Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
References in this Annual Report to “we,” “us,” “our” or the “Company” refer to Liminatus Pharma, Inc. (successor to Iris Parent Holding Corp.) and its subsidiaries. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
Some of the statements contained in this document may constitute “forward-looking statements” for purposes of the federal securities laws. All statements, other than statements of historical fact included in this Annual Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the public filings made with the SEC by the Company. The Company’s filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
The Company is a pre-clinical stage biopharmaceutical company developing novel, immune-modulating cancer therapies. The Company’s candidate IBA101, is a humanized anti CD47 monoclonal antibody. The next generation CD47 checkpoint inhibitor’s initial indication is expected to be patients with advanced solid cancers including non-small cell lung cancer.
The Company is subject to the uncertainty of whether the Company’s intellectual property will develop into successful commercial products.
Business Combination
On November 30, 2022, Iris Acquisition Corp, a Delaware corporation (“Iris”), the Company, Liminatus Pharma, LLC, a Delaware limited liability company (“Liminatus”), Liminatus Pharma Merger Sub, Inc. (“Liminatus Merger Sub”) and SPAC Merger Sub, Inc. (“SPAC Merger Sub”) entered into a business combination agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”).
On March 4, 2025, Iris held a special meeting of stockholders. At the special meeting, Iris’s stockholders voted to approve the Business Combination and adopt the Business Combination Agreement, among other items. In connection with the special meeting, stockholders holding 59,844 Iris Class A Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.74 per share, subject to adjustment for taxes payable from the trust account, for an aggregate redemption amount of $702,359. The redemptions were settled on April 30, 2025 upon the consummation of the Business Combination.
On April 30, 2025 (the “Closing Date”), the Company consummated the business combination contemplated by the Business Combination Agreement, pursuant to which (a) Liminatus Merger Sub merged with and into Liminatus (the “Liminatus Merger”), with Liminatus surviving the Liminatus Merger as a direct wholly-owned subsidiary of the Company, and (b) simultaneously with the Liminatus Merger, SPAC Merger Sub merged with and into Iris (the “SPAC Merger” and, together with the Liminatus Merger, the “Mergers”), with Iris surviving the SPAC Merger as a direct wholly-owned subsidiary of the Company (the transactions contemplated by the foregoing clauses (a) and (b) the “Business Combination”), and in connection therewith the Company changed its name from “Iris Parent Holding Corp.” to “Liminatus Pharma, Inc.”
Pursuant to the Business Combination Agreement, among other matters, at the effective time of the Business Combination (the “Effective Time”), (i) every issued and outstanding security issued by Iris during its initial public offering (each, an “Iris Unit”) was automatically separated and broken out into its constituent parts and the holder thereof was deemed to hold one share of Iris Class A
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common stock, par value $0.0001 per share (the “Iris Class A Shares”) and one-fourth of one redeemable warrant that was included as part of each Iris Unit (the “Public Warrants”), and such underlying constituent securities of Iris were converted in accordance with the applicable terms of the Business Combination Agreement, (ii) at the Effective Time, each issued and outstanding Iris Class A Share was converted automatically into and thereafter represent the right to receive one share of common stock, par value $0.0001 per share (“Common Stock”), of the Company, following which all Iris Class A Shares ceased to be outstanding and were automatically canceled and ceased to exist, (iii) at the Effective Time, each issued and outstanding Public Warrant immediately and automatically represented the right to purchase shares of Common Stock on the same terms and conditions as are set forth in the applicable warrant agreement, (iv) at the Effective Time, each issued and outstanding non-redeemable warrant of Iris that was issued by Iris in a private placement at the time of the consummation of its initial public offering, entitling the holder thereof to purchase one Iris Class A Share at $11.50 per share, except those issued to Cantor Fitzgerald & Co. (“Cantor”), were forfeited, and (v) the private placement warrants issued to Cantor immediately and automatically represented the right to purchase shares of Common Stock.
Upon the consummation of the Business Combination, the Company’s certificate of incorporation was amended and restated to, among other things, set the total number of authorized shares of capital to 501,000,000 shares, of which 500,000,000 were designated as common stock, $0.0001 par value per share, and 1,000,000 shares were designated as preferred stock, $0.0001 par value per share.
