What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-07 · 90 added, 82 removed, 155 unchanged (53% of the section changed)

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All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

We are a clinical-stage biopharmaceutical company focused on developing medicines to target diseases driven by abnormally elevated aldosterone.

Our clinical-stage product candidate, lorundrostat, is a proprietary, orally administered, highly selective aldosterone synthase inhibitor that we are initially developing for the

treatment of cardiorenal conditions affected by abnormally elevated aldosterone, including hypertension and chronic kidney disease (CKD).

This Quarterly Report includes trademarks, tradenames, and service marks that are the property of other organizations.

Solely for convenience, trademarks and tradenames referred to in this Quarterly Report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will

not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames.

We are a clinical-stage biopharmaceutical company focused on developing medicines to target diseases driven by dysregulated aldosterone.

Our clinical-stage product candidate, lorundrostat, is a proprietary, orally administered, highly selective aldosterone synthase inhibitor (ASI) that we are initially developing for the treatment of cardiorenal conditions affected by dysregulated aldosterone, including hypertension and chronic kidney disease (CKD).

In the United States, there are over 115 million patients who have sustained elevated blood pressure (BP), or hypertension, and more than half of this population fails to achieve their BP goals, defined as BP of below 130/80 mmHg, with currently available medications.

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In a Phase 2 proof-of-concept clinical trial evaluating 200 subjects with uncontrolled hypertension (uHTN) or resistant hypertension (rHTN), lorundrostat demonstrated a clinically meaningful and statistically significant reduction in BP with once-daily dosing and was well tolerated.

In addition to hypertension, we intend to develop lorundrostat for the treatment of CKD and believe that our product candidate holds promise to be an innovative solution for the rapidly growing unmet need in multiple cardiorenal disorders.

Dysregulated aldosterone levels are a key factor in driving hypertension in approximately 25% of hypertensive patients.

In addition to hypertension, we intend to investigate the benefits of lorundrostat in subjects with hypertension and CKD.

We believe that our product candidate holds promise to be an innovative solution for the rapidly growing unmet need in multiple cardiorenal metabolic disorders.

Clinical Highlights

Pivotal Hypertension Program

In April 2023, we initiated our first pivotal trial, Advance-HTN, a randomized, double-blind, placebo-controlled Phase 2 clinical trial to evaluate the safety and efficacy of lorundrostat for the treatment of uHTN or rHTN, when used as an add-on therapy to standardized background treatment of two or three antihypertensive medications in up to approximately 300 adult subjects.

In April 2023, we initiated our first pivotal trial, Advance-HTN, a randomized, double-blind, placebo-controlled Phase 2 clinical trial to evaluate the efficacy and safety of lorundrostat for the treatment of uHTN or rHTN, when used as an add-on therapy to a standardized background treatment of two or three antihypertensive medications in 261 adult subjects.

Subjects who meet screening criteria will have their existing hypertension medications discontinued and start on a standard regimen of an ARB and a diuretic, if previously on two medications, or a standard regimen of ARB, diuretic and calcium channel blocker if previously on three to five medications.

Subjects who remain hypertensive, despite the standardized regimen are then randomized into three cohorts and treated for twelve weeks:

lorundrostat 50 mg QD, lorundrostat 50 mg QD, and an option to titrate to 100 mg QD at week four based on defined criteria or placebo.

The primary endpoint of the trial will be change in 24-hour ambulatory systolic BP at week twelve from baseline for active cohorts versus placebo.

Topline data from this trial is anticipated in the fourth quarter of 2024.

In December 2023, we initiated our second pivotal trial, Launch-HTN, a randomized, double-blind, placebo-controlled Phase 3 clinical trial to evaluate the efficacy and safety of lorundrostat for the treatment of uHTN or rHTN, when used as an add-on therapy to their existing, prescribed background treatment of two to five antihypertensive medications in up to approximately 1,000 adult subjects.

Subjects are then randomized into three cohorts and treated for twelve weeks:

lorundrostat 50 mg QD, lorundrostat 50 mg QD and an option to titrate to 100 mg QD at week six based on defined criteria or placebo.

