable by the Company upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of the Company’s service providers, up to the date of cancellation and, in the case of certain arrangements with CROs and CDMOs, may include noncancelable fees. Under such agreements, the exact amounts owed by the Company in the event of termination will be based on the timing of the termination and the exact terms of the agreement. As of June 30, 2026 , the Company has not recognized any amounts related to these contingencies as the amount and timing of such payments are not fixed and estimable. 15. Related Party Transactions In October 2025 and January 2025, certain existing investors participated in the Company's underwritten offerings (see Note 9 - Stockholders' Equity ). 18