At the Closing Date, 7,014,633 shares of Iris Class A Shares automatically converted into shares of the Company’s common stock, on a one-for-one basis. Of the total 7,014,633 newly converted shares, 6,900,000 were issued to Iris Acquisition Holdings, LLC, the sponsor of Iris and 114,633 were issued to Iris’ public stockholders in a noncash transaction.
At the Closing Date, the Company issued an aggregate of 1,500,000 shares of the Company’s common stock in a private placement (the “PIPE Shares”) for the total consideration of $15,000,000 (the “PIPE Financing”). The PIPE Financing consisted of a cash and non - cash component. Under the cash component, the Company received gross proceeds of $10,556,500, of which $7,129,500 came directly from the PIPE investor and $3,427,000 were funded indirectly by the PIPE investor, through promissory notes between Prophase Sciences, LLC, a related party of the Company, and Liminatus. At the Closing Date, the $3,427,000 in related party debts between Prophase Sciences, LLC and Liminatus was ultimately converted into shares as part of the PIPE Financing. As part of the PIPE Financing, the gross proceeds satisfied principal and accrued interest totaling $3,316,756, which was ultimately converted into shares as part of the PIPE Financing. The non - cash component of the PIPE Financing included the conversion of $4,443,500 in amounts borrowed from a consortium of related parties. The $4,443,500 borrowed from the related parties were used to fund an unsecured promissory note between Liminatus and Iris. At the Closing Date, the unsecured promissory note was settled and the $4,443,500 in related party debts were ultimately converted into shares of the Company in a noncash transaction.
At the Closing Date, 112,222,220 Liminatus’ member units converted into 17,500,000 shares of the Company’s common stock. Of the 17,500,000 shares of common stock, 4,000,000 were issued to Feelux Co, Ltd. as part of an agreement between the Company, Feelux Co, Ltd. and Car - Tcellkor, Inc. As part of the agreement, the outstanding principal and accrued interest on the Feelux and Car - Tcellkor bonds, totaling $11,481,146, and 9,999,999 member units of Liminatus were converted into 4,000,000 shares of the Company’s common stock. The remaining Liminatus member units were converted based on a conversion ratio of 0.1559 shares per member unit.
Upon consummation of the Business Combination, the Company assumed a total of $10,694,604 in liabilities from Iris. The Company incurred $1,518,381 in transaction costs associated with the closing of the Business Combination. The Company converted a total of $14,797,901 of related party debt and accrued interest, $3,316,756 from the PIPE investor and $11,481,146 from Feelux and Car - Tcellkor (as described above) into common stock. Additionally, a total of $169,201 in accrued interest on related party debts that were converted, as discussed above, was eliminated upon consummation of the Business Combination.
In addition, at the Closing Date, the Company settled deferred underwriting fees incurred by Iris prior to the closing date of $7,000,000 for 700,000 shares of common stock to the underwriters in Iris’s initial public offering. At the Closing Date, the shares were not issued to the underwriters and the Company recorded as a liability with a fair value of $7,049,000. On July 1, 2025, the Company issued the shares to the underwriters, which on July 1, 2025 had a fair value of $7,245,000.
Liminatus was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The determination was primarily based on Liminatus’ members prior to the Business Combination having a majority of the voting interests in the combined company, Liminatus’ ability to exert control over the majority of the board of directors of the combined company, Liminatus’ ability to maintain control of the board of directors on a go-forward basis, Liminatus’ senior management comprising the senior management of the combined company, and Liminatus’ operations prior to the Business Combination comprise the ongoing operations of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Liminatus’ issuing stock for the net assets of Iris, accompanied by a recapitalization. The net assets of Iris were stated at fair value, with no goodwill or other intangible assets recorded.
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Upon the consummation of the Business Combination, the Iris Class A Shares, Iris Units and Public Warrants ceased trading on the OTC Pink Marketplace, and the Common Stock and Public Warrants began trading on The Nasdaq Stock Market (“Nasdaq”) under the trading symbols “LIMN” and “LIMNW,” respectively, on May 1, 2025.