The primary endpoint of the trial will be change in office measured systolic BP at week twelve from baseline for active cohorts versus placebo.

Topline data from this trial is anticipated in the second half of 2025.

We also plan to initiate our second pivotal trial, Launch-HTN, a randomized, double-blind, placebo-controlled Phase 3 clinical trial in the second half of 2023 to evaluate the safety and efficacy of lorundrostat for the treatment of uHTN or rHTN, when used as an add-on therapy to prescribed background treatment of two to five antihypertensive medications in up to approximately 1,000 adult subjects.

The trial is expected to have a similar design to the Target-HTN trial.

Topline data from this trial is expected in the second half of 2025.

In mid-2023, we initiated an open-label extension trial to allow subjects to continue to receive lorundrostat and obtain long-term safety and efficacy data.

In mid-2023, we initiated an open-label extension trial, Transform-HTN, to allow subjects to continue to receive lorundrostat and obtain long-term efficacy and safety data.

All subjects in the pivotal hypertension program, including the Advance-HTN and Launch-HTN trials, as well as the Explore-CKD trial, will be given the opportunity to participate in the extension trial.

Other Indications

Lorundrostat has been developed to normalize the production of aldosterone, and we believe this mechanism can be applied to other indications where abnormal aldosterone biology plays a role, including CKD and cardiorenal indications.

Uninhibited aldosterone is known to play a critical role in the progression of CKD.

CKD is characterized by the gradual loss of kidney function, is estimated to affect more than 10% of the global population and over 23 million people in the United States, and is one of the leading causes of mortality worldwide.

According to the U.S.

Centers for Disease Control and Prevention (CDC), an estimated 1-in-7 (15%) of U.S.

adults have CKD.

Diabetes and hypertension are responsible for approximately two-thirds of CKD cases.

Early detection and treatment can often keep CKD from getting worse.

When CKD progresses, it may eventually lead to kidney failure, which requires dialysis or a kidney transplant to maintain life.

We plan to initiate a two-part Phase 2 trial, Explore-CKD, in the second half of 2023 for lorundrostat in hypertensive patients with Stage 2 to 3b CKD.

The planned Phase 2 clinical trial includes an initial proof-of-concept portion (Part A) and a profiling portion (Part B).

As this is an exploratory trial, interim data analyses may be conducted at one or more time points.

Topline data from this trial is anticipated between the fourth quarter of 2024 and the first quarter of 2025.

Lorundrostat has been developed to normalize the production of aldosterone, and we believe this mechanism can be applied to other indications where dysregulated aldosterone biology plays a role, including CKD and cardiorenal indications.

The Explore-CKD trial is designed to evaluate lorundrostat in hypertensive subjects with Stage 2 to 3b CKD.

The Phase 2 clinical trial was recently modified from its original design to enroll both naïve to and patients on SGLT2 inhibitors.

This change reflects how SGLT2 inhibitors have quickly become standard of care for patients with CKD.

All study participants will stay on an SGLT2 inhibitor throughout the course of the trial.

We also lowered the eGFR criteria for the proof-of-concept study from 45ml/min/1.73m2 to 30ml/min/1.73m2 and eliminated the original Part B profiling portion of the study.

The study periods were reduced to four weeks, which we believe will provide ample time to demonstrate clinical benefit on BP reduction and kidney benefit.

The primary endpoint is placebo-adjusted change from baseline in systolic BP and an exploratory endpoint is placebo-adjusted percent change from baseline in urine albumin-to-creatinine ratio at week four.

As this is an exploratory trial, interim data analyses may be conducted at one or more points in time.

Topline data from this trial continues to be anticipated between the fourth quarter of 2024 and the first quarter of 2025.

Financial Overview

We commenced our operations in May 2019 and have devoted substantially all of our resources to date to organizing and staffing our company, business planning, raising capital, in-licensing our product candidate, lorundrostat, establishing our intellectual property portfolio, conducting research, preclinical studies, and clinical trials, and providing other general and administrative support for our operations.

As of September 30, 2023, we had cash, cash equivalents, and investments of $265.9 million.

From inception to September 30, 2023, we raised aggregate gross proceeds of approximately $378.8 million from the sale of common stock, convertible preferred stock, and convertible notes.

