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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 54 added, 54 removed, 140 unchanged (44% of the section changed)

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We are a clinical-stage pharmaceutical company dedicated to the discovery, development, and commercialization of innovative therapies for the treatment of solid tumors and other major diseases.

Our investigational product, certepetide (formerly known as LSTA1 or CEND-1), is designed to activate a novel uptake pathway that allows co-administered or tethered (i.e., molecularly bound) anti-cancer drugs to target and penetrate solid tumors more effectively.

Our investigational product, certepetide (formerly known as LSTA1 or CEND-1), is designed to activate a novel uptake pathway (the C-end rule active transport mechanism) that allows co-administered or tethered (i.e., molecularly bound) anti-cancer drugs to target and penetrate solid tumors more effectively.

Certepetide actuates this active transport system in a tumor-specific manner, resulting in systemically co-administered anti-cancer drugs more efficiently penetrating and accumulating in the tumor, while normal tissues are expected to remain unaffected.

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We, our collaborators and other researchers have amassed and continue to amass significant non-clinical data demonstrating enhanced delivery of a range of existing and emerging anti-cancer therapies, including chemotherapeutics, immunotherapies, and RNA-based therapeutics.

To date, certepetide has also demonstrated favorable safety, tolerability and activity in completed and ongoing clinical trials designed to enhance delivery of standard-of-care chemotherapy for pancreatic cancer.

Relatedly, exciting preclinical data using certepetide in combination with antibody drug conjugates (ADCs) has been generated as part of our research collaboration with Catalent.

These data are expected to be presented at a scientific meeting during the fourth quarter of 2025.

We are exploring certepetide as a means to enable a variety of therapeutic modalities to treat a range of solid tumors more effectively.

Currently, certepetide is the subject of several Phase 2 clinical studies being conducted globally in a variety of solid tumor types, including metastatic pancreatic ductal adenocarcinoma (mPDAC), cholangiocarcinoma, appendiceal cancer, colon cancer and glioblastoma multiforme in combination with a variety of anti-cancer regimens.

Our leadership team has amassed several decades of collective biopharmaceutical and pharmaceutical product development experience across a variety of therapeutic categories and at all stages of development from preclinical through to product registration and launch.

Currently, certepetide is the subject of several Phase 2 clinical studies globally in a variety of solid tumor types, including metastatic pancreatic ductal adenocarcinoma (mPDAC), cholangiocarcinoma, appendiceal cancer, colon cancer and glioblastoma multiforme in combination with a variety of anti-cancer regimens.

Our leadership team has amassed many decades of collective biopharmaceutical and pharmaceutical product development experience across a variety of therapeutic categories and at all stages of development from preclinical through to product registration and launch.

Our goal is to develop and commercialize products that address important unmet medical needs.

Targeted Solid Tumor Penetration via CendR Active Transport

Many solid tumor cancers, including, for example, pancreatic ductal adenocarcinoma (“PDAC”) and cholangiocarcinoma, are surrounded by dense fibrotic tissue, known as the tumor stroma.

Many solid tumor cancers, including but not limited to pancreatic ductal adenocarcinoma (“PDAC”) and cholangiocarcinoma, are surrounded by dense fibrotic tissue, known as the tumor stroma.

This stroma often limits the penetration of anti-cancer therapies including chemotherapy into the tumor and thus limits their efficacy.

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Certepetide has demonstrated favorable safety, tolerability, and activity to date in clinical trials enhancing the selective delivery of standard-of-care chemotherapies for mPDAC.

Certepetide’s cancer targeting characteristics may also enable

emerging solid tumor treatment modalities to prove more effective.

Certepetide’s cancer targeting characteristics may also enable emerging solid tumor treatment modalities to prove more effective.

For example, preliminary results of certepetide in combination with both immunotherapy and chemotherapy are promising.

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Qilu has completed Phase 2 enrollment (n=96) in first line mPDAC in combination with SoC gemcitabine and nab-paclitaxel.

Currently, certepetide is also the subject of a Phase 2 trial in first-line mPDAC patients, the ASCEND trial.

ASCEND is being conducted in collaboration with the Australasian Gastrointestinal Clinical Trials Group (AGITG) and the University of Sydney at 25 sites in Australia and New Zealand.

Currently, certepetide is also the subject of a Phase 2b trial in first-line mPDAC patients, the ASCEND trial.