Results of Operations
The following is a comparative of our results of operations for the years ended December 31, 2025 and 2024:
For the year ended December 31,
2025
2024
General and administrative
$
2,967,812
$
644,619
Research and development
—
2,685,334
Total operating expenses
2,967,812
3,329,953
Loss from operations
(2,967,812)
(3,329,953)
Other expense, net
(7,238,705)
(216,356)
Net income (loss)
$
(10,206,517)
$
(3,546,309)
Revenue
We did not generate revenue during either of the years ended December 31, 2025 and 2024. Our ability to generate revenue in the future will depend almost entirely on our ability to successfully develop successful commercial products with our intellectual property.
Operating Expenses
General and Administrative Expenses
General and administrative expenses consists primarily of professional service fees, including accounting and legal services and other general operating expenses. General and administrative expenses increased by approximately $2.3 million during the year December 31, 2025 as compared to the year ended December 31, 2024 primarily due to increases in accounting and legal expenses incurred in connection with the Business Combination and due to the entity now operating as a publicly traded company.
Research and Development Expenses
Research and development expenses consist of costs incurred by TDT who was performing the research and development activities for the Company in accordance with the license agreements with TDT and the annual fee paid to TDT. Research and development expenses decreased by approximately $2.7 million during the year ended December 31, 2025 as compared to the year ended December 31, 2024 as a result of the termination of TDT’s license agreements on August 11, 2024.
Other Expenses, net
Other expense, net increased by $7,022,349 from $216,356 of other expense for the year ended December 31, 2024 to $7,238,705 of other expense for the year ended December 31, 2025. The increase is primarily due the Company recognizing other income of $2,142,297 related to the settlement of TDT’s payables and an unrealized gain on the change in fair value of the warrant liabilities of $54,312, offset by an unrealized loss on the change in the fair value of deferred underwriting fee paid in common stock of $196,000, a loss on the issuance of common stock of $1,740,000 related to the issuance of common stock in exchange for the cancellation of warrants and $7,360,000 of expenses related to the fair value of common stock to be issued in February of 2026 due to settlement of the Clear Street litigation, discussed elsewhere in this filing, for a contingent liability that became reasonably estimable prior to the issuance of these consolidated financial statements. No such transactions occurred during the year ended December 31, 2024. The Company recognized interest expense of $215,903 on related party promissory notes during the year ended December 31, 2025 as compared to interest expense of $338,882 during the year ended December 31, 2024 due to a decrease in the related party promissory notes principal balance following the closing of the Business Combination. Further, the Company recognized interest income of $76,589 on loans receivable with Iris during the year ended December 31, 2025 as compared to interest income of $122,526 during the year ended December 31, 2024. In connection with the closing of the Business Combination on April 30, 2025, the loans receivable with Iris were terminated, thus no interest income is expected in future periods.
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Liquidity and Capital Resources
The Company is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern for one year after the date that the consolidated financial statements are issued. Through December 31, 2025, the Company has funded its operations mainly through equity and debt financings, including the proceeds from the Mergers and the PIPE Financing.
As of December 31, 2025, the Company had $337,655 of cash in its bank accounts. As of December 31, 2025 and 2024, there was $1,442,500 and $19,973,000, respectively, of related party debts, which are included in Short-term debt, related parties in the accompanying consolidated balance sheets.
The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company has an accumulated deficit of $38,871,733 as of December 31, 2025. The Company had a (loss) from operations and net (loss) of $(2,967,812) and $(10,206,517), respectively, for the year ended December 31, 2025. The Company had a (loss) from operations and net (loss) of $(3,329,953) and $(3,546,309), respectively, for the year ended December 31, 2024.