As of March 31, 2024, we had cash, cash equivalents, and investments of $338.6 million.

From inception through the date of this Quarterly Report, we raised aggregate gross proceeds of approximately $498.8 million from the sale of common stock, convertible preferred stock, convertible notes, and pre-funded warrants.

In February 2023, we completed our initial public offering (IPO) of 13,800,000 shares of our common stock at a price to the public of $16.00 per share, including the exercise in full by the underwriters of their option to purchase 1,800,000 additional shares of our common stock.

Including the option exercise, our aggregate net proceeds from the IPO were approximately $201.4 million, net of underwriting discounts, commissions, and offering costs.

In February 2024, we sold 8,339,169 shares of common stock and, to certain purchasers, 549,755 pre-funded warrants to purchase common stock for aggregate net proceeds of approximately $116.1 million, net of offering expenses, in a private placement offering (the Private Placement).

We do not have any products approved for sale, have not generated any revenue, and have incurred net losses since our inception.

Our operations to date have been limited to business planning, raising capital, in-licensing and developing lorundrostat, conducting clinical trials, and other research and development activities.

Our net losses for the nine months ended September 30, 2023 and 2022 were $47.5 million and $20.7 million, respectively.

As of September 30, 2023 and December 31, 2022, we had an accumulated deficit of $100.3 million and $52.8 million, respectively.

Our net losses for the three months ended March 31, 2024 and 2023 were $31.5 million and $12.6 million, respectively.

As of March 31, 2024 and December 31, 2023, we had an accumulated deficit of $156.2 million and $124.7 million, respectively.

Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical development activities and other research and development activities.

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We have never generated any revenue and do not expect to generate any revenue from product sales unless and until we successfully complete the development of, and obtain regulatory approval for, lorundrostat, which will not be for several years, if ever.

Accordingly, until such time as we can generate significant revenue from sales of lorundrostat, if ever, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements.

Accordingly, until such time as we can generate significant revenue from sales of lorundrostat, if ever, we

expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements.

However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

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In July 2020, we entered into a license agreement (the Mitsubishi License) with Mitsubishi Tanabe Pharmaceutical Company (Mitsubishi Tanabe), pursuant to which Mitsubishi Tanabe granted us an exclusive, worldwide, royalty-bearing, sublicensable license under Mitsubishi Tanabe’s patent and other intellectual property rights to exploit products incorporating lorundrostat (formerly MT-4129) (Lorundrostat Products) for the prevention, treatment, diagnosis, detection, monitoring, or predisposition testing with respect to indications, diseases, and conditions in humans.

Pursuant to the Mitsubishi License, we paid Mitsubishi Tanabe a $1.0 million upfront fee, and we were initially obligated to pay Mitsubishi Tanabe development milestone payments of up to $9.0 million in the aggregate and commercial milestone payments of up to $155.0 million in the aggregate upon first commercial sale and upon meeting certain annual sales targets, as well as additional commercial milestone payments of up to $10.0 million for a second indication.

Additionally, we are obligated to

pay Mitsubishi Tanabe tiered royalties at percentages ranging from the mid-single digits to ten percent ( 10% ) of aggregate net sales of each Lorundrostat Product on a Lorundrostat Product-by-Lorundrostat Product and country-by-country basis, until the later of (i) the expiration of the last-to-expire valid Mitsubishi Tanabe patent claim covering a Lorundrostat Product, (ii) ten years from the first commercial sale of a Lorundrostat Product, or (iii) the expiration of regulatory exclusivity in such country.

Pursuant to the Mitsubishi License, we paid Mitsubishi Tanabe a $1.0 million upfront fee and development milestone payments of $9.0 million in the aggregate.

We have remaining obligations to pay Mitsubishi Tanabe commercial milestone payments of up to $155.0 million in the aggregate upon first commercial sale and upon meeting certain annual sales targets, as well as additional commercial milestone payments of up to $10.0 million for a second indication.