We are collaborating with the academic sponsor of the ASCEND trial, the Australasian Gastrointestinal Clinical Trials Group (AGITG) along with the University of Sydney to execute the study at 25 sites in Australia and New Zealand.

The Phase 2 double-blind, randomized (2:1), placebo-controlled, multi-center ASCEND trial is evaluating certepetide in combination with SoC chemotherapy (gemcitabine and nab-paclitaxel) for the treatment of mPDAC.

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A comparison of the preliminary data from Cohorts A and B indicates that the addition of two doses of certepetide (Cohort B regimen) to SoC chemotherapy resulted in a clinically meaningful improvement in both PFS and ORR for patients with mPDAC.

These clinically significant findings provide compelling support for the continued and expedited investigation of certepetide as a novel therapeutic agent for the treatment of metastatic pancreatic cancer.

The adverse event profile of Cohorts A and B has been similar in subjects treated with certepetide compared to placebo,

confirming previous observations of certepetide’s benign safety profile.

Final data and key findings from both cohorts of the ASCEND study are anticipated to be available later this year.

Additionally, certepetide is currently the subject of multiple ongoing and planned clinical trials being conducted globally in a variety of solid tumor types and in combination with several chemotherapy and immunotherapy anti-cancer regimens.

These clinically significant findings provide compelling support for the continued and expedited investigation of

certepetide as a novel therapeutic agent for the treatment of metastatic pancreatic cancer.

The adverse event profile of Cohorts A and B has been similar in subjects treated with certepetide compared to placebo, confirming previous observations of certepetide’s benign safety profile.

Additional data from Cohorts A and B was presented at the ESMO annual meeting in October 2025 with final data and conclusions of the ASCEND study anticipated to be available in the first quarter of 2026.

Additionally, certepetide is currently the subject of ongoing clinical trials being conducted globally in a variety of solid tumor types and in combination with several chemotherapy and immunotherapy anti-cancer regimens.

The following diagram summarizes these studies.

Additional Out-licensing Opportunities

Our intellectual property portfolio comprises notable programs available for out-licensing and/or partnering in order to augment or continue their clinical development.

Our current long-term strategy focuses on advancing our therapies through development with the ultimate objective of obtaining market authorizations and entering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions.

Our intellectual property portfolio comprises notable programs and inventions available for out-licensing and/or partnering in order to augment or continue their clinical development.

Our current long-term strategy focuses on advancing our therapies through development, with the ultimate objective of obtaining market authorizations in major markets and commercializing them, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions.

We believe that we are well-positioned to realize potentially meaningful value increases within our own proprietary pipeline if we are successful in advancing our product candidates to their next significant development milestones.

Results of Operations

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

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

Three Months Ended June 30,

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

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

Three Months Ended September 30,

2025 2024 Change

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Net loss $ (4,249) $ (4,930) $ 681

Overall, net losses were $4.7 million for the three months ended June 30, 2025, compared to $5.0 million for the three months ended June 30, 2024.

For the three months ended June 30, 2025, revenue totaled $70 thousand in connection with an upfront license fee related to a research license agreement.

We did not have any revenue for the three months ended June 30, 2024.

Overall, net losses were $4.2 million for the three months ended September 30, 2025, compared to $4.9 million for the three months ended September 30, 2024.

We did not have any revenue for the three months ended September 30, 2025 and September 30, 2024.

Operating Expenses

For the three months ended June 30, 2025, operating expenses totaled $4.9 million, compared to $5.5 million for the three months ended June 30, 2024, representing a decrease of $0.6 million or 10.6%.

For the three months ended September 30, 2025, operating expenses totaled $4.4 million, compared to $5.3 million for the three months ended September 30, 2024, representing a decrease of $0.9 million or 17.3%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $2.3 million for the three months ended June 30, 2025, compared to $2.6 million for the three months ended June 30, 2024, representing a decrease of $0.3 million or 13.4%.

This was primarily due to a reduction in patient treatment costs and clinical research organization (“CRO”) expenses associated with our Phase 2a proof-of-concept Bolster trial and lower spend on chemistry, manufacturing and controls (“CMC”).

• General and administrative expenses were approximately $2.7 million for the three months ended June 30, 2025, compared to $2.9 million for the three months ended June 30, 2024, representing a decrease of $0.2 million or 8.1%.

This was primarily due to savings resulting from elimination of an employee position and lower spend on consulting and travel and entertainment expenses.

• Research and development expenses were approximately $2.0 million for the three months ended September 30, 2025, compared to $2.5 million for the three months ended September 30, 2024, representing a decrease of $0.6 million or 22.9%.