On February 17, 2026, the Company announced the pricing of a “best efforts” public offering of (i) 8,270,000 shares of its common stock, (ii) 5,543,000 pre-funded warrants to purchase up to 5,543,000 shares of common stock (the “Pre-Funded Warrants”) and (ii) 13,813,000 common stock purchase warrants to purchase up to 20,719,500 shares of common stock, at a combined public offering price of $0.29 per share (or $0.2899 per Pre-Funded Warrant) and accompanying warrant. On February 18, 2026, in connection with the Offering, the Company received net proceeds of approximately $3.46 million, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) ASC 205-40, Presentation of Financial Statements—Going Concern , management has concluded that there is substantial doubt about its ability to continue as a going concern for one year after the date that the accompanying consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Management’s plans relating to the above include raising additional cash through equity and debt financings or other arrangements to fund operations. There can be no assurance that the Company will be able to raise adequate capital under acceptable terms, if at all. The sale of additional equity may dilute existing members and newly issued equity securities may contain senior rights and preferences compared to currently outstanding common stock. Issued debt securities may contain covenants and limit the Company’s ability to pay dividends or make other distributions to stockholders. If the Company is unable to obtain such additional financing, future operations would need to be reevaluated.
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2025 and 2024:
For the year ended December 31,
2025
2024
Net cash used in operating activities
$
(9,963,318)
$
(1,451,066)
Net cash used in investing activities
(788,108)
(2,850,000)
Net cash provided by financing activities
11,032,762
3,923,000
Net change in cash
$
281,336
$
(378,066)
Net cash used in operating activities for the years ended December 31, 2025 increased by $8,512,252 as compared to the year ended December 31, 2024. The increase in cash used in operating activities is primarily due to an increase in net loss during the year ended December 31, 2025 of $6,660,208 when compared to the net loss for the year ended December 31, 2024, an increase in payments of accounts payable and accrued expenses of $4,035,340 as a result of increased compliance and legal fees as a public entity, settlement of amounts due to related parties of $3,427,000, and amounts due to research and development partner of $1,540,359 for the year ended December 31, 2025 as compared to the same period in the prior year. The increase is further a result of the operating activities, adjusted for non-cash transactions including a contingent liability for common stock to be issued of $7,360,000, issuance of common stock in connection with surrender of warrants of $1,740,000, change in fair value of deferred underwriting fee payable of $196,000 and
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forgiveness of related party receivables of $126,275, offset by the non-cash settlement of the TDT payables of $2,142,297 for the year ended December 31, 2025 as compared to no such activity during the same period in the prior year.
Net cash used in investing activities for the year ended December 31, 2025 decreased by $2,061,892 as compared to the year ended December 31, 2024. The decrease in cash used in investing activities is primarily due to less issuances of loans to Iris prior to the Business Combination.
Net cash provided by financing activities for the year ended December 31, 2025 increased by $7,109,762 as compared to the year ended December 31, 2024. The increase in cash provided by financing activities is primarily due to proceeds received of $10,556,500 from the PIPE Financing, offset by $2,563,738 in payments for the transaction costs in connection with the Business Combination. Further, the Company had proceeds from related party debt of $4,340,000, which is offset by payments of related party debt of $1,300,000 during the year ended December 31, 2025 as compared to proceeds of $3,923,000 during the year ended December 31, 2024. No such payments occurred during the year ended December 31, 2024.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The actual results could materially differ from those estimates.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly period end date while the warrants are outstanding. As of December 31, 2025, 5,899,975 of the Company’s Public Warrants were accounted for as equity-classified instruments and 835,555 private placement warrants were accounted for as liability-classified instruments.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss. The Company assesses the classification of its warrants at each reporting date to determine whether a change in classification between equity and liability is required. During the year ended December 31, 2025, the Company had an unrealized gain on the change in fair value of the warrant liabilities of $54,312. During the year ended December 31, 2024, the Company had no unrealized gain or loss on the change in fair value of the warrant liabilities.
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” that addresses requests for improved income tax disclosures from investors that use the financial statements to make capital allocation decisions. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2024. The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements and early adoption is permitted. The Company adopted this standard on January 1, 2025 and determined that the adoption does not have a material impact on these consolidated financial statements.
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Recently Issued Accounting Pronouncements – Not Yet Adopted
On November 4, 2024, the FASB issued ASU 2024-03, Accounting Standards Update 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements; however, the amendments affect where such information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that the adoption of this standard will have on its financial statements.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.