Additionally, we are obligated to pay Mitsubishi Tanabe tiered royalties at percentages ranging from the mid-single digits to ten percent (10%) of aggregate net sales of each Lorundrostat Product on a Lorundrostat Product-by-Lorundrostat Product and country-by-country basis, until the later of (i) the expiration of the last-to-expire valid Mitsubishi Tanabe patent claim covering a Lorundrostat Product, (ii) ten years from the first commercial sale of a Lorundrostat Product, or (iii) the expiration of regulatory exclusivity in such country.

Such royalties are subject to reduction under specified conditions, including lack of patent coverage and generic competition.

We incurred $4.0 million of research and development expenses during the nine months ended September 30, 2023 associated with an achieved development milestone in March 2023 related to the planned initiation of our pivotal clinical program of lorundrostat.

We incurred $0 and $4.0 million of research and development expenses pursuant to the Mitsubishi License during the three months ended March 31, 2024 and 2023, respectively, that related to the initiation of our pivotal clinical program of lorundrostat.

As of March 31, 2024, we have paid an aggregate of $9.0 million in development milestone payments and have no remaining development milestone obligations under the Mitsubishi License.

We are obligated to use commercially reasonable efforts to conduct and complete the development activities and to file for regulatory approval for at least one Lorundrostat Product in a major market country and consider in good faith developing at least one Lorundrostat Product in a non-major market country.

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We also agreed not to commercialize any competing product prior to three years following the first commercial sale of the first Lorundrostat Product in any country without Mitsubishi Tanabe’s prior consent.

Private Placement Offering

On February 7, 2024, we entered into a securities purchase agreement (the Purchase Agreement) with the purchasers named therein (the Purchasers), for the Private Placement of (i) 8,339,169 shares (the Shares) of our common stock at a price of $13.50 per Share, and (ii) with respect to certain Purchasers, Pre-Funded Warrants to purchase an aggregate of 549,755 shares of common stock (the Pre-Funded Warrants) in lieu of shares of common stock, at a purchase price of $13.499 per Pre-Funded Warrant (the shares of common stock issuable upon exercise of the Pre-Funded Warrants, the Warrant Shares) for aggregate net proceeds of approximately $116.1 million.

We expect to use the net proceeds from the Private Placement to fund the research and development of lorundrostat and for working capital and general corporate purposes.

Each Pre-Funded Warrant has an exercise price of $0.001 per share of common stock, is immediately exercisable on the date of issuance, and will not expire.

Under the terms of the Pre-Funded Warrants, we may

not effect the exercise of any portion of any Pre-Funded Warrant, and a holder will not have the right to exercise any portion of any Pre-Funded Warrant, which, upon giving effect to such exercise, would cause a holder (together with its affiliates) to own more than a specified beneficial ownership limitation of either 4.99%, 9.99% or 19.99% (as selected by such holder prior to the issuance of the Pre-Funded Warrant) of the number of shares of common stock outstanding immediately after giving effect to such exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrants.

However, any holder may increase or decrease such percentage to any other percentage not in excess of 19.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice is delivered to us.

We registered the resale of the Shares and the Warrant Shares on a shelf registration statement on Form S-3 (Registration No.

333-278122), which was declared effective by the SEC on April 11, 2024 (the Registration Statement).

Pursuant to the Purchase Agreement, we agreed to use our reasonable best efforts to keep the Registration Statement effective until the earliest of (i) the time as all of the Shares and Warrant Shares purchased by the Purchasers pursuant to the terms of the Purchase Agreement have been sold pursuant to the Registration Statement, or (ii) such time as the Shares and Warrant Shares become eligible for resale by non-affiliates without any volume limitations or other restrictions pursuant to Rule 144 under the Securities Act or any other rule of similar effect.

At Market Equity Offering Sales Agreement

On March 21, 2024, we entered into an ATM Equity Offering Sales Agreement (the ATM Agreement) with BofA Securities, Inc.

and Evercore Group L.L.C.

as our sales agents (the Agents) and/or principals.

Pursuant to the terms of the ATM Agreement, we may sell from time to time through the Agents shares of our common stock having an aggregate offering price of up to $100,000,000 (the ATM Shares).

Any ATM Shares will be issued pursuant to the Registration Statement.