This was primarily due to lower spend on chemistry, manufacturing and controls (“CMC”) and a reduction in Clinical department expenses partially offset by an increase in our Phase 2a proof-of-concept BOLSTER trial costs.

• General and administrative expenses were approximately $2.5 million for the three months ended September 30, 2025, compared to $2.8 million for the three months ended September 30, 2024, representing a decrease of $0.3 million or 12.1%.

This was primarily due to lower spend on consulting and savings resulting from elimination of an employee position.

Historically, to minimize our use of cash, we have used a variety of equity instruments to compensate employees, consultants and other service providers.

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Other Income (Expense)

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities for the three months ended June 30, 2025 and 2024.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

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

Six Months Ended June 30,

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities for the three months ended September 30, 2025 and 2024.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

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

Nine Months Ended September 30,

2025 2024 Change

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Net loss $ (13,632) $ (15,375) $ 1,743

Overall, net losses were $9.4 million for the six months ended June 30, 2025, compared to $10.4 million for the six months ended June 30, 2024.

For the six months ended June 30, 2025, revenue totaled $70 thousand in connection with an upfront license fee related to a research license agreement.

We did not have any revenue for the six months ended June 30, 2024.

Overall, net losses were $13.6 million for the nine months ended September 30, 2025, compared to $15.4 million for the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, revenue totaled $70 thousand in connection with an upfront license fee related to a research license agreement.

We did not have revenue for the nine months ended September 30, 2024.

Operating Expenses

For the six months ended June 30, 2025, operating expenses totaled $10.8 million, compared to $12.1 million for the six months ended June 30, 2024, representing a decrease of $1.3 million or 11.0%.

For the nine months ended September 30, 2025, operating expenses totaled $15.2 million, compared to $17.5 million for the nine months ended September 30, 2024, representing a decrease of $2.3 million or 12.9%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $4.9 million for the six months ended June 30, 2025, compared to $5.8 million for the six months ended June 30, 2024, representing a decrease of $1.0 million or 16.9%.

This was primarily due to a reduction in clinical research organization (“CRO”) expenses, patient treatment costs and site expenses associated with our Phase 2a proof-of-concept Bolster trial and lower spend on chemistry, manufacturing and controls (“CMC”).

• General and administrative expenses were approximately $5.9 million for the six months ended June 30, 2025, compared to $6.3 million for the six months ended June 30, 2024, representing a decrease of $0.4 million or 5.6%.

This was primarily due to one-off settlement costs in the prior year partially offset by severance costs in the current year.

• Research and development expenses were approximately $6.8 million for the nine months ended September 30, 2025, compared to $8.4 million for the nine months ended September 30, 2024, representing a decrease of $1.6 million or 18.7%.

This was primarily due to lower spend on chemistry, manufacturing and controls (“CMC”), a reduction in clinical research organization (“CRO”) expenses, patient treatment costs and site expenses associated with our Phase 2a proof-of-concept BOLSTER trial and a reduction in Clinical department expenses partially offset by an increase in expenses associated with our Phase 2a glioblastoma multiforme (“GBM”) proof-of-concept study.

• General and administrative expenses were approximately $8.4 million for the nine months ended September 30, 2025, compared to $9.1 million for the nine months ended September 30, 2024, representing a decrease of $0.7 million or 7.6%.

This was primarily due to one-off settlement costs in the prior year in addition to lower spending on consulting in the current year partially offset by severance costs in the current year.

Historically, to minimize our use of cash, we have used a variety of equity instruments to compensate employees, consultants and other service providers.

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Other Income (Expense)

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities and losses on sales of our New Jersey net operating losses for the nine months ended September 30, 2025 and 2024 and investments in Impilo which were fully expensed under the equity method of accounting within the prior year period.

Income Tax Benefit

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Analysis of Liquidity and Capital Resources

As of June 30, 2025, we had cash, cash equivalents and marketable securities of approximately $22.0 million, working capital of approximately $20.6 million, and stockholders’ equity of approximately $21.0 million.

During the six months ended June 30, 2025, we met our immediate cash requirements through existing cash balances.

As of September 30, 2025, we had cash and cash equivalents of approximately $19.0 million, working capital of approximately $17.0 million, and stockholders’ equity of approximately $17.4 million.

During the nine months ended September 30, 2025, we met our immediate cash requirements through existing cash balances.