Sales of the ATM Shares, if any, will be made by means of ordinary brokers’ transactions on the Nasdaq Global Select Market or as otherwise agreed by us and the Agents.

Under the terms of the ATM Agreement, we may also sell the ATM Shares from time to time to an Agent as principal for its own account at a price to be agreed upon at the time of sale.

Any sale of the ATM Shares to an Agent as principal would be pursuant to the terms of a separate terms agreement between us and such Agent.

We have not yet sold any ATM Shares as of March 31, 2024.

Key Components of Results of Operations

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• salaries, bonuses, employee benefits, and stock-based compensation charges for those individuals involved in research and development efforts;

• external research and development expenses incurred under agreements with contract research organizations and consultants to conduct and support our clinical trials of lorundrostat, and payments made under the Mitsubishi License;

• external research and development expenses incurred under agreements with contract research organizations (CROs) and consultants to conduct and support our clinical trials of lorundrostat, and payments made under the Mitsubishi License;

• costs related to manufacturing lorundrostat for our clinical trials.

We plan to substantially increase our research and development expenses for the foreseeable future as we continue the development of lorundrostat.

We cannot determine with certainty the timing of initiation, the duration, or the completion costs of current or future clinical trials and preclinical studies of lorundrostat or any future product candidates due to the inherently unpredictable nature of clinical and preclinical development.

We cannot determine with certainty the timing of initiation, the

duration, or the completion costs of current or future clinical trials and preclinical studies of lorundrostat or any future product candidates due to the inherently unpredictable nature of clinical and preclinical development.

Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations.

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Our future development costs may vary significantly based on factors such as:

including any modifications to clinical development plans based on feedback that we may receive from regulatory authorities;

• the initiation, type, number, scope, progress, expansions, results, costs, and timing of clinical trials and preclinical studies of lorundrostat and any future product candidates we may choose to pursue, including any modifications to clinical development plans based on feedback that we may receive from regulatory authorities;

• our ability and strategic decision to develop future product candidates other than lorundrostat, and the timing of such development, if any;

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• the phase of development of the product candidate;

• the impact of any interruptions to our operations or to those of the third parties with whom we work due to the ongoing COVID-19 pandemic;

• the efficacy and safety profile of the relevant product candidate;

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Results of Operations

Comparison of the Three Months Ended September 30, 2023 and 2022

Comparison of the Three Months Ended March 31, 2024 and 2023

Three Months Ended,

September 30,

2024 2023 Change

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Research and Development Expenses

Research and development expenses increased by $16.4 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, which was primarily due to increases of $12.4 million in preclinical and clinical costs, driven by the initiation of the lorundrostat pivotal program in the second quarter of 2023, $2.3 million in clinical supply, manufacturing, and regulatory costs, and $1.7 million in higher compensation expense resulting from additions to headcount.

General and Administrative Expenses

General and administrative expenses increased by $2.4 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

The increase was primarily due to $1.2 million in higher professional fees associated with operating as a public company, $0.8 million in higher compensation expense resulting from additions to headcount, $0.3 million of higher insurance expense associated with new director and officer insurance policies, and $0.1 million in higher other administrative expenses.

Total Other Income, Net

Total other income, net increased by $2.8 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, which was primarily attributable to increased interest earned on our investments in money market funds and U.S.

Results of Operations

Comparison of the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended,

September 30,

2023 2022 Change

(in thousands)

Research and development expenses $ (46,676) $ (18,432) (28,244)

General and administrative expenses (10,270) (3,039) (7,231)

Total other income, net 9,437 745 8,692

Net loss $ (47,509) $ (20,726) $ (26,783)

Research and Development Expenses

Research and development expenses increased by $28.2 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, which was primarily due to increases of $15.3 million in preclinical and clinical costs, driven by the initiation of the lorundrostat pivotal program in the second quarter of 2023, $4.9 million in clinical supply, manufacturing, and regulatory costs,

$4.0 million in license fees under the Mitsubishi License upon achieving a development milestone of lorundrostat in March 2023, $3.9 million in higher compensation expense resulting from additions to headcount, and $0.1 million in other research and development expenses.

Research and development expenses increased by $18.5 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, which was primarily due to increases of $16.8 million in preclinical and clinical costs, driven by the initiation of the lorundrostat pivotal program beginning in the second quarter of 2023 and the Explore-CKD trial that began in December 2023, $3.7 million in clinical supply, manufacturing, and regulatory costs, $1.7 million in higher compensation expense resulting from additions to headcount and stock-based compensation, and $0.3 million in other research and development expenses, partially offset by a decrease of $4.0 million in license fees.

General and Administrative Expenses

General and administrative expenses increased by $7.2 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

The increase was primarily due to $3.7 million in higher professional fees associated with operating as a public company, $2.5 million in higher compensation expense resulting from additions to headcount, $0.8 million of higher insurance expense associated with new director and officer insurance policies, and $0.2 million in higher other administrative expenses.

General and administrative expenses increased by $2.0 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

The increase was primarily due to $1.3 million in higher compensation expense resulting from additions to headcount and stock-based compensation, $0.5 million in higher professional fees associated with operating as a public company, and $0.2 million in higher insurance and other administrative expenses.

Total Other Income, Net

Total other income, net increased by $8.7 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, which was primarily attributable to increased interest earned on our investments in money market funds and U.S.

Total other income, net increased by $1.5 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, which was primarily attributable to increased interest earned on our investments in money market funds and U.S.

Liquidity and Capital Resources

We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses and have negative cash flows from operations for the foreseeable future as we continue the development of, seek regulatory approval for, and potentially commercialize lorundrostat, seek to identify, assess, acquire, and in-license intellectual property related to or develop additional product candidates and operate as a public company.

From inception to September 30, 2023, we raised aggregate gross proceeds of approximately $378.8 million from the sale of common stock, convertible preferred stock, and convertible notes.

As of September 30, 2023, we had cash, cash equivalents, and investments of $265.9 million.

In February 2023, we completed our IPO of 13,800,000 shares of our common stock sold at a price to the public of $16.00 per share, including the exercise in full by the underwriters of their option to purchase 1,800,000 additional shares of our common stock, for net proceeds of approximately $201.4 million, net of underwriting discounts, commissions, and offering costs.

As of March 31, 2024, we had cash, cash equivalents, and investments of $338.6 million.

In February 2023, we completed our IPO of 13,800,000 shares of our common stock sold at a price to the public of $16.00 per share, including the exercise in full by the

underwriters of their option to purchase 1,800,000 additional shares of our common stock, for net proceeds of approximately $201.4 million, net of underwriting discounts, commissions, and offering costs.

In February 2024, we sold 8,339,169 Shares and, to certain Purchasers, 549,755 Pre-Funded Warrants for aggregate net proceeds of approximately $116.1 million in a Private Placement.

Our primary uses of cash to date have been to fund our research and development activities, including with respect to lorundrostat, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations.

Funding Requirements

Based on our current operating plan, we believe that our cash, cash equivalents, and investments as of September 30, 2023 will be sufficient to allow us to fund our operations for at least twelve months.

Based on our current operating plan, we believe that our cash, cash equivalents, and investments as of March 31, 2024 will be sufficient to allow us to fund our operations for at least twelve months.

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

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• costs associated with any products or technologies that we may in-license or acquire;

• the other risks and uncertainties described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 and in “Special Note Regarding Forward-Looking Statements and Market Data” and elsewhere in this Quarterly Report.

• the other risks and uncertainties described under the heading “ Risk Factor s” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 202 3 and in “ Forward-Looking Statements ” and elsewhere in this Quarterly Report.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses, and other similar arrangements.

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To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and equity financing, if available,

may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from factors that include but are not limited to, inflation, elevated interest rates, geopolitical conflict in and around Ukraine, Israel, and other areas of the world, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability.

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If we are unable to raise additional funds through equity or debt financings or other arrangements when needed or on terms acceptable to us, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves, or on less favorable terms than we would otherwise choose.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Comparison of the Three Months Ended March 31, 2024 and 2023

Since our inception, we have primarily used our available cash to fund expenditures related to the in-license and development of lorundrostat.