Additionally, we used equity and equity-linked instruments to pay for services and compensation.

Net cash (used in) or provided by, operating, investing and financing activities were as follows (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash used in operating activities $ (12,700) $ (14,828)

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Operating Activities

Our cash used in operating activities during the six months ended June 30, 2025 was $9.4 million, which is comprised of (i) our net loss of $9.4 million, adjusted for non-cash expenses totaling $0.8 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $0.8 million.

Our cash used in operating activities during the six months ended June 30, 2024 was $12.3 million, which is comprised of (i) our net loss of $10.4 million, adjusted for non-cash expenses totaling $0.6 million (which includes adjustments for equity-based compensation, depreciation and amortization, loss from equity method investment, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $2.5 million.

Our cash used in operating activities during the nine months ended September 30, 2025 was $12.7 million, which is comprised of (i) our net loss of $13.6 million, adjusted for non-cash expenses totaling $1.1 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $0.1 million.

Our cash used in operating activities during the nine months ended September 30, 2024 was $14.8 million, which is comprised of (i) our net loss of $15.4 million, adjusted for non-cash expenses totaling $0.9 million (which includes adjustments for equity-based compensation, depreciation and amortization, loss from equity method investment, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $0.4 million.

Investing Activities

Our cash provided by investing activities during the six months ended June 30, 2025 totaled $9.9 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities).

Our cash provided by investing activities during the six months ended June 30, 2024 totaled $18.1 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities) partially offset by an investment of $0.1 million in Impilo Therapeutics.

Our cash provided by investing activities during the nine months ended September 30, 2025 totaled $15.1 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities).

Our cash provided by investing activities during the nine months ended September 30, 2024 totaled $11.8 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities) partially offset by an investment of $0.1 million in Impilo Therapeutics.

Financing Activities

Our cash provided by financing activities during the six months ended June 30, 2025 totaled $41 thousand and consisted of $0.3 million in proceeds primarily from the issuance of shares through our ATM Agreement (as defined below) partially offset by tax withholding-related payments on net share settlement equity awards to employees of $0.3 million.

Our cash used in financing activities during the six months ended June 30, 2024 totaled $0.1 million and consisted primarily of tax withholding-related payments on net share settlement equity awards to employees.

Our cash provided by financing activities during the nine months ended September 30, 2025 totaled $0.4 million and consisted of $0.6 million in proceeds primarily from the issuance of shares through our ATM Agreement (as defined below) partially offset by tax withholding-related payments on net share settlement equity awards to employees of $0.3 million.

Our cash used in financing activities during the nine months ended September 30, 2024 totaled $0.1 million and consisted primarily of tax withholding-related payments on net share settlement equity awards to employees.

Liquidity and Capital Requirements Outlook

To meet our short and long-term liquidity needs, we expect to use existing cash balances, marketable securities and a variety of other means.

To meet our short and long-term liquidity needs, we expect to use existing cash balances and a variety of other means.

Other sources of liquidity could include additional potential issuances of debt or equity securities in public or private financings, partnerships and/or collaborations and/or sale of assets.

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We will also continue to seek, as appropriate, grants for scientific and clinical studies from various governmental agencies and foundations, and other sources of non-dilutive funding.

We believe that our cash on hand and marketable securities will enable us to fund current operating expenses for at least the next 12 months following the issuance of our financial statements.

We believe that our cash on hand will enable us to fund current operating expenses for at least the next 12 months following the issuance of our financial statements.

Our future capital requirements are difficult to forecast and will depend on many factors including the timing and nature of any other strategic transactions that we undertake;

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If our public float exceeds $75.0 million on a future measurement date, the Company will no longer be subject to the Baby Shelf Limitation.

During the six months ended June 30, 2025, we issued 68,496 shares of common stock under the ATM Agreement for net proceeds of $247,496.

Since inception through June 30, 2025, we have issued 136,669 shares of common stock under the ATM Agreement for net proceeds of $528,343.

During the nine months ended September 30, 2025, we issued 197,980 shares of common stock under the ATM Agreement for net proceeds of $600,663.

Since inception through September 30, 2025, we have issued 266,153 shares of common stock under the ATM Agreement for net proceeds of $881,510.

While we continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital generating efforts may worsen as existing resources are used.

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Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates during the six months ended June 30, 2025, compared to those reported in our 2024 Form 10-K.

There have been no material changes in our critical accounting policies and estimates during the nine months ended September 30, 2025, compared to those reported in our 2024 Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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