The following table sets forth a summary of cash flows for the periods presented:

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Operating Activities

Net cash used in operating activities of $52.2 million during the nine months ended September 30, 2023 increased, compared to $19.0 million during the nine months ended September 30, 2022, which was primarily attributable to an increase in cash used to support our operating activities, including but not limited to, the development of lorundrostat and related clinical trial expenses, personnel and compensation expense, legal and professional fees to support our operations, and general working capital requirements.

Net cash used in operating activities of $19.1 million during the three months ended March 31, 2024 increased, compared to $12.8 million during the three months ended March 31, 2023, which was primarily attributable to an increase in cash used to support our operating activities, including but not limited to, the development of lorundrostat and related clinical trial expenses, personnel and compensation expense, legal and professional fees to support our operations, and general working capital requirements.

The $6.4 million increase in cash used consisted of an increase in net loss, adjusted for non-cash expenses of approximately $19.1 million, and the net effect of changes in working capital of $12.7 million.

Investing Activities

Net cash used in investing activities of $152.4 million during the nine months ended September 30, 2023 increased, compared to $71.8 million during the nine months ended September 30, 2022, which was attributable to increased purchases of marketable securities of $203.1 million during the nine months ended September 30, 2023 subsequent to receiving cash proceeds from our IPO in February 2023, partially offset by

increased maturities of the marketable securities of $122.5 million during the nine months ended September 30, 2023.

Net cash used in investing activities of $56.0 million during the three months ended March 31, 2024 decreased, compared to $140.3 million during the three months ended March 31, 2023.

The decrease was primarily attributable to the timing and amount of purchases and maturities of marketable securities in each period.

During the three months ended March 31, 2024 compared to the three months ended March 31, 2023, an increase in maturities of prior purchases of $45.0 million occurred, which was partially offset by a reduction in purchases of $39.4 million.

Financing Activities

Net cash provided by financing activities of $203.2 million during the nine months ended September 30, 2023 increased, compared to $129.1 million during the nine months ended September 30, 2022.

During the nine months ended September 30, 2023, we received aggregate gross proceeds of $220.8 million from the sale of our common stock in our IPO in February 2023 and paid $17.8 million of underwriting discounts, commissions, and offering costs in the same period.

During the nine months ended September 30, 2022, we received $129.6 million in net proceeds from the issuance and sale of our Series A and Series B convertible preferred stock.

Net cash provided by financing activities of $116.2 million during the three months ended March 31, 2024 decreased, compared to $203.6 million during the three months ended March 31, 2023.

During the three months ended March 31, 2024, we received net proceeds of $116.1 million from the sale of Shares and Pre-Funded Warrants in the Private Placement, and during the three months ended March 31, 2023, we received net proceeds of $203.6 million from the sale of our common stock in our IPO.

Contractual Obligations and Commitments

Under the Mitsubishi License, we have milestone payment obligations that are contingent upon the achievement of certain development milestones and specified levels of product sales and are required to make certain royalty payments in connection with the sale of products developed under the agreement.

Our next anticipated development milestone of $5.0 million will become due by us upon initiation of the Launch-HTN trial.

Under the Mitsubishi License, we have milestone payment obligations that are contingent upon the achievement of specified levels of product sales and are required to make certain royalty payments in connection with the sale of products developed under the agreement.

We are currently unable to estimate the timing or likelihood of achieving other future milestones or making future product sales.

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however, actual results may differ materially from these estimates under different assumptions or conditions.

There were no changes during the nine months ended September 30, 2023 to our critical accounting estimates as disclosed in our 2022 Annual Report on Form 10-K.

There were no changes during the three months ended March 31, 2024 to our critical accounting estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

For information on our significant accounting policies, please refer to Note 2.

“ Summary of Significant Accounting Policies ” within our 2022 Annual Report on Form 10-K.

“ Summary of Significant Accounting Policies ” within our Annual Report on Form 10-K for the year ended December 31, 2023.

JOBS Act and Smaller Reporting Company Status

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We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We intend to rely on other exemptions provided by the JOBS Act, including without limitation,

not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if, among other factors, the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year (subject to certain conditions), or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

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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